Volume 30 September 16, 2003
Message From Charles Loew
Comments From Our Readers
New On The Maset Web Site
Helpful Hints from fellow Practitioners
Top Ten List
Feature Of This Issue
Second Feature Of This Issue
Coming in the Next Few Issues
Welcome to MASET News. A monthly publication dedicated to the communication between MASET and our many interested friends, customers and potential customers
MESSAGE FROM CHARLES LOEW:
The new course added to Maset resources this month emphasizes the ability to design products that can be manufactured with high quality and low cost, a very important step in keeping an organization on the leading edge in its industry.
Sales and Marketing are important keys to any successful business. We will be adding a number of workshops and Products and Services to the Maset capability over the next few months. The first Product and Service added this month deals with creating and maintaining your organization's image. More additions will be arriving soon.
During the last few months there has been a lot of debate and media attention to the "exporting of jobs" from America to low-wage areas around the world. The feature article, "Flying High In Fashion", addresses this issue regarding the fashion industry. Upon reading this article, you will find it not only fits the fashion industry, but it can be successfully applied to any industry.
The second feature article is the third part of an article written by Ted Squires, "Identifying and Prioritizing New Product Opportunities". I hope that you have found this article of interest and helpful in your efforts to get new products developed that meet your customers' needs.
COMMENTS FROM OUR READERS:
"It has been at least three years since we were seat mates on the way to Asia. I am on my way back from Thailand and could not but help think of you and the message you and your group offer. Since that chance meeting years ago I have read and enjoyed every single issue of Maset News. You bring insight, imagination, and hope to those of us in middle management. I continuously forward your news letter to Senior Management knowing that they can't ignore the voices they are hearing forever! Thanks for the continued inspiration to be the best!" - Massachusetts
NEW ON THE MASET WEB SITE:
Maset has added another popular course developed and taught by our own Ted Squires, entitled "Design for Assembly (DFA)". It is an excellent course for any organization involved in the design of products for production.
Introduced this month is the first Product and Service targeted at the Sales and Marketing parts of an organization, "The Importance of Image", which will assist your organization in the creation of a highly favorable impact image.
HELPFUL HINTS FROM FELLOW PRACTITIONERS:
When involved in a presentation, I listen attentively and actively to what the participants are saying. I never assume that I know more than the participants. It's not until I understand clearly what they are saying that I may respond with a recommendation.
TOP TEN LIST:
Key Learnings in - New Product Success (Last Five of Ten)
1. The firm has a well-conceived marketing plan, which details the product launch plan.
2. Be organized for success.
3. Receive top management support.
4. Insure that the products under development are synergistic with the existing technical and marketing structures.
5. Products aimed at attractive markets do better.
"Reprinted with permission" of Ted Squires. Contact us if you would like the expanded version of this list.
FEATURE OF THIS ISSUE:
FLYING HIGH IN FASHION
What can save the United States’ investment in this industry?
By A. Blanton Godfrey
I recently participated in a special conference called "Reindustrialization: Prospects for the Fashion Industry," which brought together many top executives from the fashion and home furnishings industries. The conference’s unofficial intention was to explore how—or if—fashion products could continue to be manufactured in the United States. The industry is only too aware that low-cost labor in developing countries may soon become an insurmountable obstacle.
The answer to this fundamental question was a resounding yes. If we drive waste from all processes and deal with factories close to market. If we partner with workers and create high-quality, fast-response production. If we remove unnecessary inventories, reduce unsold or discounted goods and reduce missed sales opportunities.
To someone with my background, this all sounds like quality management. For me, the only surprise was how often the issue of speed to market was cited as the critical success factor. Close partnerships with key customers were also considered critical. Without these, it’s almost impossible to have the information needed to design, produce and deliver the right product to the right place at the right time.
Professor Medini Singh presented a case study that he, Nelson Fraiman, Linda Arrington, Carolyn Paris and other colleagues at Columbia Business School compiled on Zara, a Spanish designer, manufacturer and retailer that has stunned the fashion retail world with its unique design model, production and sales. It creates more than 10,000 designs a year but produces only 500 to 700 items from each design. With more than 450 stores, this means each store gets only a handful of each. Customers must buy the items they want quickly or they’re gone; the clothes are never gong to be around long enough to buy on sale.
The keys to Zara’s success are obvious. The company moves fast. It often identified which styles are not at fashion shows and moves copies into production even before the original designers can. It designs, produces, distributes and sells its products itself. Each store manager watches what customers buy and don’t buy, and what they wanted but didn’t find. Managers report this information daily to the company, and it acts.
