It starts with the Big Idea. Gets enriched by customer response. Gathers pace with design. Progresses to prototypes. And, ultimately, draws in the entire value chain. BT presents the benchmarks from India's product development wizards.

By Radhika Dhawan

The Mahindra & Mahindra team that developed Bijlee, India's first commercially-viable electrically-operated 3-wheeler, consisting of (clockwise from left) Managing Director Anand Mahindra, A.D. Dande, P.M. Fernandes, A.D. More, L. Dwarakanath, J. devare, T.V. Ranganathan, K.V. Jangle, A.V. Javeri, S.V. Nagarkar, F.A. Pereira and S.V. Dahanukar, worked on the product as a skunkworks project, sans rules, targets and budgets

''It's all about structure and discipline, discipline, discipline.''
Pawan Goenka, 44, Senior General Manager (R&D), M&M

''It's about letting people tinker around with what they want.''
Anand Mahindra, 43, CEO, M&M

It's a dual blueprint that the Act Of Creation-that serious business of conceiving, midwifing, and giving birth to a new product-follows. For corporate labs in search of that new product which will revolutionise the marketplace, the truth does not lie in between. It lies at both extremes. New product development is both perspiration and inspiration, both persistence and serendipity, both work and play.

In April, 1999, Mahindra & Mahindra (M&M) unveiled the Bijlee-the first-ever commercially-viable electrically-operated 3-wheeler. A classic skunkworks project-worked on by a 14-member team without a deadline, budget, or even an assurance of success-the project took exactly 6 months. It followed virtually no rules.

But, at M&M's Industrial Design & Manufacturing (IDAM) Centre in Mumbai-electronic security clearance is required to enter-a completely different approach to product development is evident in the clay model of a mystery-vehicle, code-named Scorpio-project cost: Rs 700 crore-shrouded in secrecy. Its development, spread across 5 continents, is worked on, monitored, controlled, and reviewed by a 120-strong team.

Yes, for every Bijlee, there is a Scorpio. For every inspiration-driven Tata Indica, there is a market-driven Bajaj Caliber. For every product born of brainstorming, there is one structured with systems and method. Elaborates Mahindra: ''Creativity and incubator projects, like the Bijlee, are just as critical to us as the Scorpio methodology. Every attempt to develop a new product needs to be structured according to its needs.''

That's because the linkages run across the organisation. Since strategy begins with the customer, working its way backwards to align the organisation's activities to meet her needs, the connection between product development and strategy is a visible one. Says Mangesh Korgaonkar, 50, Head, School of Management, Indian Institute of Technology (IIT), Mumbai: ''An integrated strategy, linking development, manufacturing, and marketing into one chain, is necessary.'' For example, at Titan Industries, which develops between 70 and 100 new watches every year, every new model flows from 3 central strategic considerations: boosting brand value, lifting marketshare, and adding to profits.

In fact, it is the company's strategic objectives that must necessarily determine its approach to new product development today. For companies operating in nascent markets, or entering new areas of business, or-at a fundamental level-seeking to redefine their industries, breakthrough new products are essential. And, as global examples show, such products are best-developed in relative isolation from everyday activities: from General Motors' Saturn to IBM's Thinkpad notebook, many products that have set new standards in their industries were born of skunkworks projects, with complete freedom for the teams.

On the other hand, no company can survive on new products alone. It will also need to upgrade its existing products on a continuous basis, making incremental improvements. And product development aimed at meeting this strategic objective is better-served through a disciplined process, with clearly-defined targets for every stage, continuous interaction with the other functions, and more than one eye on cost, delays, and manufacturability. That's why growing new products must be a mixture of the two approaches, and not a binary choice. As James Abraham, 34, Director, Boston Consulting Group, puts it: ''Sometimes, there are accidents which are great-like Post-It notes or the microwave oven. But without a good process in place, it cannot work.''

Whether the starting-point is customer need-mapping or a spark of genius, the 3 fundamental requirements-top quality, best speed, and lowest cost-must be met. Cost, in particular, has become the single-most important consideration for new product development today. Not only has the recession dampened the customer's willingness to pay premium prices, steepling competition in every business is making it imperative for companies to offer the highest value at the lowest price. Since it is at the development stage that 80 per cent of the cost of manufacturing a product is decided, economising must begin in the labs. That's why, for instance, TVS-Suzuki and Bajaj Auto use the technique of target-costing-determining the price of the product and working backwards to fix the maximum-acceptable cost-to develop new products.

