LEAN INNOVATION in CROP PROTECTION R&D I: targeting customer value.
“The greatest danger for most of us is not that our aim is too high, and we miss it, but that it is too low, and we reach it.” Michelangelo.
In today’s competitive crop protection world, the rapidly changing strategic situation requires organizations to demonstrate strategic agility to transform strategies into action. Within the R&D organization, introducing faster innovation processes with more predictable output is a strategic necessity. Put in simpler terms, “time is money” – this is especially true for innovation.
We can illustrate the effect of the speed of innovation processes on business creation with an example:
- In 2005, a leading agrochemical company launched an innovative herbicide strategy. However, because of poor communication between R&D and field application, the product did not address customer needs in the field. These issues required an extensive training period for the commercial team, leading to a missed season and delaying product introduction until the following year.
- This delay allowed a competitor to exploit the situation by developing and launching a competing product addressing actual customer needs in time for the growing season. Because of their innovation agility, they could command a significant market share, and the company with the initial innovation experienced an estimated 5 million Euro in lost revenue.
Late-stage changes are costly and delay product development
In the crop protection industry, almost everyone involved in product development has experienced late-stage changes to address prototype failures, patent challenges, manufacturing issues, production up-scaling or efficacy issues in the field.
For most development projects, the cost to make a change during the initial phase is lower than during the prototype phase, which in turn is significantly lower than in the production phase.
Despite the cost of changes increasing over product development project timelines, for many crop protection organizations, late-stage changes are still considered inevitable and are factored for in project plans.
For crop protection organizations, reducing the number and impact of late-stage changes can be achieved by “frontloading” the product development process – moving critical knowledge to the beginning of the project.
Frontloading takes place at the initiation of the project when the ability to carry out changes is high and the cost of these changes is low, and when decisions have the most influence.
The dotted line in the illustration below represents the expenses associated with changes to the project over time, while the full line shows the influence of our decisions throughout the project.
Figure 1: Influence and expense profile – frontloading reduces late-stage changes by moving critical knowledge to the beginning of the product development process when decisions have the most influence with the least expense.
Frontloading facilitates the definition of objectives and associated planning processes early in the project life cycle. As we make the most crucial decisions at the start of the project, frontloading critical knowledge to the beginning of the project will reduce the number and impact of late-stage changes.
While frontloading adds time and some expense to the first stages of a project, these costs are relatively minor compared to the costs and consequences of changes made at a later stage.
Doing the right thing – targeting customer value
R&D frontloading is a crucial part of Lean Innovation – which may be defined as both ‘doing the right thing’ and ‘doing it right’:
- Doing the right thing means ensuring that the outcome of the project targets the customer need
- Doing it right entails implementing frontloading decisions through a prompt and efficient development process
We can summarize this as: “Creating more value for the customer, with fewer resources.”
In Lean Innovation, the innovation project team identifies the solution generating the greatest customer value by identifying and targeting customer needs, while avoiding over- or under-developing the product.
In successful R&D organizations, management and project teams have a well-defined “top-down” and “bottom-up” process for innovation projects. This input-based, inclusive development framework facilitates the inclusion of Execution (bottom- or expert-up) into Strategy (top- or management-down) by ensuring individual buy-in at the beginning of the process.
The textbook example of the value of identifying customer need in Lean Innovation is that of the redesign of the Toyota Sienna minivan for its primary market – the United States. Rather than relying on surveys, Toyota addressed customer needs by sending an engineer to the US to rent current model Siennas and drive 85,000 km throughout North America, from Canada to Mexico.
This focus on identifying customer need meant crosswind stability and steering drift were improved for long-distance travel, while the turning radius was tightened for city driving. In addition, the number of cup holders was increased to 14(!) and the fold-down load area was increased to 4 by 8 feet to transport plywood and drywall sheets. The result: Sienna sales increased by 60 percent.
As a Strategic R&D Manager, you have responsibility for the innovation process. However tempting it is to push the project team to start the value creation process, it is crucial to first define the customer need to be targeted by the innovation process. It is critical for the process that you define, clarify and align internal and external expertise with project objectives and success criteria by:
- Establishing customer value to cut “solution waste” and “solution creep” – the outside-in approach to innovation
- Empowering cross-functional teams to provide critical knowledge up-front and challenge conceptions of customer value – the inside-out approach to innovation
The key benefit of cross-functional teams in knowledge-based development projects lies in implementing cross-discipline knowledge transfer from earlier projects and transferring problem and solution-specific information to new projects – transforming knowledge into value.
For example, process engineers can inform the team on the process capability of existing manufacturing equipment at the start of the project. Trial specialists can provide information on testing methods and time constraints to ensure timely production of prototypes for field trials, while agronomists can give information on competitor products and regional requirements and limitations.
The project team can plan within these constraints to find and solve development problems before they arise, improving product quality and project efficiency.
Implementing knowledge-based projects requires “translating” knowledge from specialist terms into general terms that the team can understand, increasing cross-functional expertise within the organization so that this knowledge is ready to be implemented in later product development projects.
Let us consider two project teams tasked with the same goal of developing an innovative crop protection solution.
- Team A has a clear, well-defined commercial goal, the result of an intensive frontloading process. They are a balanced cross-functional team with strong individual competencies and the correct combination of skills as a team, combing patent, biology, registration, synthesis, formulation, production, commercial and marketing specialists. Together with empowerment, this combination of clear objectives and competencies makes for a motivated team willing to challenge management vision when needed. By using frontloading templates, team members provide input before project meetings, resulting in structured project meetings that give value to all participants. Project changes and iterations are made early in the project process, and the project milestones, budgets and deadlines are met.
- Team B starts with a less well-defined goal. Despite their individual competencies, the lack of frontloading objectives has led to the prioritization of department deliverables, rather than project deliverables. Due to the low level of up-front knowledge and unstructured project meetings, project changes and iterations are made later in the project, and project milestones, budgets and deadlines are exceeded.
Team A’s development process is clearly better. The motivational project culture and associated processes make sure that relevant knowledge is integrated into a solution creating customer value by balancing capabilities with market objectives.
In a knowledge-based crop protection organization, the management team is responsible not only for the strategic vision but also for establishing the culture and associated processes that drive commercial innovation projects. In the second article in this series, we will consider two of the most important of these associated processes: the frontloading process and implementing frontloading decisions in the development process.
Thanks for reading – please feel free to read and share my other articles in this series!
Are you looking to understand basic aspects of AgChem R&D Management? STRATEGIC R&D MANAGEMENT: AGCHEM & BIOSCIENCE (THE LABCOAT GUIDE TO CROP PROTECTION Book 2) offers an easily accessible introduction to essential principles of Strategic Management in Crop Protection Development and Research.
A little about myself
I am a Plant Scientist with a background in Molecular Plant Biology and Crop Protection. 20 years ago, I worked at Copenhagen University and the University of Adelaide on plant responses to biotic and abiotic stress in crops.
At that time, biology-based crop protection strategies had not taken off commercially, so I transitioned to conventional (chemical) crop protection R&D at Cheminova, later FMC.
During this period, public opinion, as well as increasing regulatory requirements, gradually closed the door of opportunity for conventional crop protection strategies, while the biological crop protection technology I had contributed to earlier began to reach commercial viability.
I am available to provide independent Strategic R&D Management as well as Scientific Development and Regulatory support to AgChem & BioScience organizations developing science-based products.
For more information, visit BIOSCIENCE SOLUTIONS – Strategic R&D Management Consultancy.