Deirdre Quinn, senior vice president of the fashion company Lafayette 148, echoed this message. After years of working for others, she and her partners started a company in New York’s Chinatown. They now have a seven-story factory there. Their key success moves included partnering with their production people, investing in design and moving quickly. To ensure fast response to the company’s New York retail customers, 85 percent of their product is made in the city. In just a few years their sales have grown from $6 million to a project $36 million this year.
Bob Coppage of VF Corp., the world’s largest apparel maker, presented a case study from the producer’s side. VF has partnered with one of its large customers, J.C. Penney, to deliver a custom line of product to each of Penney’s more than 1,100 stores. By investing heavily in information technology and setting up flexible manufacturing plants and distribution strategies, VF now creates individual shopper profiles for each store, and then produces and delivers custom product line packages. This approach demands an intense customer focus, design and manufacturing flexibilities as well as incredible speed.
Tom O’Connor, president of sales for Springs Industries, added a supporting view to these points. Springs is a large $2.5 billion company focused on home furnishings. Ten major accounts cover 85 percent of its sales. The company created close partnerships with each of these retailers to design, produce and deliver a wide range of high-quality products quickly. Whether they’re produced in the United States or in partner factories abroad is a function of a complex model of distribution and labor costs, quality and need for speed. For many of Spring’s product lines, the need to design, produce and deliver quickly means these products are manufactured in the United States.
Herb Spivak, executive vice president of New Balance Athletic Shoes, stressed the issue’s human side. The company’s sales have grown sixfold during the eight years Spivak has been there. He attributed New Balance’s success to moving from piece-part work and pay to team-based production and pay to today’s model of creating a team from the entire company. Consequently, productivity and quality have both gone up, even though New Balance continues to manufacture all its product in the United States.
The lessons learned by these fashion companies apply to all industries. What matters most is meeting customers’ needs better and faster than anyone else. The only way to do this is through close, working, real partnerships with all members of an organization.
About the author
A. Blanton Godfrey is dean and Joseph D. Moore Professor of North Carolina State University’s College of Textiles. He is the co-editor of Juran’s Quality Handbook, in its fifth edition, and co-author of the recently published Modern Methods for Quality Control and Improvement, Second Edition (John Wiley & Sons, 2001). E-mail him at email@example.com. Letters to the editor regarding this column can be e-mailed to firstname.lastname@example.org.
Reprinted with permission from Quality Digest, where this article appeared in June 2002, on page 16.
SECOND FEATURE OF THIS ISSUE:
Identifying and Prioritizing New Product Opportunities
Trends in Product Development and Process Improvement
(Part Three of a Three-Part Article)
By Ted Squires
In the first part of our article, we covered the first of four steps for identifying and prioritizing new product opportunities. We proposed a structure for the firm to brainstorm new product and market ideas. We then recommended a gap analysis to locate existing market offerings and spot market areas that were not being served. These are identified as our potential product opportunities.
In the second part, we outlined a method for selecting those opportunities that seem to best match our market and technology strategies along with our business infrastructure.
So while we seem to have potential opportunities that are matched up against our markets, technological ability and business infrastructure, we have not really compared the relative risks that would occur when tackling any of these opportunities. In this, the third and last part of our article, we tackle the issue of risk for our entire portfolio of new opportunities.
Step #4 - Overall Risk Assessment
The final step is to identify favorable risk opportunities. This can be done by matching the Opportunity Attractiveness findings (created in step #2) against the Business Attractiveness findings (from step #3). An easy way to do that is by placing the assessment findings on a two-dimensional grid using their respective index scores.
Opportunities, which score strongly in both the opportunity attractiveness and business attractiveness category, are placed in the Good Bets quadrant (upper right) in their appropriate positions.
Correspondingly an opportunity, which fit well with the firm’s business strengths, but was relatively weak in the opportunity attractiveness assessment, would be placed in the Conservative Bets quadrant (lower right).
Or an opportunity, which scored highly on the opportunity attractiveness assessment but did not score well in the business attractiveness assessment, would be show up in the High Risk Bets quadrant (upper left).
And lastly an opportunity, which had relatively low scores in both the opportunities attractiveness assessment and business attractiveness assessment would be placed in the lower left quadrant.
