Strategies that Lead to Product Differentiation
Michelle Boucher posted on April 13, 2015 |
Research from Tech-Clarity reveals the strategies that lead to differentiation.

Increased complexity and difficulties collaborating are very common challenges engineering teams struggle with. In some cases, management teams may feel these are just challenges their product development teams must deal with. However, ignoring them or not looking for better ways to address these challenges can hurt a company’s ability to bring more competitive products to market.

Before looking to solve challenges, it is helpful to understand which practices lead to success.  To understand what successful companies are doing, Tech-Clarity researchers surveyed over 250 manufacturers and identified Top Performing companies. Researchers then analyzed what these Top Performers were doing differently compared to their peers to understand what is helping them become more successful.

These Top Performers were identified as those who when compared to their competitors were more effective with their ability to:

  • Design high quality products
  • Develop products quickly
  • Develop innovative products
  • Develop products efficiently
  • Meet product cost targets

These metrics are all indications of a company’s ability to be profitable.

Tech-Clarity researchers then looked at what Top Performers are doing differently. The strategies Top Performers are more likely to adopt are shown in Figure 1. Since these are practices lesser performing competitors are less likely to adoption, they likely contribute to the success of Top Performers.

Overall, the most common strategy, regardless of performance, is to improve development efficiency. Getting to market first can provide a significant competitive advantage as a company can start to capture market share before competitors release their products. Plus the sooner a product is brought to market, the longer the window of opportunity to bring in revenue and realize a return on the development investment. An efficient development team is key to bringing products to market quickly so it makes sense that this is something everyone is trying to do. It is the additional focus on some other strategies that help Top Performers.

Coordinating simultaneous global product launches is the most differentiated strategy Top Performers adopt. The benefits of doing this include optimizing the impact of the marketing budget as well as preventing a fast follower from stealing regional market share before a company has been able to complete its global launch. However, the ability to execute a simultaneous global launch requires strong collaboration and the ability to easily coordinate product information around the globe.

Improving compliance is far more important to Top Performers than to lesser performing companies. Depending on the industry and regulation, compliance may be a requirement so remaining focused on compliance and traceability helps to avoid downstream problems that would cause delays. In other cases, compliance can be used as a competitive differentiator such as emphasizing environmentally friendly policies. When all things are equal, this can be the thing that sets a product apart and makes it more desirable for customers. However, regulatory compliance adds to the complexity of the process, giving engineers one more thing to manage.

Top Performers are also far more likely to tap into new sources of innovation. By using third parties as an innovation source, Top Performers are able to assess more ideas. In addition, relying on others for innovation mitigates some of the risk associated with innovating. However, fully leveraging this resource often requires a tight integration of third parties into the development process, which also increases complexity.

Tailoring products according to regional needs and customer preferences is also a nice way to set products apart from competitors. Customers have high expectations and are looking for products that meet their needs exactly. A product tailored to their specific needs will be more appealing. However, managing the different product variants to support this is a further increase in complexity.

The conclusion is that there are several strategies Top Performers adopt that help them to be more competitive. However, successful execution of these strategies increases the importance of managing complexity and improving collaboration. By not addressing these challenges, companies are hurting their ability to execute the very strategies they need to be more competitive.

More information on the survey and additional results can be found in the complete report, Reducing Non-Value Added Work in Engineering.

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