Global know how
and Product Manager,
Rochester, N.Y., USA
→ Developing a multifaceted, global communications strategy can boost motivation and diminish geographical isolation.
→ Technology can make for smoother knowledge transfer around the globe and speed innovation.
→ Fully developed multinational project procedures are subject to pitfalls. Executive sponsorship helps avoid snares.
No longer content to dominate only the markets they've cultivated, today's leading global manufacturing firms are on the prowl for lucrative new possibilities further afield.
Significant expansions into markets in Asia, Central and Eastern Europe, and Latin America are already underway. About 47 percent of North American and Western European manufacturing companies, for example, currently sell products in China, while a similar percentage say they will expand their Chinese market presence in the next three years, according to a study by Deloitte Touche Tohmatsu.
Manufacturers, feeling unparalleled pressure to cut expenses and boost productivity, also are shifting production to lower-cost locations. Outsourcing to sites in Southeast Asia and Eastern Europe has become commonplace, and firms are moving rapidly to establish or expand engineering facilities outside their home regions.
With assets spread across countries and cultures, three leading firms share methods for improving their multinational project teams’ performance.
Talk Before You Walk
One of the key influencers in a multinational project also is one of the most visible—communication. When used appropriately, communication enables global teams to leverage their breadth and reach to penetrate communities and cultures they previously avoided. But when relegated to secondary importance, communication can stop a project dead in its tracks.
“You have to be very sensitive to the communication, the form it takes and when it occurs,” says Doug Engel, a national industry lead partner for management solutions at Deloitte & Touche. “It is something that a lot of people overlook and say that it's a soft squishy thing, but that's probably the wrong approach. They haven't been adequately sensitized to the importance of language.”
At Eastman Kodak, multinational project teams are used to ensure product launches experience parallel success across various markets. Project teams boost efficiency especially by implementing well thought-out, diverse communication strategies.
The EI Division's solution lay in developing a new, all-liquid product line of mixed chemicals that would simplify production while meeting the diverse needs of its multicultural customer base. The division formed two teams, development and relaunch, that consisted of members spread across Europe, North America and Asia.
Variations and aberrations were sure to abound. To mitigate the cross-cultural disparities, Business Development and Product Manager Marian Herz sought to create a diversified communications strategy. While telephone, e-mail and Web-based transmissions formed the bulk of the team interactions, Herz realized early on that remote connections would not entirely suffice. “Even though the team was able to reach a consensus on every important decision, it later became clear that each region interpreted action items and decisions differently,” Herz says.
A Rochester, N.Y., USA-based manufacturer of imaging products.
PROJECT: The Entertainment Imaging (EI) Division sought to bolster sluggish sales of its line of premixed chemical kits for processing motion picture film. A multinational team was charged with developing and coordinating the 2002 re-launch of a uniform chemical kit in mostly European and Asian markets.
RESULTS: The original product line consisted of six different mixes of varying size, weight and consistency, and customer feedback was just as varied. Some regions reported the product was too small, others too big, sales reps reported certain packaging was too cumbersome, and all said the price was too high.
Partial Source: “Eastman Kodak using global teams to overcome the challenges of multinational product distribution,” Product Development & Management Association.
Two face-to-face meetings eventually were conducted, during which the bulk of the decision-making was performed. “Initially, these face-to-face meetings were more expensive,” she says. “But over the course of the program, these costs were more than offset by increased productivity and less time spent eliminating misunderstandings.”
As the next best form of communication, regular conference calls were scheduled for status meetings. The team chose 4 p.m. U.S. Eastern time, which translates into midday in California, late evening in France and early morning in Australia. Although not as effective as the in-person sessions, the group conference calls helped alleviate some of the geographic isolation.
Because regions previously had been supplied by two sources within Kodak, a great deal of time was spent on internal negotiations. Herz and other project leaders had to develop a deep sense of trust with regional members to convince them to work with a new sourcing location, which would cut lead time in half. “We had to convince one region to source their supply from a manufacturing location they had not been using,” she says. “Financially it made sense, but cultural issues had to be overcome.”
Problems also arose around packaging, marketing and overall disparities in international regulations. With a uniform chemical mix for the different regions, the team also decided to consolidate the packaging. Each region was required to review the packaging so it met various international shipping and labeling requirements. To further complicate matters, computer network limitations required different catalog numbers for each manufacturing site.
The EI Division eventually moved manufacturing to one site primarily to reduce inventories and lead times. The team finalized a new process to approve packaging. Experts in international shipping regulations, regional packaging engineers and regional marketing managers were included in the process.
Despite the high degree of complexity involved in producing one product with a team as diverse as the marketplace, Herz credits the use of a wide-ranging communications strategy as an effective negotiation tool as the key to the successful re-launch. “We were able to overcome all of the challenges we faced with the multinational distribution of this product,” she says. “The relaunch has resulted in high customer acceptance of the product line and steadily increasing sales.”
For effective transcontinental communication to occur, organizations must have the proper infrastructure in place. Technology, like communication strategies, can either enhance or prevent project success. Companies such as Rhodia implement new technology to enable more effective global interaction.
