- Leadership Focus on Product Development as a Key Business Process
- The Strategic View of Top-Line Growth
- Enabling Your Product Development Process to Have the Ability to Produce the Right Data, Deliverables, and Measures of Risk within the Context of Your Phase/Gate Structure
- Executive Commitment to Driving Culture Change
- Summary
- References
This chapter is from the book
This chapter is from the book
This chapter is from the book
The Strategic View of Top-Line Growth
The following list of project types illustrates the transition a business must undertake to shift from bottom-line Six Sigma operations projects to top-line DFSS projects. Type A projects give you the most control over the market and your profit margins (assuming the customer values the new product), while Type D and E projects yield the lowest market control. Most DFSS programs start with Type C through E projects and evolve to Type A and B. If your DFSS program remains focused on Type D and E, you may still suffer the same fate as Polaroid and others. You can only cut costs so much—then you have to spend money to make money.
Top-Line Growth Using Long-Term DFSS-Based Commercialization Projects
Type A Project: Initiate market share by opening new markets with new
designs
(establish the price)
Type B Project: Obtain market share in new markets with an existing
design
(at the current market price)
Type C Project: Improve margins and revenue growth in existing markets with
a new design
(premium price)
Bottom-Line Growth Using Short-Term Hybrid DFSS/Operations Six Sigma Projects
Type D Project: Decrease cost of an existing design
(hold the current price)
Type E Project: Decrease product rework and warranty costs
(reduce cost of poor quality)
GE's former CEO, Jack Welch, stated, "You can't manage (grow) long term if you can't eat short term . . . any fool can do one or the other. The test of a leader is balancing the two" (Welch, 2001). While hundreds of companies will speak to their cost-reduction success using Six Sigma, only a fraction will state that it helped them achieve remarkable growth. Most of those actually attain growth through the additional capacity from production and transactional process improvement projects. Very few companies have been able to use Six Sigma to develop new products and services which "so delight the customer" that they impact the annual reports through increased growth and revenues. This book is about changing organizational behavior to grow the top line.
The model for strategic business growth can be illustrated as a matrix:
A business can eat short term with cost-reducing Type D/E projects and then grow over the long term with value-driving Type A, B, and C DFSS-based projects and programs.
Operations (DMAIC) Six Sigma will help you solve your current problems and "eat short term." DFSS will prevent many of those same problems from ever occurring again and will leverage your resources to drive value into your future designs. If you do not develop new products that possess strong value in your customer's eyes, you will indeed starve. If much of your new product development resources are distracted from their mission because they are constantly fixing poor designs that have managed to get out into the plant and into your customer's hands, how can you ever find the time to fulfill your business strategy?
In some of the following chapters in this text, you will begin to see the strategic layout illustrated in the following list, defining the context in which a business deploys DFSS to generate new product development initiatives. It is a recipe for getting product development started right. These are the key elements that help drive value out to customers and return the required profits to the business and its shareholders.
Define business strategy: profit goals and requirements
Identify markets and market segments: value generation and requirements
Gather long-term voice of customer and voice of technology trends
Develop product line strategy: family plan requirements
Develop/deploy technology strategy: technology and subsystem platform requirements
Gather product-specific VOC and VOT: new, unique, and difficult needs
Conduct KJ analysis: structure and rank the NUD* VOC needs
Build system House of Quality: translate NUD VOC needs
Document system requirements: create system requirements document
Define the system functions: modeling performance
Generate candidate system architectures: concept generation
Select the superior system concept: Pugh concept selection process
You can see that the strategy transitions quickly into tactical applications of specific tools and best practices. Financial performance will flow from your core competencies found within this list. Fail to fund, support, and execute on any one of these line items and your company could be in big trouble over the long term. It may look good to take short cuts in the short term but in the long term you will underperform. DFSS tools and best practices will greatly aid your efforts to gain significant improvements in financial performance. The gains come from your leadership and personal, frequent, visible support of these elements of success.