Shifting the focus from Product Quality to Process Quality

In most of the small and emerging organization, we are observing that people spend enormous time, energy, effort in ensuring product quality through inspecting(in some cases 100 % inspection!) the final component both on functional and aesthetic aspects, segregation, rework and documentation.This kind of focus on a product only leads to “somehow” pushing the product to the customer with high manpower cost and long lead time. Moreover, this will set the belief in the organization that defects are unavoidable and the role of quality function to detect, correct and send it to the customer. Ownership also shifts from production to quality function on both delivery and quality. Eventually, the organization does not improve its problem-solving capabilities and culture of problem-solving at the source.

Instead, the organization can shift the focus more on the process quality than product quality. This shift can be demonstrated by ensuring the product quality at the source of production like pre-inspection of material before the process, providing process parameters through standard operating procedures,implementing mistake proofing devices either to prevent or detect the error at source of production, applying statistical process control, making the operator responsible for production and quality.

This focus on process will help the organization to reduce time, effort, energy in reactive product inspection processes, improve the problem-solving competency across the organization and reduce the lead time.

Shifting towards process quality from product quality, to start within the manufacturing process will be the first step towards total quality management in the organization.

Need for organizationwide performance management system

As we discussed earlier "what you measure, will get focus and control." Measuring business, functional and individual through performance metrics will drive the behavior and actions. 

Organization-wide performance management systems mean from top of the organization to the bottom of the organization have a COMMON GOAL, deployed to all levels, with a different set of objectives that will have linkages with COMMON GOAL. 

For example, a business goal of achieving X % net profit is to be deployed from top to bottom levels of the organization and everyone will have the same focus to achieve the goal. But the fact is business metrics cannot be populated down the level as such as it is very difficult for the people to understand.

To engage all levels of people, deployment of business objectives to the down the level with supporting objectives are being done. For example, a business goal is further broken down into the functional level goal, in turn, the functional level goal is further broken down as an individual goal. By achieving the goal at the individual level, the functional goals are achieved. By ensuring functional goal achievement, the business goals are achieved.

Given below 
deployment of one performance metric from the business level to the individual level.

Now let us discuss why does the company require organization-wide performance deployment?

1 Organization-wide common performance deployment promotes performance s oriented culture over a period of time.
2. It differentiates performer and nonperformer.
3. It engages individual and the team, and it is a natural team-building process
4. The team understands each other's challenges and helps each other for a common goal.
4. It helps to improve individual / functional efficiency as constraints are exposed.
5. eventually, the organization migrates from functional orientation to organizational goal achievement orientation, and this drives the solutions-oriented mindset among the team.

Driving organization towards solutions-oriented culture is a paramount priority of business head, and organizational-wide performance deployment will help to achieve the mission !!

Need for organisation structure role clarity in growing organization

When the organization is small, it does not require any formal organization structure, role clarity as most of the transaction would be done by the promoter cum business head with this known people through RELATIONSHIP. But when the organization grows regarding sales turnover, customer's addition, new product lines or variety increasing, the business also becomes complicated. The Organization requires a formal structure with relationship to get the things done without much complication or trouble.

when we say formal structural relationship, it involves 

• The positional designation, 
• Role accountability, 
• Performance metrics to measure accountability and responsibility 
• Reporting relationship 
• Organization-wide formal communication process about the structure 

Need for this structural in a growing organization

1. When the organization grows the relationship, and informal management becomes challenging to manage
2. Increase in communication complexity leads to confusion among the team
3. There is a chance for poor accountability  among the team in case if they are not governed by performance metrics, and there is no reviews and reporting method
4. When we have a structured  organizational relationship with performance metrics and the review forums helps to build performance culture .
5. It is a known fact that what we measure with accountability will bring focus and control.

Let us discuss organization structure designing

Most of the time we see a trend when we are asking for organization structure people are showing some visual positioning of man people and saying on a structure is already there. It is not just who is reporting to whom or who are all going to report to porting to one person.

In my opinion, visualized organization structure is a final step in the designing organization structure. Before that, a lot of strategic and tactical thought process has to go into the designing the organization structure.

As we discussed in manpower planning whenever there is an increase in the volume of product lines or customer base or whenever you are going for expansion, then it calls for revisiting the organization structure roles and responsibility.