PRODUCT PHOTO COURTESY OF EASTMAN KODAK
“The chemical technology transfer process starts at a meeting where everyone knows what they need to do,” says Myron Galuskin, president of Rhodia North America. “But the plan is a living instrument. It will change; it is not static. We needed a tool that enables us to ensure that everyone has access to real-time project timelines to reflect any changes in tasks and deadlines.”
Centralizing its knowledge in a single database, Rhodia enabled its project team members to access key information at any time anywhere in the world. Executives reason this access allows team members to speed innovation while giving top executives a better picture of resources available and how various projects align with corporate initiatives. “[This] is a critical tool in helping us shorten the transcontinental transfer timeline from nine to 12 months to perhaps two to three months,” Galuskin says.
A Paris, France-based manufacturer of specialty chemicals.
PROJECT: Looking to augment its U.S. market presence, Rhodia's global team of 5,000 chemical innovators needed a solution for seamless knowledge transfer of chemical formulas and best practices across time zones, languages and cultures.
RESULTS: The company went virtual, implementing an enterprise project management application in 2002 to track the process of technology and chemical transfer among Rhodia's offices, laboratories and manufacturing sites around the globe.
Now teams can work literally around the clock. Dispersed across the globe, members access the database at all hours of the day, minimizing delays due to time differences and distance. “The real-time project adjustment and communications…are particularly valuable,” says Mike DeRuosi, president of Home, Personal Care and Industrial Ingredients at Rhodia. “They help us overcome time-difference issues and provide a single source for project information and status notifications as well as visibility into all tasks assigned to other project team members.”
Technology will only get you so far without the proper culture in place. Atop a long list of responsibilities, global manufacturing executives must decide how to communicate corporate objectives, from the highest levels down to the junior project team member.
Good project teams are supported by executive-level steering committees that are in a position to deal with company policy.
Partner for Management Solutions, Deloitte & Touche, Chicago, Ill., USA
“It's the lack of common vision and alignment that is the most destabilizing fact in multinational projects,” Engel says. “When you're launching a global project, it must start at the top with the global management team in a way that everyone can understand and buy into.”
Executives must encourage a company culture that values change for project teams to use innovation to their advantage. “Good project teams are supported by executive-level steering committees that are in a position to deal with company policy,” Engel says. “Poorly organized teams run into policy issues and are hampered by inability to deal with it at the appropriate level.”
Advanced Sterilization Products was a young company that recognized quickly the importance of enterprisewide buy-in and executive sponsorship at the detailed project level.
As early as 1998, an ASP team began implementing a new product development organization and process model based on truly cross-functional techniques and a core team that works in parallel with line functions. Having discovered gaps between development and the supply chain, process authors sought to integrate the two elements to provide a broader picture across the enterprise, using a structured development process based on Mountain View, Calif., USA-based PRTM Management Consulting's Product and Cycle-Time Excellence model. Design team members in the Irvine, Calif., USA, office now ably interact with the organization's partners in India and China.
ADVANCED STERILIZATION PRODUCTS (ASP)
An Irvine, Calif., USA–based subsidiary of Johnson & Johnson, which produces sterilization, high-level disinfectants and cleaning technologies.
PROJECT: Refine global new product development process, enhance enterprisewide visibility.
RESULTS: Having produced its first commercial installation only a decade ago, ASP has completed more than 5,000 installations worldwide and is nearing $300 million in sales. Part of its young, speedy success is due to the organization's dedication to global, cross-functional operations among its offices and affiliates in 40 countries.
Source: “Collaborative Product Development: How We Develop Products Globally to be Sold Worldwide,” Product Development & Management Association.
However, the process, now fully engrained in the corporate culture, still is vulnerable to common pitfalls, including geographic differences. To override these conflicts, ASP executives display their decisions and support on a large scale. The management board is actively involved in determining project success or cancellation. They conduct milestone reviews and project phase approvals, and more importantly, each management team leader serves as a direct advocate for each project team throughout its entire life cycle. “Project leaders should have a ‘skin in the game,’ some stake in the project's success,” says Alfredo M. Choperena, vice president, research and development worldwide.
Key to the process’ success is ASP's use of metrics to ensure former, current and future projects align with the organization's strategic vision. Teams use an expanded Norton-Kaplan balanced scorecard model that strongly associates new product development objectives and metrics with key strategies. “Benefits are best seen when metrics are viewed as related entities where outcome metrics are ‘caused’ by other, lower-level metrics,” Choperena says.
ASP calls this collection of interrelated metrics its “Return Map,” which is based on project expenses and product sales. “Understanding metrics causality typically yields better deployment and effectiveness of any NPD strategy,” Choperena says.
When they started, ASP's first- and second-generation sterilizer systems were delivered in five years. Today, the company is developing a totally new sterilizer platform in less than two years, and more than 30 percent of sales derive from ASP's platform of new products. “Our dedication to a truly global new product development process is paying off,” Choperena says. “More significantly, the global approach is contributing not only to faster availability of the product, but earlier readiness in each key geography to maximize product sales from the start.” PM
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PM NETWORK | NOVEMBER 2003 | WWW.PMI.ORG