Innovation and the art of Product Lifecycle Management

Dear Readers,

Earlier this year I was asked to write an article for Oracle on Innovation in relation to Product Lifecycle Management.  That article has now been published and so I thought I'd take the opportunity to share the original with you.  Of course this doesn't have all the nice graphics and pics of the finished article but it does have the unedited content.  I hope you enjoy it.

With the advent of the digital revolution has come a dramatic change in the way many businesses seek to source, fund and manage innovation.   Rather than simply relying on their own innovation processes or those of their traditional supply chain partners, many businesses are now aspiring to partner with entrepreneurial digital start ups (either directly or through technology ‘incubators’) in a concerted attempt to access digital expertise.  

Digital expertise is required to create, enhance and develop product sets and challenge business models.  In many cases these new partnerships are being championed by the Chief Marketing Officer who has lost a measure of faith in the ability of their own product development teams to create customer centric, digitally accessible products at speed. If proof were needed of this major shift one only needs to look at the exponential rise in the number of technology incubators offering to act as brokers between big business and entrepreneurial technology start ups. 

This is a big challenge for PLM and its associated tools, which, if we are being honest, have not always done the best job of supporting businesses in the effective management of the innovation processes at the very front end of the product development lifecycle. Too often the inception of product ideas is not linked to the product lifecycle. Instead inception is within the domain of an isolated team using stand-alone, hard-to-use and opaque systems. As a result the Chief Marketing Officer (CMO) often feels entirely justified in looking outside their own organization to plug into new sources of innovation.  What the CMOs need are tools that can provide them with a sufficient level of clarity on the quality and costs associated with the innovation process and more importantly on the visibility of the product innovation pipeline - including inception.

Therefore, PLM methods and tools currently face a double challenge, firstly to simply get better at managing the existing innovation process and the existing sources of innovation and secondly to adapt themselves to managing and extracting data from the newly emerging innovation ecosystems.

If PLM methods and tools cannot adapt to these changes then we are in danger of seeing a growing disconnect between the existing, data rich, PLM tools and the new product pipeline.   This will only add fuel to the fire of the power struggle between the Chief Marketing Officers driving the demand for new innovative digitally accessible products, the Chief Information Officers providing the infrastructure to support the product lifecycles and the Heads of Manufacturing and Supply Chain who are tasked with delivering the products at an optimum cost point and the CFO who is responsible for providing the investment funds.  Multiple and conflicting sources of data will continue to be developed with each senior executive not trusting the data provided by the others.

To bridge this growing schism requires work, but it is far from an impossible task. In fact the solutions seem to sit within the history of PLM itself and its approach to the supply chain.   We know the ability to deliver effective product lifecycle management blossomed when the full product supply chain and the external suppliers’ systems were bought within the scope of PLM thinking and methods; when their data was captured, their processes were improved and the interfaces between the suppliers’ business and the product development businesses were enhanced. What is now clear is that we need to treat the innovation eco-system, at the very front end of the PLM process, with the same type of diligent approach if we are to continue to see a steady increase in the benefits that accrue from effective PLM.

At the heart of the new thinking and tooling required is the recognition of a number of truths:

• That the sources of Innovation (in house R&D, supplier’s R&D, and digital incubators) can be effectively monitored, tracked and managed.
• That the process of Innovation can be effectively monitored, tracked and managed, it really is not a mystical process reliant upon some maverick genius. Innovation is a key business process and should be treated as such.
• That effectively managing the Innovation process is a key driver of competitive advantage.
• That managing the Innovation process requires effective collaboration between marketing, IT, manufacturing, supply chain management and finance.
• That there is a pressing need to access and utilize effective PLM tools that supply useful data and management information on the costs and quality of the innovation pipeline.

 Once we have taken onboard these truths we should be looking to create intelligent PLM tooling that delivers the following:

• Visibility of the innovation pipeline from all the sources of Innovation, including the emerging innovation ecosystems.
• An understanding of the real “cost of deployment” for products developed on standalone external systems, especially where the product is utilizing new technology or technology platforms.
• A rich source of data and the associated analytical tools that can spot and analyse trends in the innovation pipeline in e.g.:

1. Innovative Business model and operating model trends
2. Innovative Material and technology performance trends
3. Innovative Product distribution trends
4. Innovative Ecosystem trends
5. Innovative Service management trends

 Tools that are capable of delivering these outputs will ensure that a business investing in a PLM tool is investing in a tool that is capable of supplying the crucial strategic data required for managing the investment portfolio.

 If the PLM industry does not respond to the challenges provided by the developments in Innovation then PLM tools will still provide a valuable source of intelligence on the manufacturing process but will not continue their impressive progress towards holding centre stage in the Boardroom as a rich source of data, trusted by all members of the senior executive team, upon which key strategic business decisions can be based.