Blow Plast's product-development team comprising (from left) Pravin Pasricha, Kurien Potha, CEO A.G. Ware, Mukhan Khanna, Pallavi Puri, and Girish Ganraj routinely subject its models to severe tests, replicating actual conditions of usage to test new product features while using software-enabled concurrent engineering techniques to speed up the process

Indeed, designing according to cost yokes product development firmly to strategy. In January, 1997, the Chennai-based TI Cycles needed a new product to meet a dire need: reviving the comatose geared-cycles segment. Exactly one year later, it had put the Hercules Top Gear in shops-a product that has fuelled a 20-fold growth in the segment. How did CEO A. Vellayan develop this new product and take it to market in one year-flat? The answer lay in understanding the real impediment to the acceptance of the product, so that it didn't waste its resources on abortive designs.

When this was identified as the lack of reliability of gears, TI Cycles decided to use the best and safest gears (from Shimano of Japan) and designed its product around this component. Managing costs was a critical issue because the gears were being imported. This was achieved by maintaining strict control on material costs, and through cheaper outsourcing-both decisions being taken as part of the product development-and not the production-process.

Undoubtedly, new product development has to be managed like any other process: with clear objectives, a specified sequence of activities, budgeted resources, performance standards, and feedback loops. Avers Nobi Gupta, 52, Director (Marketing & Sales), Videocon International, who is the main facilitator for the Videocon Group's new product development processes: ''Your processes must have a high degree of throughput, and that can only happen if you have the systems in place.'' Adds Murli Ramachandran, 38, Director, KPMG-Peat Marwick, who heads its Operations practice: ''You have to provide the organisational support that goes with it.''

Faced by these challenges, just how should new product development be managed? To find out, BT examined the methods-and the madness-at a handful of companies that have actually developed entire products from scratch. The target universe of our research was a purposively-chosen sample of companies where new product development is a planned and continuous process, culminating in products that have a unique position in the Indian-or global-market in terms of features, styling, or sales. BT blueprints the methods being used by India's Hottest Product Development Companies-the Superdevelopers-to meet their strategic objectives.

Strategic Ideas
THE STRATEGIC OBJECTIVE: Put Innovation At The Heart Of Every New Product Concept So That It Meets The Customer's Unperceived, Unarticulated Needs.

Achieving the right mix of structure and freedom is key to success in generating that Big Idea for a new product. A systematic process is necessary. At luggage-manufacturer Blow Plast, the first week of the month begins with a meeting, headed by the CEO, and attended by the functional heads of manufacturing, sales, R&D, and marketing, purely for the purpose of product development brainstorming. Emphasises Arun G. Ware, 50, CEO, Blow Plast: ''Set the standards, and the creativity will follow.''

While that may explain how the Superdeveloper sets up its idea-management superstructure, how is the cauldron where the ideas must boil over be forged? Ideally, as a hotshop of creativity, with defined targets, but without controls over the ideation processes. The leisure to experiment is crucial.

It was the freedom to experiment that led to the development of Titan Industries' metal-plated Fastrack watches. The designers were trying out a gold-plating process-named Physical Vapour Deposition, it involves vaporising the gold at high temperatures for even deposition-with other metals, and found, to their delight, that it could be made to work to produce coatings of other colours too. So, it was applied to create the multi-coloured Fastrack range.

At M&M, the activity is enshrined with the nomenclature of Sandpit projects, where the R&D staff is encouraged to mess around with new concepts. Discloses S.V. Nagarkar, 61, Executive Vice-President (Corporate Project), M&M, who headed Team Bijlee: ''I received my inspiration from something I saw on TV. And the organisation backed me.'' Indeed, when he wanted his company to develop a new car, CEO Ratan Tata gave TELCO only one specification: the product had to be world-class. Beyond that, the development team had complete freedom for their design, without having to restrict themselves in any way.

At Titan, ideas can originate with the marketing brief; on the shopfloor, as a spin-off from a new material or process; in the lab, as a R&D idea, as was the case with an ultra-slim movement that led to the design of a new range of products; or from the design group. No matter where it comes from, every idea is made to pass through a stringent 5-point test, covering styling, costing, sourcing, schedules, and resource-requirements. Only then does the development process actually get under way. Says Kaushik Ramanathan, 32, Design Head, Titan: ''The ideas that come through these 3 processes are then filtered through discussions, where people from marketing, design, and manufacturing are present. We look at the ideas, vet them, and decide which ones are immediately possible to implement, and which will take more time.'' Only the best ideas survive.

THE NEW PRODUCT DEVELOPMENT LESSON: Big Ideas can originate anywhere in your company. Set up a formal system for channelling them, testing them, and converting them into product concepts.

Strategic Resources
THE STRATEGIC OBJECTIVE: Develop Only Those New Products That Have The Best Chance Of Success In The Marketplace Given The Company's Capabilities And Competitive Strengths.