Our Four-Step Process
Step #4 of our four-step process—Picking the Best Bets
While the scaling of the axis is arbitrary and is based on the opportunity and business assessments indices from steps #2 and #3 mentioned in previous parts of the article, if each opportunity is consistently evaluated, opportunities will be placed according to their relative overall attractiveness to the firm.
The key to using this analysis effectively is to know the mindset of management and where it wishes to take the organization. If the firm has just been through major turbulence, then selecting an opportunity, which fell into the "conservative bet" quadrant, could be quite appropriate. Activities in the both left quadrants really do entail moving the firm into new areas and developing as yet non-existent infrastructure.
On the other hand, if the firm is poised for growth, moving into the "high risk bet" quadrant might be exactly the right move provided management is prepared to make investments in both the product and organization. A final cautionary note here: When exploring the "high risk bet" quadrant, management must take great pains to not punish less-than-successful attempts.
This analysis can be expanded to cover expected rewards while simultaneously looking at risks. The rewards are based on expected ROI and cash flows. These calculations are fairly straightforward: reasonable cash flow models can be set up on a spreadsheet using estimates for total market unit sales, market share percentage, sale price, cost-of goods-sold and investment dollars.
Cooper, Robert G. Winning at New Products, Reading, MA: Addison-Wesley Publishing Company, 1993. ISBN 0-201-56381-9
McGrath, Michael E. Setting the Pace in Product Development, Newton, MA: Butterworth-Heinemann, 1996. ISBN 0-7506-9789-X
THE QUESTION BEHIND THE QUESTION:
QBQ! (The Question Behind the Question) QuickNote #4
John G. Miller
Author of the QBQ! book.
"Why are customers so demanding
(and such a pain, too)?"
Not a very good question, is it? Where does it take us? It would be good to remember this:
The customer is NOT always right, but they're always the customer.
Too often "customer service" is an oxymoron (words that contradict) like Same Difference, Pretty Ugly, Legal Brief, Old News, Student Teacher, and Country Music (Sorry, folks, I couldn't resist!)
But not at The Build-A-Bear Workshop (TM). Have you been there yet? If not, go right now. Any idea what you do at Build-A-Bear? That's exactly right: You build a bear. Not just any stuffed animal, but your own personalized, customized bear! One that fits you and your personality. Now, beyond the service story and the fabulous concept created by Maxine Clark, there's some humor here, too. You put your kids in the car. You drive to a mall. You fight the traffic. And you play Elbow War with the mall crowd .... so you can BUILD YOUR OWN BEAR. Then you walk out saying, "Gee, we need to do that again real soon!" Why? Because you have had a marvelous guest experience!
Very cool, Maxine. And smart - because she gets it.
This former President of Payless ShoeSource truly understands. Though the on-fire ball of energy stands 4' 10", Maxine's 10 feet tall to those around her. Now why is that? Is it because she started an organization in 1997 with one store in St. Louis and now communicates with over 70 locations and 3,000 colleagues? No. Is it because the business is growing like a weed and a fun place to work? Nah. Is it because she's the Master of Ideas, Flawless Founder, and the Head Honcho with the Big Title? Well, maybe. But mostly she stands tall in the hearts and minds of many because she just simply gets it. And what is it that she and her associates get?
The business exists to serve both paying customers and hardworking and committed colleagues. It's not about the Company or her, it's about others. And from this core value comes a practical day-to-day philosophy. One that works. One that the people can grab hold of and practice. Every "trainee" class that comes through "Bearquarters" hears it straight from the Inspiring Icon herself. So simple, yet so profound. Maybe it'll help your organization. Here it is:
"There is virtually nothing we can do for a customer that will put us out of business."
Example: A customer wants to borrow the phone. No problem, help yourself. But they might make a long-distance call? It's OK, it won't hurt us! But what if they call China? Well, that'd be weird, but they do have Panda Bears over there!
Build-A-Bear Workshop's approach is the absolute opposite of the "Religion of Business." Religion, in any context, is about rules, rites, regulations, rituals, and routines. What Maxine and Team are espousing and doing is customer care, flexibility, grace, empowerment, joy, ownership, passion, commitment, and - personal accountability. They not only Build A Better Bear, they Build A Better Question, like this one:
"What can I do right now to serve the customer?"
What would that question do for your organization in this economy? Maybe great things. Do you need to be in retail to apply this? Hardly. As always, the answers are in the questions. Keep building better questions - and go to The Build-A-Bear Workshop today and make a friend!
COMING IN THE NEXT FEW ISSUES:
Ethics in Business
Six Sigma for Small Business
Sales and Marketing workshops
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