PLM Perspective
For some reason Johnny Cochran’s rhyme popped into my head as I was reading a story from a great book titled “Switch: How to Change Things When Change Is Hard” by Chip and Dan Heath. In the story a man named Joe Stegner is struggling with ways to convince his company, a large manufacturer, that they are wasting large sums of money. Sound familiar? In this specific example he observes his company wasting billions of dollars thru inefficient purchase processes. A major shift in process will have to occur to eliminate this waste and he needs a compelling example to drive his point home. He seized upon a single item that illustrated his point; gloves. After researching the issue he discovered that the factories in his company were purchasing 424 different types of gloves. Moreover the gloves were being purchased from various suppliers and cost could range from $5 at one factory to $17 in another. When it came time for his meeting with the executives at his company he piled a table high with all 424 types of gloves and the price paid for each pair. He titled this display the “Glove Shrine”. The executives were stunned. They could walk around the table and see different pairs of gloves that were basically very similar yet were costing the company $10 or $15 dollars more. The exhibit was so effective they ended up taking it on the road so that everyone could see how much money the company was wasting just on gloves. In the end the exhibit had the desired effect. It illustrated the point that the company was wasting money unnecessarily through a flawed process and motivated the company to address this issue. Everyone ended up winning except for the glove salesman.
The similarities to the types of discussion we have with management to facilitate change via Product Lifecycle Management and Engineering Collaboration are striking. Most of the time we present data via spreadsheets and PowerPoint and our audience nods their heads in agreement or just nod off period. We go through elaborate exercises to convince management of the need for change and often these presentations are ignored. The question becomes how do we as agents of change identify and effectively communicate the impact of PLM to management at product development organizations?
The challenge of PLM is that the value isn’t nearly as obvious as other areas. PLM leads to secondary effects that create value. PLM doesn’t develop products faster. It enables process optimization and data reuse and reduces late stage change and brings manufacturing into the process earlier, etc. All of these things ultimately allow a company to develop more products in a shorter period of time but how much more and how much shorter really depends on how efficient they were in the first place and the complexity of the products. The net result is that PLM return on investment presentations are very abstract and very dry. Some management teams just get it and know intuitively that it makes sense to have a single source of truth with all physical data vaulted as a product record. They understand that electronic processes can be monitored and tweaked for maximum efficiency. They understand that having all of this information captured in a data base can yield real time reports that will allow them to identify the bottlenecks in their process and maximize their efficiency. Studies by Aberdeen, CIM Data and others bear out that “best in class” companies use PLM and benefit from it. Aberdeen’s study, “Profitable Product Development for SME”, states, “That Best in Class SMEs are meeting the product development goals that drive product profitability 49% to 74% more frequently than average companies, and up to 14 times more frequently than laggards.” This is pretty compelling stuff but how do you present it in a way that resonates for a specific company?
Recently Joe Fowler published a blog on Linkedin that I think offers some valuable perspective on the value of PLM. In his article titled, “Critical Success Factors for an Enterprise Wide PLM Solution ” he writes “Remember PLM is bigger than ERP. You must make the commitment. PLM is to your intellectual property what ERP is to your physical property. I would challenge and ask each of you which one is more valuable to a company.” Joe is in a position to speak authoritatively on the value of PLM. He was a leading resource at one of the biggest PLM initiatives in the history of the industry at Lockheed Martin and has spent a good portion of his career involved in implementing PLM solutions from the industry side. So I think we can safely say that PLM is something that product development companies should have high on their list. Yet there is still significant resistance in the industry and many companies balk at the high price tag of enterprise wide PLM.
To understand the reasons companies and their leadership teams resist the change required by PLM you must understand psychology. Many of you are aware that psychologists theorize that the brain has two independent systems; an emotional side and a rational side. The book “Switch” dubs the two sides the “Planner” and the “Doer”. In order to trigger action you must appeal to the emotional system rather than the rational one. The emotional system in our brain is far more powerful and often sabotages us when our rational side knows better. Think of things like diet or exercise where we know we should eat right and exercise regularly. Process improvement is not that different. Most executives know that it needs to be done but inertia, and fear of the unknown or just simple procrastination keep them from acting. Powerpoint slides and spreadsheets are not going to appeal to the emotional side and motivate someone to action. You have to find a compelling way to illustrate change, something that will reach people on an emotional level. Taking a list of companies that are directly competitive to your company and showing how they have adopted PLM and put your company behind would definitely trigger some emotion. Stacking the monetary savings with monopoly money might be a little gimmicky but still might be more effective than a ROI spreadsheet. I will resist the hackneyed “think out of the box” expression but if you are passionate about improving your company’s ability to effectively develop products you need to tap into that emotion and use it to motivate others.
In summary PLM presents a complex but significant value proposition for companies. While it can be difficult to quantify and communicate the value your biggest opponent is human nature and the aversion to change. You must be aware of the psychological elements at play when you are advocated a departure from the norm and find unique ways to appeal to the emotional side of people to successfully revamp the status quo. It really doesn’t matter if it’s PLM or any other major process improvement. People will resist, managers will hesitate and ultimately the decision will be made based on emotion. You are competing with many other process improvements and capital expenditures so it is critical that you identify the elements of PLM that will trigger the “doer” rather than the planner. Remember the glove, it worked for Johnny Cochran and it can work for you.