For example, if there is a  position as General Manager  with business development as his accountability, then we need to articulate his  positional accountability with one or two performance metrics 

It could be a sales turnover increase our new customer development and so on one.

Most of the time we are mixing up accountability and responsibility . Accountability is result and responsibility is related to the process.

For example, the person is accountable for increasing the sales turnover is responsible for maintaining a relationship with the customer once in a week or sending the queries or finalizing the quote and so on are responsibilities to achieve the sales turnover. This responsibility becomes the person's daily/weekly management activities. Also, we need to be clear on the reporting relationship for each position, in turn, the person occupying the position.

The above inputs of all positions will be the inputs for designing the visual organization structure. The business head plays a major role in defining the organization structure with strategic and tactic perspective.

Importance of Manpower Planning during Growth phase

Like any other planning is being done in functions like marketing, sales, finance, and material, equal importance has to be given on MANPOWER PLANNING  particularly during the growth phase. Else, it would affect the organization growth badly. Having Right people in Right place at Right Time is critical for accelerating the growth.

The execution calls for detailed planning of manpower on the following aspects.

1. No of people required
2. Level of people required regarding skill and positions 
3. Compensation and Budgeting 
4. Recruitment methodology either dependence on the internal source or external support
5. Org structure, the communication process 
6. Infrastructure and facilities for increased manpower 


The typical problem with manpower  in small and medium-sized organizations are

1. Non-availability of right people 
2. Mismatch of manpower requirement vs. availability
3. High attrition rate 
4. Engagement of people towards organizational objectives

Typical mistakes the business head is doing in manpower planning during the GROWTH  stage 

1. Lack of forwarding thinking on manpower planning process:

it means the lack of thought process on the quantitive projection of manpower requirement, qualification, skill level, and how they would be positioned in the existing organizational structure and engagement plan.

2. Adhoc recruitment 

It means either compromising on the talent or fitting the people to the position rather than need. sometimes organizations recruit the people based on some reference either from relatives or friends or association, and they may not be fit into job requirements

3. Non-checking on the cultural fit :

Not verifying during selection  about the candidate's suitability to the organizational culture and values


. So when we are not planning the manpower properly in advance, the organization will lead to chaos or cost overrun on manpower budgeting. 

When Manpower planning has to be done for the organization?

Manpower planning is immensely required during the following scenario

1. Plant expansion
2. Drastic Increase in volume and variety 
3. New product  / new business lines getting added 

Benefits of manpower planning 

to plan budget/manpower cost in each category
to determine the job description/type of talent, you look for
to recruitment timely and induct
to focus more on external priorities than managing internal manpower problems.

So the point is manpower planning is one of the essential tactical activities of the organization, and  it is a continuous activity to ensure operational effectiveness and growth.

Importance of daily routine management towards sustainable performance

One of the common phrases we use to hear in most of the discussion in the organization is daily routine management.

Let us understand the meaning of the term and its significance on sustainable performance in the organization, especially in small, emerging organization.

Some of the myths of daily routine management:

"It is all about roles and responsibility as described in the job description."

Even though daily routine management is a responsibility of all individual in the organization, it goes beyond as mentioned in the job description. From my experience with small, emerging organization, the job description is written with the mix of activities and accountability.

However , Daily routine management is nothing but how you are consistently managing your daily routines so that you ensure your organizational performance is on track against the target. 

The context is if you are not active on a daily basis, you cannot be successful in your weekly results. If you are not effective in your weekly commitments, you cannot be successful in your monthly results and so on quarterly, half-yearly and annually.

"It is required only for shopfloor people and not for management level"

Daily routine management is a management practice, and it is required for all the levels.

For instance, if you are a shop floor manager, you suppose to do some of the activities on a daily basis irrespective of your other priorities. For example, the activities like reviewing your previous day production against the target, quality issues, customer complaints, communicating with other functions through MIS or meeting forums at a fixed time are the daily routines.

If you miss it for one day or do it in ad-hoc frequency, you may have the consequences regarding losing targets. For example, if you do not review your production status on a daily basis and ensure you are matching with asking and running rate, you may have relatively less response time to catch up or to take timely counteractions.

If you do not monitor the progress on a daily basis, you don't know the reality and cannot take timely corrective action.

