Sunday, March 23, 2014

From Product Life Cycle to Process Life Cycle: The Need for a Paradigm Shift in Managerial Thinking

Amongst several managerial concepts, the concept of Product Life Cycle has been one of the most enduring concepts. The concept is based on the fact that every product goes through four distinct phases of introduction, growth, maturity and decline in its life. A product’s life journey is depicted by a curve which is plotted on the two axes of time (X-axis) and sales volume/value (Y-axis). The nature of the product life cycle curve varies based on the nature of the product, the firm and the industry. While the level of innovation in a product determines the extent of introduction and growth phases, the level of competitiveness and competition determines the onset and extent of maturity and decline phases. All firms would like to shorten but spike up the introduction phase, enhance and extend the growth phase, delay and sustain the maturity phase and preferably avoid, and if unavoidable supplement the decline phase with a new product life cycle.

Ideally, product life cycles occur in waves. As one product moves into the latter half of its growth phase, the agile and innovative firm would seek to bring a new product (complementary or substitute) into the introduction phase. An overlapping wave structure of product life cycles moving with time ensures that a firm retains market dominance, with a portfolio of products. Firms which are market-savvy and technology driven are in a continuous quest for product life cycle optimization, including extending product life cycle through product improvements in the maturity phase of the life cycle. There tend to be cases, of course, when it would be either infeasible or unviable to stay with an outdated product beyond a particular time point and below a particular sales volume/value. Firms are so focused on developing, improving and replacing products that they miss another important aspect of all human and organizational endeavor, which the author of this blog post would call the Process Life Cycle.
Product-process nexus
When the word “process” is mentioned in technical or administrative discussions, the intended, implied and absorbed reference tends to be on typical operational or organizational process, be it functional or administrative. Processes do get improved, but often with newer equipment; to mention two examples, machining of components is improved with newer, high tolerance machining centers while analysis of a food ingredient is improved with newer, more sophisticated analytical equipment. As new products get developed, often requirement arises for new materials and new processes; to mention two examples again, radiation therapy is improved with newer, high precision diagnosis of malignant tumors while the pharmaceutical product is rendered more efficacious with a new delivery system. The process-product nexus is often in terms of improved development, manufacture or delivery of the product.
The less visible product-process nexus is in terms of how a product forms a part of a larger process network. There are four aspects to this in terms of changes to products and processes. The first is that products change but processes do not; an example is one of computer replacing a typewriter but the office documentation processes remaining unchanged. The second is that products do not change but the processes change; an example is one of computer remaining the same but paper transmission moving from facsimile to scanned electronic transmission. The third is that neither products nor processes change; examples are some of the basic needs such as writing instruments and writing. The fourth is that both products and processes change; an example is one of land phone becoming a smart phone and it becoming a medical companion and communicator. This phenomenon of both product and process clearly is the most important combination for continued progress. It is important to note that like products, processes also must have life cycles of their own to drive totalistic progress.    
Process life cycle
Like products, processes also should be deemed to have a concept of life cycle. It is, however, not one of introduction, growth, maturity and decline as is the case of product life cycle. The stages of process life cycle are improvement, optimization, stabilization and substitution. Every process intrinsically cries out for improvement. Some improvements are driven by learning efficiencies while some are driven by new products. A housewife improves the cooking process by experience on one hand, and use of modern kitchen gadgets on the other hand, for example. An improved process leads to optimization. Optimization involves continuous experimentation to arrive at the optimum combination of products and learning efficiencies to ensure the best possible quality, consistency and stability in the processes. A skilled housewife knows, for example, which products and processes are best suited for particular recipes.
Stabilization is that phase which lets an optimized process remain in a state of control. The way a restaurant works to deliver a standardized menu, day after day, is an example of a stable process. Substitution represents a phase where dramatic changes take place transforming the very essence of the process. The first time a pressure cooker entered the kitchen, the microwave changed the way of cooking or an automated food making equipment line entered the restaurant space represented a substitutive process, in each case. Each of the four phases of process life cycle has certain unique characteristics in terms of change management. In the improvement phase, users are typically experimental, in the optimization phase analytical, in the stabilization phase contended and in the substitution phase impatient. It is important for firms to be cognizant of the market expectations as they seek to understand and define process life cycles.
