Product plus: How product + service = competitive advantage
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.I PROD INNOV 1995;12:89-95
products are making decisions, providing a vision, setting priorities. 3 The productivity and quality of these executive products are a key competitive advantage for the firm. 4 The executive team needs superior processes (and tools) to produce superior products The product orientation is understandable because bcth authors come from strong manufacturing backgrounds. Nonetheless their focus on the customer is stong and they make several convincing points. The authors describe an executive process that has thee important elements: l
l
Hearing tomer
and understanding
the voice of the cus-
Linking
customer input with the firm’s
strategy
the strategy
1 was particularly impressed with the authors’ insight regarding how companies view their customers. Tt e following example from chapter 2 illustrates this pain: and is consistent with my experience as a markeiing consultant: 1) MYTH-Companies want.
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found a more objective discussion of their advantages and disadvantages versus alternative approaches more valuable. Also, a description of how these qualitative and quantitative tools can be used to address the other’s shortcomings would also have been helpful. Chapter 3 provides a good description of QFD and its use as a planning tool to help set priorities. The authors continue in chapter 4 and describe how to use QFD to integrate the strategy across different functional departments. In chapter 5 “Deploying the Strategy,” they compare the Management By Objectives (MBO) approach with Hoshin Kanri, a Japanese approach for deploying strategies. They point out how the latter emphasizes the importance of getting “buy in” and ownership by those responsible for execution. I was disappointed in the appendices: l
@Deploying
MANAG
l
l
Appendix A-Software Sources is limited two popular QFD packages on the market
to the
Appendix B-Is a valuable exhibit of forms needed to help a firm get started with strategy deployment Appendix C-Sales & Operations Planning didn’t seem to fit with the rest of the book.
just
know what their customers
1~Fact-What companies think they know about customers is more likely to be wrong than right. 1) Fact-Customers rarely think they sell them
buy what companies
811Fact-Customers define the business-what the customer thinks she’s buying determines value and quality. (I .,vanted to stand up and yell--RIGHT Olv!!) 1 was a little surprised at the treatment the authors gal;e focus groups. They dismissed this approach due to ipotential misuse rather than any design shortcoming , Instead the authors advocate two other approaches to #::apture the Voice of the Customer: @In Context customer visits or case studies of customers using the product (for idea generation). 6 Choice models particularly (for idea testing).
the SUMM
approach
Unfortunately, these tools are presented as the best chc’ices for gathering customer input. I would have
I felt this book was right on target. It has an important message in describing the executive “product” as a process that starts with the customer. The authors effectively use a fictitious firm, B&W, Inc. and their new OmniPen product as an example for each of the concepts and tools. The example both softens the message and makes it real. We all like examples and this is a particularly good one. We follow the story of B&W executives as they struggle with new product alternatives and decisions. It adds a dimension of fiction that does an effective job of increasing both the readability and impact of a story with an important message. John J. Moran, CMC J. J. Moran & Associates Product Plus: How Product + Service = Competitive Advantage, by Christopher Lovelock. New York: McGraw-Hill, Inc. 382 + xiv pages. $24.95. “Today’s managers are under pressure to perform on many fronts: customers demand more than quality, they want value, too; investors want profits; and employees seek more rewarding work. Experts constantly
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urge businesses to cut costs and increase productivity. Both problems and opportunities abound as markets become multicultural, technology develops with astonishing speed, and the evolving global economy affects even local firms. “Product Plus is about creating synergy between customer satisfaction, operational productivity, and employee performance. ’ ’ These thoughts are lifted from the jacket of Christopher Lovelock’s book and serve as an accurate, albeit perfunctory, summary of the book’s contents. Product Plus is not about product creation but about marketing and entrepreneurship. It is about understanding the customer, your market, and your business (product or service), and creating processes that will improve your chances of winning. As such it’s a must read. Product Plus is a unique book which combines great analogies from world class companies with practical theory and “how-to” guidelines. It begins with a great review of Southwest Airlines and its processes to balance customer satisfaction with financial control and employee development. Lovelock then uses this case to demonstrate how to review your own business and industry and effectively utilize ideas from other industry to improve value. He discusses how to balance the dual challenges of efficiency and cost control with customer satisfaction and employee well-being. (Practitioners may recognize this as cost, or productivity, vs. quality.) Lovelock completes the first quarter of his book by demonstrating how to determine customer values and how to match those values with your company’s competencies and strategies. Clearly, Lovelock writes this book for the practitioner with real-life examples of how several companies have achieved a market position with customerdriven, cost-effective goods and services. Some of his chapters detail customer research and development methodologies that will be old hat to the seasoned practitioner but are well worth the review in the context of process improvement as he has outlined. For the novice, these chapters will build a strong foundation for the development of an effective business plan for any product or service. Most of the material in the book, however, is new and relevant for successfully growing future business not only in the USA but, with NAFTA, all of North America and the world. Lovelock discusses how to measure your progress and gives world class examples of companies who are already implementing processes which are satisfying customers throughout the globe. Lovelock’s book is certainly of value to students
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and academic readers as well as practitioners as his advice is based on first-hand experience with the companies and industries about which he writes. His drive to balance line operations (which are easily and immediately measurable) with customer satisfaction (which is soft and has long-term implications) is of extreme value for the student because real world marketing must achieve that balance or risk failure in either the short-term or long-term. Product Plus is an exceptional book that should be read by anyone in product development or marketing. The information is so timely and the company examples are so pertinent that this reviewer has ordered more copies for use within his organization. If you need a successful business plan for that new product or service idea the formula is in Product Plus. James R. Scheu Whirlpool Corporation Competing by Design: Creating Value and Market Advantage in New Product Development, by Craig Erhorn and John Stark. Essex Junction, VT: Omneo, 1994.~290 + xii pages, $40.00. During the 198Os, American industries, driven by foreign competition, increased quality in manufacturing while reducing time-to-market and costs. In the 1900s) new technology improving communications, manufacturing and design processes, and information management continued to fuel the competitive atmosphere by improving quality while further reducing costs and cycle time. Companies who adapted to the changes became better competitors, whereas those who didn’t were bought out or closed their doors. Manufacturing executives have come to realize that total quality design must be incorporated into a company’s strategic plan because successful product development requires managing technology and information and the interactions between marketing, manufacturing, and engineering effectively and efficiently. Craig Erhorn and John Stark show manufacturing executives in nontechnical terms how to manage the product development process, utilize technology and techniques, and devise a product development strategy and enfold it into the corporate strategic plan. Both authors are management consultants; Craig Erhom is with Coopers and Lybrand in New York, and John Stark is an independent management consultant based in Geneva, Switzerland. The authors have presented a wealth of practical information. Here is an overview of what the reader
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