In fact, daily routine management is based on the P-D-C-A cycle.

Similarly as a business head, if your daily routine activities are maintaining relationship with customers and employees, reviewing the financial aspects, reviewing the strategy implementation aspects and so on and if you are consistently doing those activities on a fixed, short intervals, you may face the consequence on the performance failure in any of those critical areas.

Benefits of daily routine management across all levels

1.Improves certainty and communication among team members

2. More response time available to take corrective action in case performance slips

3. It drives organization towards performance-based culture and engagement

4. More importantly, it improves personal efficiency and effectiveness

As any habit formation, initially it would be challenging to follow disciplined, structured daily routine management, but once it is formed, the organization is capable of handling any changes from external as well as internal environment.

In my opinion, more than management processes, daily routine management is culture building towards performance!

How to select the right candidate for your organization?

One of the challenges for most of the small, emerging organization is selecting the right candidate for the job and retaining in the organization. There could be many factors contributing to retaining the people, and we discuss in another forum. However, one of the typical scenario we are witnessing in most of the organization is that within a short time, say 1-3 months time, the business head and the incumbent conclude either person is not fit for the job, or the organization is not fit for the new incumbent. This scenario is more common in senior level recruitment.

A strange fact is that the business head had personally involved in shortlisting, interviewed the candidate and inducted for employment. If either one of them concludes " this is not fit for me," we can arrive a logical conclusion that " selection process needs to be improved".

Typical mistakes the business head do during the selection process?

1. On an ad-hoc basis, decide the requirement for manpower 
2. No job description or role clarity/ responsibility/accountability defined before shortlisting the candidate even though there is macro level articulation on the need.
3. Conducting the interview process  with the intent of understanding more about the  candidate's previous experience and not on verifying or calibrating his caliber is matching with the organization's prevailing business practices or the culture
4. No structured questioning to check the attitude/perspective of the candidate to solve the existing organizational challenges or issues
5. Sometimes, selecting the candidate based on the reference from a known circle or filling the position with " somewhat" fit candidates.

Impact of the poor selection process:

1. Attrition rate becomes high, and it affects the stability of the organization.

2. Business head spends his time in routine work which affects his productivity and other aspects of profitability and growth
3. Cost of recruitment keeps increasing with no return benefits.

4. The organization which has grown with old, loyal employees, the high attrition rate signals different communication among employee. Eventually lead to complacent mentality, arrogance, know it all attitude which affects speed and flexibility towards change 

5. Sustaining organization development and gearing up for next level growth with a professional mix of people will become a major challenge for the organization.

Solutions approach to improving the selection process:

As a business head, before filling and selecting the candidate, you need to be clear on the job description as follows

• Position description
• Age, Experience, and qualification
• what level of competency(Job Knowledge and Skills) you are looking for 
• what is your organizational culture and how would you like to check during the interview
• your affordable pay and structure
• Likely growth path to the incumbent and likely changes in the existing organization structure

Once you are clear on your expectation, circulate the job description to professional recruiters and get the potential candidates.

Scan through the potential people and shortlist a  few who fit into the above requirements.

During Interviewing the candidate:

Look for the attitude which is required for the position or title. Attitude can be tested by asking the following question and look at the response from the candidate.

1. Experience in handling people dynamics and his style of managing the challenges 

2. State some of your organizational scenario or challenges and ask how he would respond in those scenarios.

The quick or momentary response, to some extent, will reflect the person's natural attitude towards work and people as this help you to gauge the suitability of the person to your organization.

Also, You need to note that you are recruiting senior level people to bring a change and sustain the business growth. Hence be balance in your approach to select the person with a track record of change management and fit into your culture.

Since we are dealing with human dynamics, it is challenging to gauge people's capability and attitude in the interview time. However, having a systematic process and improving your interviewing skill will improve the probability of choosing a right people for the organization as it helps both you and the others!

Relevance of Target setting & Review forums on accelerating business performance

One of the management process to control the business performance is to set the business target and review those targets.

when the organization grows from small to large, complexity also gets grow faster than business growth thanks to more customers, more products, more people and so on. Communication also gets complicated among all the stakeholders.
To overcome the complexity and bring accountability, setting the target and review those targets becomes important.

