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From product first to better products; electronics, aerospace, and consumer goods industries gain from product lifecycle management; business initiatives and execution strategies aim at growth and profitability.

Article Excerpt
Brad MacLean, vice president of development and engineering with well-known office furniture maker Herman Miller, Zeeland, Mich., knows about Product First.

"Innovative products can redefine an entire category," says MacLean. "Prior to the introduction of our Aeron chair, for example, it was unheard of to pay top dollar for an office chair-for everybody, not just executives. That product redefined the market for well-made chairs and expanded it fivefold."

It's obvious that good products are the essential starting point for any successful manufacturer. Product First is both a business strategy and a conceptual framework for making resource allocation and investment decisions, based on the belief that companies exist to make great products.

What's new is that an increasing number of companies are discussing what business initiatives and execution strategies result from a Product First strategy, and how different industries, based on their relative product lifecycle lengths, approach the discipline.

When a manufacturer invests in systems that support product lifecycle management (PLM), the benefits include cost savings--for example, by eliminating duplicated efforts and automating manual tasks such as design changes. But unlike other technology solutions, product lifecycle management also is an opportunity for revenue gain, even in somewhat unexpected places. (For a definition of PLM, see the sidebar on page 3A.)

"Major original equipment manufacturers' [OEMs] share of their product aftermarket often is only single or low double-digit percentages," says Skip Shaw, managing partner of Accenture's Aerospace and Defense practice. "Effective product lifecycle management can allow a higher capture rate for that part of the business--the product aftermarket--with the highest potential profit margin."

Why hasn't recognition of the business value of a Product First strategy come sooner? It may be that too many companies in recent years have been distracted by mergers and acquisitions, schemes to reduce working capital, and attempts to fine-tune front-office, back-office, or distribution operations.

MIT professor Dr. Charlie Fine, author of the book Clock Speed: Winning Industry Control in the Age of Temporary Advantage, is familiar with the problems companies have had with installing "solve-world hunger" enterprise systems that were overly rigid, locking the company into business processes that weren't always the best fit.

"It's like pouring concrete over your business processes," says Fine. "If you're in a rapidly changing environment, that's deep trouble. The faster the pace of the underlying businesses, the more flexible the systems need to be."

Product First recognizes that customers know companies by their products, not by their Wall Street strategies. In addition, B2B buyers are loyal to those vendors whose products and services are of consistently high quality.

"Product development is partly art and partly science," says MacLean. "It's also really hard-so we try to be very strategic about our product development efforts and our investments."

MacLean says Herman Miller has a corporate culture that is hugely supportive of product development and innovation. "A passion for great products is wired into our DNA. People come to work every day thinking about products that really wow the marketplace and create new value for customers."

MacLean also stresses the collaborative nature of Herman Miller's relationships with prominent industrial designers and resellers, helping it to gain keen insight into what customers want and how they want it. Increasing the collaborative nature of these relationships is a big reason Herman Miller invested in Windchill, a product lifecycle management solution from Needham, Mass.-based PTC.

To further the discussion about what follows from Product First, PTC is introducing a Product First roadmap (see sidebar, page 4A) that associates the defining goals of a manufacturer with the initiatives and execution strategies that allow attainment of those goals.

For any manufacturer, two overriding business goals stand out: growth and profitability. Successful companies pursue both goals simultaneously. However, in recent years, experts say the stress has been too strongly in the direction of profitability, to the detriment of growth potential.

For example, many manufacturers made investments in enterprise systems-solutions whose primary value is to cut costs through inventory reduction and increased capacity utilization. Laudable goals, no doubt, but at the end of...

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