Resource-allocation is a key issue for the Superdeveloper. Having a multitude of products in an advanced stage of development at the same time puts so much strain on the organisation that regular operations are hampered. The strategic approach, therefore, is to align the new products to work on with the company's requirements in the marketplace-especially after factoring in the level of competition for the product.

For instance, when Dr Reddy's Laboratories started on its drug-discovery efforts in 1993, its priorities were clear: it would only work in those therapeutic areas where there was a clear need for a breakthrough product, and the market wasn't too crowded either. Also, the product should offer an opportunity for achieving critical mass. And since there is a considerable amount of hit-and-miss involved in creating a molecule-as opposed to, say, an industrial product-the company's resources could not be spread too thin if its efforts had to succeed. Points out A. Venkateswarlu, 58, President, Dr Reddy's Research Foundation, the company's R&D centre: ''There was no point pursuing half-a-dozen ideas. The resources had to be focused where we had a real chance of achieving a stream of breakthroughs.'' That was how it picked on diabetes and anti-cancer drugs as its target-areas.

Philips takes the same approach. Every calendar year, it picks a few products in one product-category for launching new models or upgrading existing ones. In 1996, the CD 2-in-1 was introduced; in 1997, the stereo-radio recorder-line was upgraded; and, in 1998, the CD-player range was expanded. Explains Vijay Gosavi, 33, Senior Product Manager (Audio Systems), Philips: ''The choice of the category depends on competitive forces, and whether the life-cycle of that particular product is nearing maturity.''

In its most focused form, the development process can be narrowed down to one product. That's why TELCO and M&M, for instance, make it a point to have only 1 new product on the blueprint at a time: the Indica between 1995 and 1998, and the Scorpio, at present, respectively. Agrees K. Munshi, 52, Professor & Head (Industrial Design Centre), IIT, Mumbai: ''If you don't decide where you want to focus your resources, cost- and time-overruns can become endemic.''

To create an appropriate decision-making matrix, the Superdeveloper classifies its new product development efforts on the basis of the resources it needs. M&M, for instance, has 3 levels of such projects:

• Strangers, which involve designing a new product from scratch.

• Repeaters, which are upgradations, such as styling changes.

• Runners, which entail making small changes to specific components or features.

The first variety, to which the Scorpio belongs, needs full-time teams of upto 100 people, upto 4 years to complete, and top-management reviews every month. The second and third genres-of which about 10 and 20, respectively, are under way at any given point of time-need only part-time teams, and, importantly, no top-management reviews. By keeping the mix right, M&M ensures that its capabilities aren't stretched too far. Says Mahindra: ''So long as you are aware where your resources are being used up, and what's on your plate, you're fine.''

Resources don't mean only capital, though. Different kinds of products need different kinds of development inputs, and ensuring a mix can prevent resources from being over-stretched. Where development requires engineering skills, for instance, it is essential to categorise every new product as being high on either the technical or the humanistic aspect. The former needs greater technological development-as creating a smaller and faster computer-chip might. In the case of the latter, the focus will be on usage and appearance-as a notebook PC will require, for instance. Explains IIT's Munshi: ''It works this way: the less advance the technology behind a product has made, the more must the company developing a new version work on the technology. But where technological improvements can only be incremental, attention must shift to the humanistic aspect.''

In other words, these 2 factors need different kinds of skills. So long as all the new products that a company is developing do not belong to only one end of this scale, it will be able to allocate its human as well as infrastructural resources between them, without starving any of them. When scooter-maker LML, for instance, was developing its 60-cc Trendy and and 75-cc Sensation, outsourcing technology from the scores of labs that have sprung up in Europe was easy. And since the company had adopted the new, tubular chassis-on which different models can be constructed-the focus was on the humanistic aspect: looks and ease-of-use. Which is why LML has concentrated its product-development resources on snazzy design and new-age colours.

Gauging the resource requirements up-front is particularly important for developing products with short life-cycles, such as consumer electronics products. For, trends are often too short-lived for a company to be able to develop a new product from scratch to cash in on it. The way out? First, plan new products for launching years down the line-which, in turn, means being certain about their success, and ensuring that sufficient resources are available for the process. And second, design common platforms, and simply develop new products on them with variations in features.

These are the twin strategies for product development adopted by the Videocon Group. Says Gupta: ''You are actually doing much more work in product development than the physical rate of change in the marketplace. The reason that we can generate a rapid stream of products is the way we look at the architecture of the product. There is a dedicated chassis on which every product is built. It's like using a Lego set.'' So, Videocon invests the largest amounts in developing the basic platforms, which will not change quickly, with smaller resources being earmarked for designing the additional features that will differentiate the final products from each other.

THE NEW PRODUCT DEVELOPMENT LESSON: Audit the fit of every new product concept with market realities. Then, distribute your resources between them so as to maximise their chances of success.

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