The targets could be Business targets, Functional Targets, and Individual Targets. The targets can be termed as Key Performance Indicators (KPI's)

Depending on the size of the organization and bandwidth to administer the performance management system, the business head can set the target in the following hierarcy

1. Business Key performance indicators 
2. Functional Key performance indicators
3. People Key performance indicators

From our experience, it would be a right approach, to begin with, Business Key performance indicators covering all functional deliverables in terms of the following categories

• Productivity
• Quality
• Cost 
• Delivery
• People engagement

The business head can set the annual target on the above categories as it covers all functions.

for example, "Manufacturing cost per component" is one of the key performance indicators under the category of "Cost".To achieve this KPI target, all functions have to contribute, by the way, business level KPI target setting covers all functions.

Once the organiztion becomes familiar with target setting at a business level and acquires competency, it can go to the next level of target setting at a functional level and individual level.

The business level KPI's can be set for annual basis which can be tracked every month , every week and every day.

Benefits of Setting Business Targets (KPI's)

1. Business heads and the team get clarity what they want to achieve on business profitability and growth
2. Targets set the direction to the team
3. Brings the people together
4. Improves the focus of the team
5. Improves the communication among team

Review forums :

once the business KPI's are in place, it is the responsibility of the business head to create a review forums to review/discuss the target status along with cross-functional team members and take a counteraction if it is required.

The review forum is nothing but a meeting of a relevant cross-functional team with fixed agenda.

The review forum could be monthly KPI review meeting, weekly reviews or daily performance review.

Benefits of Review forums:

1. Review forum is excellent process to review the target status and take counteractions
2. when the review happens along with cross-functional team members, it brings accountability to all
3. Review forums brings the problem to surface and can be solved along with the team quickly rather than individual review
4. Since each cross functional team member involving and contributing to different KPI's in different roles either as lead or team member, the review forum helps the team to know each other's problem . It helps to bring the bond among the members
5.Review forums if conducted properly with a real problem-solving approach, it enhances the personal productivity of each individual.

When the targets are clear and the teams are facilitated for achieving the targets through review forums, eventually organization sets for performance management culture and it would accelerate the business performance!

How does Project Management apply to New Product development?

As discussed in Typical problems in new product development in a manufacturing environment, we have observed some patterns of challenges. Project management is all about the application of different management knowledge, skill, tools, and techniques in each phase of the projects.

Hence, the following principles of project management can be applied in new product development also.

Some of the principles are given below

1. Starting the project with END GOAL in mind
2. Involving all stakeholders at an early stage
3. Define project scope with a set of key performance indicators
4. Tracking Key Performance Indicators throughout the project phase
5. Defining the phases or steps in the project 
6. Proactive risk assessment and mitigation plan
7. Review and communication process
8. Active Change Management Practices
9. Engaging people with team/leader structure

Those principles can be applied in new product development as well.

Typical Problems in New Product Development in SME's

Typically, new product development starts the moment's customer asks for a new product or giving intend for new products to the organization delivers the physical product to the customer .We can call it as C to C

In between the intent of physical delivery, a lot of issues or challenges the organization is facing. 

Given below some of the typical issues or challenges 

1.Not fully aware of the customer's requirement

2.No sign off of idea/concept between customer and organization leads to  frequent changes in the idea/concept of the product itself

3. Not identifying and involving all the key stakeholders at the beginning of the project may lead to changes at a later stage, in turn, affect the timeline/ cost and deliverables (Quality Requirements)

4. Not spending enough  on planning  product development process leads to time delay and cost overrun

5.No structured management reviews on risk assessment and mitigation of risks lead to delay in decision making, Q issues, cost overrun and time delay.

6.No structured tracking systems for  change management and in the absence of change management, any delay or cost overrun or quality issues in the new product development would be taken at a personal level and blame of others

7.No systematic planning on facilities like fixture/ gauges/material handling/toolings leads to delay and quality issues in the product.

8.NPD trials and proto building take the second priority in the organization next to day to day deliveries lead to delay and personal friction among the people on sharing the organizational resources.

when you observe those above challenges, you can find a pattern of challenges.

That is lack of target, people integration, lack of process on communication, resource planning, risk assessment, review forums and so on. To overcome those pattern of challenges only, PROJECT MANAGEMENT comes a holistic solution in the new product development process!

How do you measure organizational maturity in terms of problem solving competency?