How to Reengineer the Corporate Vision & Values

Let me just come right out and say it.  I love the idea of a business that is inspired by an irresistible and worthy vision, that lives out a set of compelling, wholesome values and that is governed by a powerful customer centric philosophy.  And call me naïve if you like, but, I believe that businesses work best for all their stakeholders and are at their most sustainable when set up in this manner.  What is somewhat startling but also very reassuring is that the writers of pretty much all the leading business/management development literature over the last 40 years seem to agree with me too.  These researchers and authors also think it’s a great way to run a business.  Well that’s all fabulous news then – but there’s a hitch – this is not what I see in reality. 

So why (according to their customers and staff) are so few businesses operating in this manner?   In this blog I’ll be drawing on my 25 years of consulting experience to offer a rationale for why the quixotic dream of creating a powerful, uplifting and inspiring vision and value set so often evaporates in practice to be replaced with the energy sapping corporate flannel and mealy-mouthed doublespeak that is the daily diet of most employees.

Now before we all jump to conclusions and belabour the shortcomings of our corporate leaders I’d like to suggest that in order to deliver the kind of organisations we crave we have to be honest about the organisations we have and the visions and values that actually drive employee behaviours and customer outcomes.

The common mistake when looking to reenergise an organisation with a new vision and values is to assume that the organisation does not already possess a very powerful raison d’etre and a dominant set of pervasive values.   They do.  The thing is that these incumbent elements are not usually the ones that have been developed as part of an executive away day and published in the annual report.   They are the “shadow” vision and values.  These shadows have real teeth and are the real behavioural drivers behind most of our organizational lives.  They are not written down and are most often illuminated on the drawing boards of the corporate satirists.  They are almost universal and are rewarded and encouraged in almost all organisations.  So, to be able to put in place the compelling vision and values we all want to see, we first have to shed light on the shadow vision and the shadow values, expose them for what they are and embrace them or change them where appropriate.

So let me deal first with the “shadow” vision.  The shadow vision is pretty much the same for all organisations and it is really simple.  It is as follows: “Make more money for the shareholders each month/quarter”.  Not surprising is it, nor is It complicated or difficult to understand.  How do I know it’s the real vision for the organization?  Simple - It is the subject that is discussed for the vast majority of the time in the vast majority of Boardrooms up and down the country.  It gets massively more executive airtime than customers, employees or any other corporate element and it is the subject of the greatest number of Board reports.   It’s also what executive reward packages are usually linked to.  Now leaving aside the rights and wrongs of the shadow vision, the failure to recognize it as the real vision of the organization is likely to create all manner of organizational inefficiencies.  Misguided employees will occasionally try and act in line with the “published” vision statements that often encourage innovation, courage, customer centricity etc and this will cause corporate chaos.   So to drive out the inefficiencies related to having two potentially misaligned visions (shadow and published) the organization needs to either be honest and declare the shadow vision to be the “published” vision or it needs to tackle the shadow vision and reengineer the workings of the business to better line up with the elements of a compelling “published” vision.

So let’s move onto the “shadow” values.   There are four main “shadow” values (although you can always find others) and they are well suited to supporting the “shadow” vision.  Again they are pretty universal in larger organistions and represent the concepts and behaviours that are truly valued by the organisation.   They are as follows:

1. Profit – This organisation values profit and encourages all its employees to make decisions and take actions that deliver the greatest level of profit this month/quarter
2. Predictability – This organisation values predictability and encourages all its employees to only make decisions and take actions that are in line with what was expected of them and previously forecast
3. Prudence – This organisation values prudence and encourages all its employees to make decisions and take actions that require no extra investment of resource and carry no risks that may adversely affect the delivery of predictable outcomes.
4. Propriety – This organisation values propriety and encourages all of its employees not to challenge the status quo and established ways of working as it can cause corporate embarrassment or attract adverse PR.  It particularly encourages all employees to ensure there is executive plausible deniability for any “off piste” actions they may wish to take in pursuance of the corporate vision

Again, leaving aside the rights and wrongs of the “shadow” values the fact is, that from observing the behaviours of employees in large organisations over the last 25 years, one has to conclude that they exist and are well supported by the corporate performance management systems.  They are also highly likely to be at odds with the “published” values.  So again, as with the shadow vision if we are to reduce inefficiency and direct our employees far more clearly then we have to admit they exist and either embrace them or reengineer the organization to support the delivery of different values.  Either way I’d like to make a plea that organisations stop confusing their employees by publishing values and visions that are not aligned to the behaviours that they would really like to see as it really cheeses me off.  

And before you right me off as a tree-hugging lunatic, I for one would be delighted to see “profit” as a value for most organisations.  Let’s put it out there and be honest – we value profit.  There I said it.  Now let’s work out what else we value.

To conclude, if you want your programme of re-envisioning the organisation and overhauling the corporate values to go well you will need to identify and deal with the shadow vision and values with as much passion and rigour as you employ to generate the new vision and values.  To fail to do this is to doom the programme to failure.  It’s the equivalent of putting on your finest designer suit or dress, all ready for a glamorous evening out, over the top of your gardening clothes.   Not a good look and a bit mad.