Life cycle synergy
The interplay between product and process life cycles is a critical factor in sustainable development. In an ideal scenario, there must be a one-to-one correspondence between the four phases of product life cycle (which are necessarily sequential) and the four phases of process life cycle (which are not necessarily sequential). Achieving this consonance is a great challenge because while the product life cycle can be responded to by the firm with product development actions, process life cycle typically has to contend with several internal and external factors. To illustrate the opportunity and challenge of internal consonance, let us take the example of a green-field automobile project that is to be established. It is easy to adopt the most advanced manufacturing equipment and utility services to turn out the most advanced cars but this exercise tends to be largely a matter of comparison and choice from among the available equipment. However, the adoption of the right phase of process life cycle of automobile operations, in terms of improvement and optimization, requires a different thinking in terms of layouts, utilization of space and people practices. Such an effort would, however, be well worth the effort.  The above is an example of an operational process leveraging the new products of equipment industry to deliver greater value through people and practices.
To illustrate the opportunity and challenge of external consonance, within the same industry, let us take the example of a driverless car as a new product. For even a nominal introduction phase, the customer segments, at the minimum, have to be prepared to be experimental and seeking improvements. If the customers are in stabilized phase, it is unlikely that the driverless car would receive the required reception. On the other hand, if urban traffic systems become chaotic with bumper to bumper, unsafe driving conditions and inordinately long travel times, the transportation process life cycle would be in the substitution phase, welcoming a driverless car. Understanding and driving change in the life processes tends to be a key success factor in the evolution of well matched product life cycles. Product evolution racing ahead or trailing behind process life cycle could lead to dissonance. Reverting to another example, could there be an automated kitchen gain acceptance with the homemaker by itself? Would a completely automated homemaking product be a better solution for the homemaker? Quite unlikely, without the homemaker being driven to completely reconfigure as to how she would prepare ingredients, cook recipes, and store the cooked food in the first case, and how she would ensure a safe, efficient automated networked home from remote location even while at work or on travel . A high level of readiness in substitution phase of the homemaking process life cycle would be required for new automated home solutions.
User psychology, process cycle
The common view is that product drives process or that users get enamored by products. For example, had not high end photography been brought to simple cameras and smart phones would photography have come to the hands of common people or more importantly would social networking with photo walls and video clips have been possible? The superficial view thus is that product drives the process or consumer choice. The truth, however, is that the innovative product designer imagines the new process and designs the product for such new process. Very often, the designer, and the firm in the overall, will need to create an ecosystem of materials, equipment, accessories and applications, in fact a total process ecosystem, to make the idea work. Once this is done, it becomes the responsibility of the marketer to enable the users discover the benefits of the new product-process ecosystem. Not many firms understand, however, understand how the product and process life cycles are intertwined in terms of the user psychology.
The user psychology has four components of exploration, experience, choice and acquisition. From a manufacturing process that is validated in the shop floor to a home asset acquisition that gets completed in the realty market, the four components of user psychology drive the process life cycle. While single window is an oft repeated concept, very few firms shape the process life cycles around the user psychology. The success of today’s mighty global technology firms such as Google (as the global search engine) as well as the new homegrown startups such as redBus (as the bus ticket provider in India) is based on leveraging the process life cycle concepts with the right awareness of user psychology. The difference between successful firms and not so successful ones as well as between successful societies and not so successful societies is anchored on how well they understand the importance of process life cycle (as compared to just a product life cycle) and imagine and shape successive waves of new process life cycles. While all this may appear to be serious essay stuff, the simple message for firms, both startup and grown up, is to perceptively imagine a new process life cycle that satisfies the user psychology on an ongoing basis – product successes would follow almost as a corollary!
Posted by Dr CB Rao on March 23, 2014

1 comment:

Unknown said...

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