One of the differentiators between the organization is people and their problem-solving competency inside the organization. Developing the organization towards performance culture or problem-solving orientation is the biggest challenge for the business head and also the responsibility of the business head.

Unlike, capacity enhancement or technology upgrade, bringing the culture of problem-solving will not happen overnight as this calls for systematic, consistent people development and creating an environment inside the organization.

Any organization can be measured by maturity level regarding problem-solving competency using the below framework.

Level 0: No data availability
Level 1: Availability of data
Level 2: No structured Analysis
Level 3: Gaining Insight from Analysis
Level 4: Converging  into solutions approach
Level 5: Implementation focus
Level 6: Track performance through metrics

Relook at your organization' problem-solving competency based on the above maturity framework. Be aware of your current status and actions required to move to the next level!

Key Drivers of your Business

As a business head, you may be spending your time, effort and energy in many activities of your business. The more you effectively spend your time in critical elements, more your business prospects.

You need to understand the fundamental of your business drivers and your awareness about those drivers and the depth of your management on those drivers will bring profitability and growth.

Key drivers of your business:

Employee:

As one of the appreciating assets in any organization is PEOPLE. However, one of the challenging area for most of the business head is managing people.

It involves 

Manpower Planning for existing and future 

Attracting Right People 

Engaging towards organizational goal and culture

Providing Growth opportunities and learning

When you are not spending your time on this "People" factor, it costs the organization regarding losing skill, high attrition, loss in delivery, quality and so on. 

From our experience with small, emerging organizations, most of the chronic problems in the organization are due to "non-availability of right people in the right positions."

Profit :

One of the critical aspect for sustaining any business for a long term is " Profitability."Only when the business generates a decent profit, the business can survive and look for growth opportunities. As a business head, you must know how the business does generate profits and the factors contributing to or affecting the profitability of the business.

To know the causes or sources of profitability, you must be aware and have depth understanding of the following factors

1. Understanding your value chain or cost stack up in your products

2. Your pricing methodology and relevance with reality

3. Product portfolio and margin in each segment

4. Buiding cost consciousness culture in the organization

5. Your sensitive analysis on volume and variety or product portfolio mix

Cashflow :

As we have observed in some organizations with high profitability, the organization struggles to meet the working capital requirements, and the business head spends most of the time in managing the cash flow issues. The reason is lack of understanding on the aspects of from where / when / how much money comes in where/ when/ how much money goes out from the business.

Business head needs to know the fundamentals of money flows irrespective of his background, financial illiteracy. He must know to balance the payables and receivables so that the business can run smoothly.

Growth :

Growth is essential to sustain and increase the profit. Beyond some point of effectiveness, increasing the profit is difficult. If a business wants to generate more profit, then one of the ways is looking for growth in business topline revenue.

This growth is possible in multiple ways as follows

1. Increasing share of business or volume from existing customer base or product lines

2. Expanding into new product lines  from existing customers

3. Expanding to new customers or new demographic locations

However, managing growth phase is more challenging rather than running the existing operations with effectiveness. It calls for the marketing effort, new product development capabilities, competency building inside the organization to cope with growth challanges regarding technology, infrastructure, maangement process or practices, people, and capital.

careful planning and execution is required to migrate the organization towards next level grwoth.

Operational effectiveness & Flexibility:

To ensure profitability and sustained growth, internal operational effectiveness has to be maximized.

When we say effectiveness, it is all about Equipment / Asset Utilization, People efficiency, development and product quality.

As operational effectiveness has a direct bearing on the profitability and flexibility to the customer's requirment, your time and drives the organization towards " Lean way of working " as a culture is critical. One of the differentiator among the competitors is your organizational culture on continuously improving your operational effectiveness.

Customer:

A customer is a center point of focus for any organization. The existence of a business is only due to the presence of market and customer to buy from your organizations.

You need to understand the real reason for the customer to come repetitively to you for doing business. The reason could be

your price

your attitude

your delivery flexibility

your locational advantage

your attitude and approach towards them

your service quality 

once if you understand the real reason of your customer comes to you , you need to think interms of 

1. sustaining those factors and its feasibility

2. leveraging those factors and sustain it

Maintaince of quality relationship with customers will help you on a long term.

