www.myCNI.com.my www.oobey.com R&D TODAY: ADDRESSING AND ENHANCING RESEARCH & DEVELOPMENT’S EFFECTIVENESS Concepts, Case Studies, and Debatable Ideas Kenny Ong CNI Holdings Berhad
Jan 23, 2015
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R&D TODAY: ADDRESSING AND ENHANCING RESEARCH & DEVELOPMENT’S EFFECTIVENESSConcepts, Case Studies, and Debatable Ideas
Kenny OngCNI Holdings Berhad
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In other words…
• How do we make R&D more Effective?
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Before that…
• How is R&D not effective?
1.Top Down – Process problem
2.Because I can - Competency problem
3.Poor business value – Ignorance problem
4. No Budget - Alignment problem
5.Not-Invented-Here – Ego problem
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Contents:
A. How do we make R&D more Effective?1. Know Your Business
2. Research
3. Reverse Marketing
4. Align
B. R&D Today → RD&D
C. Issues and Challenges
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R&D For What?
R&D
Product Process
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So…What is our Product?
Research → Develop → Sell → Improve
Coffee?
Shampoo?
Events?
Marketing Plan?
Customers?
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A1. Know Your Business
The anchor for all decisions
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About: CNI
1. 20 years old
2. Core Business: MLM
3. Others: Contract Manufacturing, Export, Trading, eCommerce, F&B retail
4. Malaysia, Singapore, Brunei, Indonesia, India, China, Hong Kong, Philippines, Italy, Taiwan
5. Staff force: ± 500
6. Distributors: 200,000
7. Products: Consumer Goods and Services
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Intro: MLM
1. Sell through people
2. Relationship & people skills
3. Compensation Plan
4. Follow-up
5. Integrity
6. R&D
7. Training
8. Functions & Events
9. Tight regulations
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Intro: CNI
CNI’s Business Model background
Factory CNIE
DC
SPLeadersCustomers
R&D
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What is the Business Model?
USP
Market Discipline
Profit Model
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Business Model: USP
Unique Selling Proposition (USP)
=
Targeted Customer
=
Core Buying Purpose/ Customer Value Proposition/ Job To Be Done (JBTD)
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Business Model: USP
“The Product is Not the Product”
• What is the customer really buying?
• What is the “Core Buying Purpose”?
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Business Model: USP
1. Insufficient WEALTH
2. Insufficient ACCESS
3. Insufficient SKILL
4. Insufficient TIME
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Business Model: Profit Model
Revenue
CostMargin
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Business Model: Market Discipline
• Mamak stall
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What are they really buying?
"They are the most innovative"
"Constantly renewing and creative"
"Always on the leading edge"
"A great deal!"
Excellent/attractive price
Minimal acquisition cost and hassle
Lowest overall cost of ownership
"A no-hassles firm"
Convenience and speed
Reliable product and service
"Exactly what I need"
Customized products
Personalized communications
"They're very responsive"
Preferential service and flexibility
Recommends what I need
"I'm very loyal to them"
Helps us to be a success
Product Leadership
OperationalExcellence
CustomerIntimacy
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Operational Excellence(low cost producer)
Ref: The Discipline of Market Leaders, Michael Treacy & Fred Wiersema; 1995
Product Leadership(best product)
Customer Intimacy(best total solution)
Strategy: Value Disciplines
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Operational Excellence
• Competitive price
• Error free, reliable
• Fast (on demand)
• Simple
• Responsive
• Consistent information for all
• Transactional
• 'Once and Done'
Operational Excellence
• Competitive price
• Error free, reliable
• Fast (on demand)
• Simple
• Responsive
• Consistent information for all
• Transactional
• 'Once and Done'
Customer Intimacy
• Management by Fact
• Easy to do business with
• Have it your way (customization)
• Market segments of one
• Proactive, flexible
• Relationship and consultative selling
• Cross selling
Customer Intimacy
• Management by Fact
• Easy to do business with
• Have it your way (customization)
• Market segments of one
• Proactive, flexible
• Relationship and consultative selling
• Cross selling
Product Leadership
• New, state of the art products or services
• Risk takers
• Meet volatile customer needs
• Fast concept-to- counter
• Never satisfied - obsolete own and competitors' products
• Learning organization
Product Leadership
• New, state of the art products or services
• Risk takers
• Meet volatile customer needs
• Fast concept-to- counter
• Never satisfied - obsolete own and competitors' products
• Learning organization
Strategy: Value Disciplines
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The McPlaybook*
Make it easy to eat• 50% drive-thru• Meals held in one
hand
Make it easy to prepare• High Turnover• Tasks simple to learn
& repeat
Make it quick• “Fast Food”• Tests new products
for Cooking Times
Make what customers want• Prowls market for new
products• Monitored field tests
*Adapted from: Businessweek , Februrary 5th 2007
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Operational Excellence(low cost producer)
Ref: The Discipline of Market Leaders, Michael Treacy & Fred Wiersema; 1995
Product Leadership(best product)
Customer Intimacy(best total solution)
Focus: Value Disciplines
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Operational Excellence(low cost producer)
Ref: The Discipline of Market Leaders, Michael Treacy & Fred Wiersema; 1995
Product Leadership(best product)
Customer Intimacy(best total solution)
Focus: Value Disciplines
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What does the Customer want?
