THE AGILE PRODUCT AND PROCESS DEVELOPMENT STRATEGY

by Dr. Ng Yan Goh,Ph.D.

It looks like we have to celebrate the Kong-Xi Raya with the very gloomy economic outlook for the year of the tiger. However, the leaders of all sectors need to have the heads above water and be positive, bold and agile like the tiger to get the critical mass into positive productive mode of operation in order to steer the nation out of the economic doldrums. 

It is unfortunate that we have to buy local only when there is a currency crisis or an economic downturn. I spent many years in the United Kingdom during the period when England has gone through the most drastic industrial transformation ever. England survive the change due to a number of very significant factors namely the education system, the knowledge base, the very established R&D infrastructure, the loyalty and patriotism to British products, and the abolishment of government protection of the British companies. In the process of global competition, Britain has lost bulk of the automotive industries to foreign companies like Ford, BMW and PROTON. 

In the world of free enterprise, the US economy is of a different scenario where anyone with the innovative and creative capabilities can become instant success if the products or services are widely accepted by the American market itself. The success of Microsoft, Yahoo, Netscape, Creative Technology (founded by a few Singaporeans) and many others are the result of the new systems of business financing through venture capital funding. 

One of the biggest challenges for the Malaysian companies is how to convince or influence the Malaysian public to buy made-in-Malaysian products. Maybe what we need to do is to audit the government and private sectors and establish the ratio of imported against local products in these establishments. We may not have got away with the mind-set that imported products are always better.

In order to encourage people to buy local we have to build up public confidence. As a regular public speaker I have to use the extension cord with multiple power points. What frustrated me the most is that those with the SIRIM label may give more problem than those made by foreign companies. Besides quality management systems we also need product quality standards. 

Professor Michael Porter, the world renowned guru on strategic planning, when visiting Malaysia recently commented that a lot of Malaysian companies lack the core competencies and usually suffer badly during the economic downturn. In other words, a lot of Malaysian companies may not have own products and unique proprietary services which differentiate themselves from the competitors. I would like to share with you the model for agile product and process development(sometimes refer to as New Product Development) as a potential formula to get us out of the economic crisis. In order to achieve that we need to review the critical areas for new product development (NPD) to ensure a resounding success.

1) The Education System
Much has been said about the importance of the education system and the need to develop new generation workers to be creative and innovative. The Japanese education system incorporate the curriculum to instil the culture of "Kaizen" (in English, continuous improvement), the Americans are, at least in the State of Pennsylvania, trying out the implementation of Agility at pre-Schools.

The emergence of smart schools, virtual classrooms, virtual universities and the like are just some of the complementors to the current education systems.

In this globally competitive world we should not packaged students into streams and expect them to be functional specialists or stereotypes that when they graduate they become inflexible. In that way they lose the power of creativity. We need to instil Kaizen, Agility or the equivalent so that they can fit into the enterprises easily. 

2) the Knowledge Base
We have a lot of work to do in terms of retaining the knowledge base otherwise enterprises suffer tremendously whenever there is staff turnover. If the management failed to manage the natural groupings in the enterprise when a non-performing or disgruntled employee leaves the organisation, a whole lot of them may leave together as an act of spite or selfishness. The knowledge base may also leave with the people. 

It is important to document the standard operating procedures (SOP) as part the operations and quality management systems. These SOP's are used for the purposes of training new hires as well. The knowledge base can be in manual filing or computerised data base. There is a need for a secured back-up in case of fire, theft, accidental damage of the copy or a sabotage. 

There is a possible syndrome that the people are not motivated to document the SOP for fear of losing control of the knowledge or competition from colleagues who can do the same job even more efficiently. The management have to convinced the people of the benefit of higher quality of products and services and hence profitability and growth for the organisation. 

3) R&D 
In a rapidly changing world, the R&D has to be a core business process rather than a functional department. The productivity will go up given the cross functional inputs from other people in the organisation. One good example is the concept of serviceability of the product whereby whenever there is a technical problem of the product we do not need an expert to open up the product and service it. 

We have been wanting to create R&D capabilities but unfortunately we have not established a sound R&D infrastructure to attract people to carry out R&D. We have the preconceived ideas that only engineers and scientist can do well in R&D and that restricts our choices of people who can perform the job. Try carrying out a survey on how many computer science graduates compared with other graduates who have achieved excellent results in software R&D. 

The more important element is the conducive environment for R&D. This complemented by good and effective leadership will definitely encourage more people to enjoy R&D work. 

4) Agile People
It is assumed that for agile product and process development, it is necessary to have the agile people mentality in place. The marketing, sales, manufacturing, purchasing, materials management, design engineers, production personnel and quality guys have to work together in order to come out with the right products and the supporting processes without having to investing heavily on new facilities. 

5) Time to market 
Time to market is becoming a marketing weapon that calls for a lot of innovation and creativity. Compaq used to excel in time to market by coming up with new personal computers faster than anybody else. Dell uses the Internet to sell PC and expects to rake in US1 billion sales in 1998. Time to market does not only restrict to technology but also to innovative service 

6) The Banking Industry
The Malaysian banking industry is very different from those overseas.

I remember as a student, I can get credit card and even short term overdraft facilities from the Barclays Bank at the Abercomby Square of the University of Liverpool. 

There is a saying in Malaysia that the bankers here will take away the umbrella during the "raining days" or "financial crisis". This is inspite of the fact that you have to put up properties or fixed deposits in order to enjoy secured banking facilities. It is very difficult to have the local bankers aggressive enough of wanting to finance new product development. 

This is probably one reason why we see very little efforts in developing new products in Malaysia. It is very difficult to convince any banker who operates on the restrictive cash-flow model as the basis of evaluating business viability. Worst of all you may have to provide business track record. 

7) The Venture Capitalists
With the recent World Trade Organisation guidelines, the Malaysian financial market will eventually open up to the foreign bankers and insurance companies with the possibility of having 51% or more foreign equity. This is definitely going to help the local economy if the venture capitalists are allowed to operate in the country. Typically the venture capitalist will take up a certain percentage of the equity of the company, provide the seed and working capital, help the company to grow locally and globally, get the company to be publicly listed here or elsewhere, sell the equity back to the founders of the company for a premium prior to listing and get out of the company or continue to provide capital if needed. 

8) Virtual partnering
In an agile enterprise, we can look at virtual partnering as a innovative way of developing new products and getting them into the market soonest possible to attain time-to-market advantage. We have to look beyond the geographical boundaries and into the global village for the partnering amongst the suppliers, contractors, customers and even, competitors. This temporary partnering will render the leveraging of all resources and yet remain very competitive. 

9) Government Grants or Incentives 
Grants and incentives are added encouragement to local enterprises to embark on new product development. The grants shall be processed quickly and to ensure proper use of the grant professionals can be appointed by the government to oversee the progress of the project. Upon successful development of product and process, the government may give further incentives to help the enterprise market and promote the new products locally and globally. 

10) Entrepreneurship 
Entrepreneurship can be developed and is an important element in new product development initiatives. NPD implies a certain degree of calculated risks and not all products become successful. The entrepreneurial spirit must be there to lead the enterprise through product development, marketing, innovation, product and process improvement, and profitability. 

Conclusions 
We can have better strategic economic development given the ability and competencies in new product development. The challenge is to be self-sufficient so that the economy will not be subjected to too much of turbulence. Further to that is our ability to make sure that there is always trade surpluses. Having own products means that the enterprise has the added assets of products and knowledge which can be turned into cash anytime. The economic downturn may provide us the opportunities to look at NPD as the weapon for thriving in chaos.