To sum up, 

the above factors are key drivers of your business, and how much time you spend on nurturing those factors determine your business sustainability and growth on a long-term basis!

Factors affecting people productivity in workplace

One of the concerned area in a workplace to improve the manpower productivity. Given the situation, automation or use of robotics is limited, how to improve the workplace ergonomics, thereby improving the manpower productivity?.

The following factors contribute to fatigue to the people. By optimizing either one or all of the factors will improve the productivity.

1.Person and his/ her posture
2.Type of work being done 
3.Tool being used by the person to do the work
4.Work Environment in which the work is being done

Why FLOW is important irrespective of production system?

Any manufacturing organization can be classified based on the production system. The production system is primarily based on TWO factors

1. Volume

2. Variety.

As shown in Pic, any organizations production system falls under any of the categories

1.Unique / Project Type production
2.Customized, Job Order production
3.Standardised, Batch Type production
4.Mass / Flow Production


You can fit your organization production system in any one of the above production systems.

However, irrespective of your production system, what matters for business profitability is SEAMLESS FLOW.

The ultimate objective of any organization is to striving towards continuous flow from the upstream process( RM Procurement from suppliers) to downstream process ( FG dispatch to customers).


How is the flow measured in manufacturing?

Flow is measured as Lead time. (Definition of lead time)

why flow is affected in any production system?

• Cycle time imbalance between work center
• Rejections / rework  at each stage
• Machine Breakdowns
• Changeovers or setting time
• Lack of  resources (material/man)
• waiting for decisions

Impact of poor flow on the business :

1. WIP between work centers
2. Long lead time
3. More Space
4. More Movements and Handling efforts
5. Rejections / Rework
6. Communication issues
7. Low productivity
8. Low flexibility to the customer

Solutions approach to improving flow in ANY production system:

Continuous-flow manufacturing (CFM) is an approach 

Continuous improvement efforts to integrate all elements of the production system.
The goal is a best possible balanced production line with little waste, the lowest possible cost, on-time and defect-free production.

Benefits of Continous flow improvement approach is as follows

• WIP inventory reduction
• Space utilization
• Set up time reduction
• Lead time reduction
• Reduce material handling distance
• Productivity improvement
• Quality improvement
• Better teamwork and communication
• High Flexibility 
• Better Visibility

To sum up, irrespective of your production system, you need to continuously improve the flow for sustainable business profitability !

Steps in Structured Problem Solving Process

As you are aware that any chronic problem in the organization can be solved only through structured problem-solving methodology. The tactic or ad-hoc solutions won't work, that is why the problem became chronic!

The chronic problem could be stagnant in sales turnover, the repeated quality problem in the product, High attrition rate, high failure rate of new products and so on.

In those chronic problems, if you systematically approach the problem, you can arrive at the right solutions.

Typical steps in solving chronic problem-solving method as follows

1.Define the problem and set the desired target
2.Data collection from the past  few  months or years
3.Analysing the data and finding the pattern or prioritizing
4. For identified pattern, collect further data to understand the reality
5.Identifying the causes of the occurrence
6.Validating the causes with real-time experiments or documents
7.Propose the solutions approach
8. Make an ACTION PLAN to implement
9.Implementation on trial basis
10.Learn from the Implementation
11.Track for the progress or improvement
12.Make the new solutions as standard

Irrespective of the problem-solving methodology you choose to solve the problem like 6 sigma approach, QC tools approach, 8D approach, A3 approach, the essence of steps are almost the same as above.

To learn more about problem-solving methodology, tools and techniques with real case study example from the manufacturing organization, pl visit.

https://www.udemy.com/structured-problem-solving-methodologytools-and-techniques

Why do you need to focus more on NPD( new product development)?

Why do you need to focus more on NPD?

This can be answered by understanding the changes happening in external and internal to the organizations.

Changes in Internal to the organizations :

As a Business head, your prime concern is sustaining profitability and ensuring future growth.

Conventionally , sustaining profitability calls for efficiency improvement,cost optimization and so on. Beyond some point, process optimization does not yield much improvement unless you revisit and re-engineer your product portfolio.

Hence, you can sustain your business profitability by creating an environment for continuous New product development and position yourself as the first mover or the preferred source to your customer on new product developments and ramping up. 

