It came out of nowhere: it was a request that one of our customer service people might have easily dismissed, yet for some reason it was put on my desk. The device being requested was significantly more stringent than the ones we had been building at the time, and while we received many of these kinds of inquiries, for some reason they decided that this one was worth a second look. After careful evaluation, I found that the market was not high liability (as many of these were), and frankly, there was a potential that this could be a very significant product opportunity for us.
The issue was the “ask.” We’d need a large number of prototypes and data, which built to these very stringent specs, would represent a huge investment of design and process engineering resources – not to mention the downtime of the production assets.
This was not going to fit in our regular new product launch process well. We were going to have to do something different.
The question was this: how do we get from here to there? How do we take our existing product line, which we had invested thousands of dollars and untold hours in automation to make smooth, and provide the performance they were looking for?
What we needed to do was create a new, low-volume product line without disrupting the process.
Proportional Commitment
When it comes to bridging the gap between ideation and actual implemented, profit-producing innovation, there is nothing that creates bigger disconnects and opens more opportunity than this concept of proportional commitment. Many of the issues I am called to unpack in my consulting business are the result of a group that is way over invested in a part of the program that another stakeholder is unwilling or unable to reciprocate on. Many times it’s the product team over investing in the development of a product or the operations team under investing in the potential of the product. In either one of these cases, blind spots are very, very costly to both the organization and the project sponsor.
This concept applies in many interactions across the firm – anywhere there is a real risk of investing significant time, money and resources that the receiving team has no proportional stake in. We can all recognize the sales team who asks for some very intricate work to please a potential customer, only to find out that the client didn’t really have the necessary commitment of their organization.
It Takes Honesty and Communication
I knew this would only work if the potential customer was willing to engage in the space provided by a joint development agreement. The best versions of these provide a sequential way of achieving the customer’s needs, while making sure that investments and risks stay proportional and bounded. They also provide for good behavior once the hard work of product development is complete.
Most fundamentally, this takes great communication and trust. Yes, there is a written agreement that the lawyers have reviewed. But perhaps even more important, is the quality of the trust environment that the two key leads of each firm bring to the table.
So, What Happened?
In the end, we were able to develop a “make sense” agreement. We hammered out a way to take advantage of the cost basis of our high-volume production line by adding two additional process loops to increase the performance of the parts. Both teams shared the margins and had financial success for several good years.
The Takeaways
- When in doubt, open a communications channel to see if there is a chance for mutual risk and reward sharing. What you are looking for is a white-hot problem worth solving that has a time-bound intensity for the end customer.
- Spend some time understanding the gives and gets on both sides. It is very easy to overlook gaps and small issues that become larger issues later. If there is any doubt on the level of mutual collaboration – stop.
- Get a written agreement in case either party has an organizational change (more frequent than you might think). Be really careful and deliberate if there are language or cultural differences. It may seem like over investing in thinking through the downside, but it is very wise to do this work on the front edge of the agreement – before you need to do it when big consequences are on the table.
- Make sure there is chemistry and rapport between the principals associated with the opportunity – and that their values, pace and culture are compatible. There needs to be a rock-solid chemistry between the day-to-day project leaders, and (easily overlooked) a working relationship at the sponsoring executive level, as well.
- Get the potential deal-killing risks on the table for all to see and make plans to work them. If finding the issues will take iteration, be honest and clear about how much experimentation each party is willing to do. If you are going to invent new understanding and IP, be super clear on who owns what and how it can be used.
These universal principles of developing the skills to engage both internal and external groups in value-creating proportional engagements are foundational to growth. You’ll find that they develop leadership in ways that will quickly multiply your team’s skills and effectiveness.
If you’d like to talk about how to build these skills while creating real value, it would be good to talk about our diagnostic and team launch programs. To set up a no-strings-attached phone call, please give me a call at 847-651-1014 or use this link to set up a 20-minute (no strings attached) consult.
Related posts you can benefit from…
