Design Is the Sizzle, PLM Is the Steak

Product design is a hot topic, judging by the coverage in today’s leading business journals. Fortune Magazine’s recent article sums up the business relevance of design: “Because of globalization, U.S. companies are finding it harder and harder to compete on price, making the pressure to add value [through design] ever greater.” Unfortunately, most still don’t have the ability to harness design to create or seize business opportunities.

The Bottom Line: Great design may sell products, but companies without sound Product Lifecycle Management (PLM) processes, systems, and measurements will never achieve the perfect product launch.

What It Means: Fortune cites big sales wins by Whirlpool, Coleman, and Stanley. The Boston Globe published a recent article about Apple Computer under the header “1) Come up with innovative ideas 2) Turn them into cool products 3) Make tons of money.” This sounds great, but AMR Research sees far too little systematic connection between the first two steps and the third.

Consider the following views from 30 manufacturing companies that we surveyed recently about New Product Development and Introduction (NPDI):

• Only 50% believe they have financial control over NPDI (ability to stay within budget and assess resource requests systematically).
• Only 40% believe they have strategic control over NPDI (ability to hit intended time, margin, and market share goals).
• Only 30% believe they have strategic and financial control.

These opinions support AMR Research’s analysis conducted in 2001 of 600 U.S. manufacturers over a 10-year period, which found no reliable correlation between increased spending on research and development and later increases in revenue. This lack of control over such an essential business process is primarily a result of poor communication (the most frequently cited roadblock to better NPDI) across functions. Ultimately, this is an information problem.

PLM technology is the plumbing that needs to run under the floor from design to production to sales. PLM pioneers have had successes like electronic engineering change management and design reuse programs, as well as disappointments with costly data migrations and poor user acceptance. Best practice starts with clarity on roles and responsibilities and balanced metrics that point to impact on the NPDI process overall, not in functional silos. It’s not as exciting as cool design, but absolutely vital if a company wants to make money.

Conclusion: Getting jazzed about product design makes sense. Doing so without a PLM system to realize both products and profits is a waste of your time and your investors’ money. The perfect product launch is a lot more than just a great product.

AMR Research originally published this article on 6 January 2004.