As you are aware that when you are manufacturing the same parts over a period of time, it will become a commodity and you lose the competitive advantage, in turn, you lose your profit margin. To compensate or sustain the profitability, smart organizations, equally focus more on New Product Development (NPD).

Also, the existing product portfolio dries out, the only way for growth is bringing out more new products.

Changes in External to the organization :

External to the organization, the consumers are changing fast. Thanks to awareness, affordability and enhanced lifestyle, consumers are looking for more varieties and prefer to change the product frequently to keep them update in the society. 

For example in the case of mobile devices, laptop, automobile, there were fewer varieties and more volume when they were introduced to the world than now. 

This change in external environment results in more new product development focus inside the organization.


Going forward, the organization which equally focus on both efficiency and new value creation will sustain the profitability and growth.

Causes of New Product Development (NPD) Success or Failure

Having discussed the strategic importance of New product development (NPD)  on business growth and profitability, now let us understand the factors contributing to NPD success or failure.


1.Planning :

Before starting a project, planning as an activity plays a significant role on project success or failure. This includes all the aspects of NPD like

a. Understanding the customer's requirement clearly by involving all stakeholders in the projects and understanding the requirements
c. Planning of time horizon and risk involved
d. Planning of resources, competency and risk involved
e. Planning of expenses both capex and revex, the risk involved
f.  Planning of conversion process either in-house and outsource
g. Planning of communication / MIS / KPI's and review mechanism

When we do not plan of above activities, by nature, we face the failure modes while executing the projects. Managing the failure modes during execution takes more time, cost and affect the product quality than during the planning stage.


2.Identification of project leader:

Even though NPD is a cross-functional activity, it is very much essential to identify a person as a project leader who is accountable for coordinating and existing the product development.

As we witnessed in most of the small and emerging organizations, NPD is driven by technology or design person. It is nothing wrong with driving by those people, they need to ensure the development completes successfully until it meets the customer's scope, cost, and time aspects.

It is advisable one person can play a role as project lead and coordinate all functions with more focus on internal and external deliverables.


3.Formation of a cross-functional team:

As said in the project lead, the establishment of a cross-functional team with a focus on product delivery is vital to speed up the NPD process. Typically, the people involved in the NPD are more oriented towards their functional ROUTINE activities, and NPD gets second priority. The reason could be organizations are wired and encouraged for functional or departmental success or deliverables rather than product delivery success which relies on many functions. To bring organizational focus on NPD, it is advisable to form core cross-functional team members who will be working on the project till it ends under the guidance of both project lead and technical lead.


4.Change Management :

Unlike Operations, New product development as a project calls for a lot of changes during execution. The change will come from either the customer or internal stakeholders. The challenge for the project lead and team is to manage the changes.

The critical challenge for all of us is how to manage the change and its impact than avoiding the change at all as it is impossible in a project environment.

This calls for proactiveness and experience in predicting the changes or risks and managing the changes. In mature organizations, there is a review forum, wherein the project team is encouraged to present the changes and its impact in a professional way. When the environment is created to discuss and review the changes and its effect on cost, scope, and timeline, eventually either team is getting involved proactively in the development process at the early stage and thereby reducing the possible changes that happen during the execution.


5.Top Management involvement :

Senior management's involvement in the NPD process is critical for the success. In my opinion, the involvement can be demonstrated by conducting fixed, preplanned reviews of the NPD progress along with project leader and team members. Periodic reviews of project status and taking timely decisions on important factors like scope, cost and any other people related issues or any other risks will save the NPD from failures.

The Top management can design suitable Management information system about the project with Key performance indicators at the initial stage of the project and tracking during the execution will save a lot of time of all and also improve the communication process among the team and shareholders.

Since unlike operations, NPD process itself is uncertain and risk involved, the team gets demotivated whenever there is a slowdown in progress. It is natural and the top management involvement and motivating the team behind helps the team to work with more enthusiasm.

In a nutshell, top management involvement through reviews of KPI's, timely decision on any risk, motivating the team are critical to the success of NPD.



As said, the project is all about managing the risk and people. Realising this fundamental, smart organizations adopt project management approach in New product development process and we have seen the improvement in the quality of execution. However, it takes time, and commitment of all stakeholders as delivering new product seamlessly is a way of working or culture building process!

Why P&L Analysis must be done EVERY MONTH?