* Treacy & Wiersema, The Discipline of Market Leaders, 1995
Product/Service Attributes Relationship Image
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What does the Customer want?
* Treacy & Wiersema, The Discipline of Market Leaders, 1995
Product/Service Attributes
Price
Quality
Time
Selection
√
√
Smart Shopper
Relationship Image
Operational Excellence: Quality and selection in key categories with unbeatable prices
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What does the Customer want?
* Treacy & Wiersema, The Discipline of Market Leaders, 1995
Product/Service Attributes
√
Brand
Time
Function
√
√
Best Product
Relationship Image
Product Leadership: Unique products and services that push the standards
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What does the Customer want?
* Treacy & Wiersema, The Discipline of Market Leaders, 1995
Product/Service Attributes
√
√
√
√
Service Trusted Brand
Relationship Image
Customer Intimacy: Personal service tailored to produce results for customer and build long-term relationships
Relations
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Business Situation vs. R&D
Upturn Flat Downturn
Fight Complacency
Sharpen Edge
Keep Momentum
Conquer
NPD Cycle Time
Improve Edge
Extensions
Counter Competitor
Innovation
Acquire
Profits
Build momentum
Sales
Cash Flow
Focused on ‘Breakthrough’
JV, In-source, Out-source
Eliminate bottom 20%
Improve Top 15% revenue-generating products
↓ R&D, ↑Sales
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A2. Research
Lies. Deception. Statistics.
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Problem…
“In business after business, 60% to 80% of lost customers reported on a survey just prior to defecting that they were satisfied or very satisfied.”
HBR March/April 1996
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Dangers of Best Practice and Benchmarking…
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Company Performance
high
low
‘Best Practice’ theories
low high
zero Performance
Trend line
“Selection Bias and the Perils of Benchmarking”, Jerker Denrell, Harvard Business Review 2005
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Dangers of Best Practice and Benchmarking…
Company Performance
high
low
‘Best Practice’ theories
low high
zero Performance
Trend line
“Selection Bias and the Perils of Benchmarking”, Jerker Denrell, Harvard Business Review 2005
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Dangers of Best Practice and Benchmarking…
Selection Bias:
1. Success Traits = Failure Traits
2. Successful Cases + Failure Cases
3. Worst effects in ‘Old’ industries
4. Overvalue ‘best practice’ theories
5. Current accomplishments unfairly magnified by past achievements
6. Reverse Causal
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Dangers of Best Practice and Benchmarking…
Also known as ‘Beware of Consultants’:
1. Selection Bias
2. Big vs. Small company
3. Selective success stories
4. Correlation vs. Causal
5. Survey problems
6. Practical vs. Glamour-to-have
7. Leaders who benchmark
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‘Input’ Filters
Mkt RscR&D
Research
Development
Filter
Filter
Filter
Marketing
Filter
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Information Drifts (1/2)
1. Availability Drift: Looking for convenience• You give more weight to information that’s more
readily available to you.
2. Experience Drift: Influenced by personal prejudice• You tend to see things in terms of your personal or
professional interest.
3. Conflict Drift: Struggling with beliefs• Your natural tendency is to reject information that
conflicts with your beliefs.
