Page 42 - DMGT501_OPERATIONS_MANAGEMENT

Operations Management

Notes Many designers do not understand these issues and, as a result, often propose products that
cannot be produced or service designs that cannot be delivered because of inadequate technology
or operational capabilities. The approach to product development has to start with an evaluation
of the capabilities and resources of the organization.
The new product strategy of the organization is decided on the basis of organizational capabilities
and resources. Organizations should develop explicit product-development strategies to co-
ordinate all of the major business processes that contribute to product innovation. The need to
be fast when competing in high clock-speed industries makes this an absolute necessity.
With a new regime of patents and legal protection against copying ideas, designs, or products–
there have been changes in the approach to new product development. Organizations are more
concerned about being the first to develop an idea or design a product so that they can protect
their markets.
Being able to design, develop, and introduce a new product quickly gives a firm 'fast to market'
capabilities. There are two types of fast to market activities.

1. Fast to customization: The first activity is being able to develop products to meet the
specific needs of a customer. This is called fast to customization. Producing such a product
with the participation of the customer, may give a firm a competitive advantage.
2. Fast to design: The second type relates to developing products to meet the needs of a
cluster of customers. Fast to design product innovation can be used in MTS, ATO, and MTO
market orientations.

Example: Nokia introduced cell phones that incorporate cameras. Seeing that there was
a cluster of customers for this product all manufacturers now offer this product. Nokia has a first
mover's lead in this segment of the market.
In other situations, being fast to market may not be less important. It depends on how quickly
a product's design becomes stale. Mercedes-Benz traditionally had customers that valued good
design more than a model a year.
For some products, being fast to market may not be in your firm's best interest.

Example: A creative advertising executive always makes his clients wait a week or two,
even though he thought of the copy for the ad in a day. Likewise, if a gourmet restaurant that
serves your meal five minutes after you order, you know that they must be using a microwave
oven. If they make you wait for 30 minutes, then the same judgment cannot be made.

Another important type of product innovation involves refining or rejuvenating products within
the existing product line. For some companies, this is an annual event, as is the case with the
automotive industry.
Major redesigns in the automobile industry can take years and costs billions. This becomes a
Catch-22 situation. Since it costs so much to develop new models, auto companies often try to
sell as many copies of the new product as possible, even if it takes four or five years. But the
older a car's design gets, the greater the chance that it will lose market share to competitors with
fresher models. And worse yet, if it takes five years to develop a new model and a company
wants to sell that model for another five years, then it must project what the customer's
preferences are likely to be ten years from now. This is not only a tremendous challenge, it
requires a leap of faith to take it to its logical conclusion.

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