One of the best management practices, most of the smart CEO or business head use to do every month is review P&L (Profit & loss) statement along with the key people. In fact, some organizations have a habit of reviewing P&L before 10 the of every month and accordingly all the financial accounting is completed, and the process of bill collection and accounting is set in place.

Benefits of doing P&L Analysis every month:

1. As a business head, notionally, you come to know the business profitability either positive or negative in the month .that give you more response time to take countermeasures in the subsequent months.

2. Analysis of P&L every month will give you a lot of insight about your profitable product mix. For example, in one month, an organization made High turnover compared to the previous month, but the Operating margin is lesser than the previous month. When analyzing the expenses, there is not much variance between months. However, when the team analyzed further on the product mix, they realized that even though they produced more of a particular product, say X, the price was low. The team had realized that more you produce product X, more loss the organization makes. This kind of analysis will give a lot of insight about your product mix and accordingly, you can take a call on optimizing the product mix.

3. Also, when you analyze P&L along with cost variance of each expense, that improves the cost consciousness in the organization, and in fact, you can take countermeasures to control the cost. We are witnessing in many organization,, where the business head reviews the P&L every month, the culture of the organization also moves towards cost consciousness.

Limiting factors of not doing P&L review every month :

1.one of the reasons people use to say is P&L statement may not reflect the real numbers as there is variation in inventory accounting, tax provision, depreciation, etc.

Yes. As said this P&L statement is just notional and indicative of your operational performance only. In the year-end, with all provisions, your auditor will make right P&L including right accounting principles. This monthly P&L will give you an instant picture of your business performance so that you can take timely actions.

Regarding inventory accounting, when you regularly do every month, will get eventually normalised. You need to ensure that you are using a standard format and input/output mechanism and the source must be the same. For example, if you are using TALLY software, use the same source and format/assumptions to prepare P&L statement every month

2. Lack of discipline on accounting all the bills on time and preparing P&L statement on time.

Rather than blaming the people and system, it is the discipline of the business head in showing interest to analyze the P&L every month before 10th matters a lot!!



The point is reviewing P&L analysis is a prime responsibility of business head, and it must be done every month for taking corrective action on business performance on time!

Importance of Visual Management System in improving Workplace Effectiveness

As discussed in the change-environment-and-trigger-positive behaviour   Visual Management  System is one of the enablers to improve the workplace effectiveness and positive culture in the organization.

let us understand, what does it mean visual management and its components, application, and examples

What is visual management System?

Visual management is a concept of making the workplace more effective by making the condition or reality of workplace more obvious at a glance.

It exposes the waste or abnormality in the system so that waste or abnormality can be corrected or reduced instantly. 

It is not merely putting posters as a one-time effort, and it is a dynamic activity 

Components of visual management system:

It consists of 

1.Visual Displays
2.Visual Metrics
3.Visual Control

Visual displays :

Basically, it consists of labels, identification, instruction posters, displaying information.

It creates awareness or for educating the user about the place/ equipment/ process/facilities 

It can be in TEXT or in COLOURS to indicate relevant information to the user

Examples

Visual  Metrics :


Visual Metrics is one of the visual management systems in which emphasis would be more on to give information about Standard  Vs. Actual.

The purpose is to show 

the variance  or gap between standard vs. reality at a glance


This visual metrics brings down the subjectivity of the people on the information and also trigger the people to take action if there is variance between standard and actual.

Examples

Visual  Control :

Visual control is meant for creating error proof environment by adhering to the right way of doing the things

Examples

How to apply Visual Management System in the workplace?

As visual management system is a creative process and there is no end for improvements ideas. The more you bring your workplace with the visual management system, more transparent, higher the clarity among the team. It increases the engagement of the people.

However, we bring focus on the implementing visual management  effort  through the following steps

1. Identify the area where you would like to improve the visual management system
2. understand the problem in the selected area and decide what you would like to solve 
3. understand your audience or people background in the area and accordingly decide what components of visual management is required. Like visual display. Visual metrics or visual control.
4. Implement and make it dynamic in a sense, it needs to be updated periodically.
5. It would be more engaged, if the people involved in the work area, update the visual management.


As mentioned, Visual Management system is one of the simple, powerful, creative concepts that make people engaged towards continuous waste elimination or reduction in the workplace!