4. Recall Drift: Trusting your memory• You more easily recall information about things
familiar to you.
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Information Drifts (2/2)
5. Selectivity Drift: Picking your priorities• You screen out information and observations about things
that do not interest you.
6. Anchoring Drift: Weighing answers too heavily• If you lack experience in a specific area, you hang on to or
anchor to the first information you hear.
7. Recency Drift• You place greater emphasis on what has just happened to
you.
8. Favorability Drift• You are more likely to look harder for information that
supports your beliefs rather than input that is obvious in front of you.
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A3. Reverse Marketing
What we can vs. What we need
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What we needed
• The birth of Malaysia’s 1st Tongkat Ali Ginseng Coffee
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The “Old” Days
InventR&D
BuildManufacturing
MarketMarketing
SellSales
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The “New” Days
Invent
Build
Market
Sell
R&D
Manufacturing
Marketing
Sales
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Marketing 101
Product
Promotion
Pricing
Place
4Ps
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Marketing & R&D
Product
Promotion
Pricing
Place
4Ps
Features
Brand
Target
Logistics
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Marketing & R&D
FeaturesBrand
Target
Logistics
Price
Promotion
Place
Product
IKEA Apple Nestle Asus
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A4. Align
Running in the same direction with the proper resources
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Strategy: 4-Wheels
Philosophy
Corporate
ObjectiveCorporate
Strategy
StructureResources
Leadership
Person
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Strategy: Framework
• Leader vs. Innovator• Bloom vs. Prune• Breakthrough vs. Incremental• Horizon• Timing vs. Quality• Internal, External, Outsourced• TopDown vs BottomUp• Blockbuster vs. Multiplier vs. Pyramid
Philosophy
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Strategy: Framework
• Org Structure• Job Design• C&B• Policies & procedures• Decision making• Job fit• Management Systems• BSC and KPIs• Decentralized & Empower
Structure
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Strategy: Framework
• Technology• Equipment• Information• Channels• Partnerships, Alliances• Brand• Funding & Allocation*
Resources
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*Funding & Allocation
CNI’s Performance
Market Potential
•Sell Outside
•Sell IP
•License out IP
•Sell IP
•Drop
•Re-invest
•Exchange IP
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Strategy: Framework
• Vision/Mission/Philosophy• Leadership Style• R&D importance• Delegation & Empowerment• C&B, Promotions• Sense of Urgency• Speak regularly about customers• Appetite for Risk
Leadership
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Strategy: Framework
• Specialist Career Ladders• Competencies**• Co-habitation• Team vs. Individual• Standard or Creative?• C&B, Retention• Toys• In-source? Co-source? JV? BPO?
Person
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Strategy: Framework
Philosophy
Corporate
ObjectiveCorporate
Strategy
StructureResources
Leadership
Person
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B. R&D Today → RD&D
R&D in Totality
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R&D Today → RD&D
• Garnier• Digi
Design Point 1: Designed to SELL
Design Point 2: Before-After R&D
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R&D Today → RD&D
• CNI Waterlife
Design Point 1: Designed to SELL
Design Point 2: Before-After R&D
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R&D Today → RD&D
• Research, Development & DESIGN
1.Features
2.Benefits
3.Differentiation
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R&D Today → RD&D
• Research, Development & DESIGN
1.Function
2.Aesthetics
3.Logistics
Design Point 1: Designed to SELL
Design Point 2: Before-After R&D
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New Product Development Matrix
1. Marketing (4.0)
2. Production (2.0)
3. Finance (2.0)
4. Manpower (1.0)
5. Procurement (1.0)
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C. Issues and Challenges
Problems, Problems, Problems
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The Product/Service Innovation Challenge
1. Add 10 value increasing properties to each product or service every 90 days
2. Reduce jointly held inventories and lead time required by 90% in 24 months
3. Reduce new-product/service development cycle time by 75% in next 2 years
4. Copy 10 ideas every 60 days form competitors and noncompetitors
5. Target % Revenue from New Products (previous 24 months) - start with 50%
Source: Thriving on Chaos, Tom Peters; Alfred A. Knopf Inc.
Thank You.
soft copy of slides: http://totallyunrelatedrandomanddebatable.
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