How is India Gearing up to Build Manufacturing Competitiveness?

1. Building Design Capability
How is India Gearing up to build manufacturing competitiveness
Shridhar Lolla, PhD
First Rough Draft
Needs Significant Editing
This article is about building product development competitiveness through Design.
Key words: Entrepreneurship, Sustainable Growth, Design, Innovation, Manufacturing,
India, MSMEs, Manufacturing Competitiveness, National Manufacturing Competition
Council, NMCC, Design Clinic, Business Excellence, Execution, Business
Transformation, Change Management, Business Model Innovation, Leadership, Theory
of Constraints, System Thinking, Focusing Mechanism, Management Technique, Process
improvement,
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April20, 2012
After the theory on Emerging Nations and BRICS… Ruchir Sharma gives a new
dimension through his Breakout Nations theory and rings out what could prevent the
pampered high growth nations from achieving a potential to reach developed nation
status.…He mentions, "In early stage of development, emerging nations can narrow the
income gap with rich nations with relative waste, by borrowing or copying the
technology and management tools of cutting edge nations. At a certain point however,
emerging nations have borrowed all they can and need to start innovating and inventing
on their own, and many fail at this challenge. Their economies suddenly stop growing
faster than those in the rich nations, and thus they stop catching up. They have hit the
middle income trap, where they can idle for years, like unhappy resident of a lower
middle class suburb…." Ruchir Sharma, Breakout Nations- In pursuit of next economic
miracles.
Notwithstanding the warning from Ruchir Sharma, India is way short of even adopting
technology and management techniques in an all encompassing way. As far as innovation
is considered… it is at very early stage. A part of this initiative is appearing in improving
manufacturing competitiveness of India's MSMEs and it starts at innovation through
Design. Though, I wonder why not so in Service Industry, when a vast majority of GDP
as well as employment is in Service Sectors.
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2. National Manufacturing Competitive Council under its NMCP and in line with the new
manufacturing policy has rolled out program to establish Design culture amongst
MSMEs in India. This was long overdue.
The goal is to help MSME manufacturing industries move up the value chain by
switching the production mode from original equipment manufacturing to original design
manufacturing and hence original brand manufacturing.
The objective of its flagship program, Design Clinic scheme is to enhance industry
understanding and application of design and innovation, and to promote design as a value
adding activity and integrate it into mainstream business and industrial processes of
MSME’s.
It aims to bring Indian manufacturing sector and design expertise on to a common
platform and to provide expert advice and cost effective solutions on real time design
problems, resulting in new product development or continuous improvement and value
addition for existing products.
Design Clinics scheme will be implemented through National Institute of Design (NID),
Ahmedabad who will act as single coordinating body responsible for delivering the
scheme.
The Design Clinic scheme will help MSME’s to avail independent advice on all aspects
of design. It helps MSME’s realize and achieve their design-related objectives. Practical
support is provided to MSMEs via one-to-one advice, seminars, and workshops. This
specialist advice is provided by experienced designers for new product development as
well as enhancing existing product portfolio.
The scheme is divided in two major parts viz. Design Awareness and Design Project
Funding
Design Awareness
The objective is to create general awareness and sensitization about the value and power
of design for businesses through seminars, talks, workshops and other engagement
methods. It will be a combination of Design need Assessment Survey and workshop
/seminar for the participant members of the cluster selected. This would be divided into
activities like seminar, workshop and diagnostic study.
Design Project Funding
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3. Through Need Analysis, Consulting and Funding, the funding assistance will be provided
to the MSMEs in their selection and engagement of design consultants and professionals.
About Design and its Position in Business
The assumption is that Design is an important competitive attribute for the success and
growth of an organization and today, MSMEs have less appreciation of Design. Further,
MSMEs have shortage of funds to seek Design services that are highly specialized today
in India.
The NMCP is of the opinion that value of Design is largely invisible in the value chain of
an organization and hence, for most of the people do not realize its importance. It is also
based on the premise that Indian MSMEs are heavily beaten abroad as well now in their
won backyard.
There is a belief that if Indian MSMEs develop design capabilities they can compete
better in international market for the world is becoming flatter, day by day.
This also gives us a feeling if large Indian organizations are good in design, while truth
could be far from reality. For design in India is limited to furniture, fashion, apparel,
interiors, art designs etc. What NMCP is coming to is about industrial products.
Modern management is based on observability, measurability and controllability of
activities. And true Design (not reengineering) is one where for business managers, it has
been not possible to predict how good design emerges, and therefore, this is one process
which is highly uncontrollable. For the same reason design has not yet found its place in
main business process.
Yes, to most of India, design is intangible, though it is practiced in every business. And
yet, if you are a designer, people would ask you why should they pay you for you have
not created anything. Remember the early days of IT, when people would say that they
can't pay much for the binaries (and that gets into a tiny CD), because they can't see it.
(And most common culprit for this mentality was the traditional cost accounting and
taxation practices, who have least of imagination in understanding different way of value
creation. They want to count everything, inventory, parts, money….. they do not have
insight to value intangibles.
Design actually has a service market. Today, appreciation of innovative designs is found
niche areas of high value items, bought by high net worth people and it seems if
appreciation of design is a refined taste. Not for nothing that for a vast majority of people
define Aesthetics as the first element of design.
It is a laudable initiative. I went through the policy document and I have a few things to
comment.
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4. On the Design Clinic Initiative
The Goal of any intervention to MSMEs, and therefore this initiative is to ultimately help
MSMES is growing their business (increase their opportunity for sustainable revenue
growth). Most of these MSMEs are run by entrepreneurs, who are highly resource
constrained; skill, people and money included. And, they have very little time to waste,
because of the way they manage their business. They tend to operate extremely schedule
and often, struggle to invest not just in design but in any other initiative unless it is
strongly driven by customers or quick revenue generation opportunities.
It also means that non appreciation of design may not be the only reason for MSMEs
adopting latest design practices, but Design is likely to be one of several constraints
amongst MSMEs. It means that the Program must take into cognizance that at a given
moment of time, growth of only a few companies would be constraint by lack of Design
skills. Which also means that including other organizations, for whom other factors are
constraints would not be a good idea and it will not give the desired results.
Let's get to brass tacks. From an Entrepreneur's point of view, it is important that any
improvement in the design capability of the organization brings far more benefits to an
MSME than improving any other aspect of the business. This is possible if and only if an
organization's design capability is a bottleneck in the complete process of value creation
(as explained below).
….
Business is a system comprising a set of interdependent building blocks, which together
allow it to progress towards a common goal. The following figure shows a conceptual
map of business as a system, that is responsible for managing 'the circle of creating,
delivering, capturing and investing value'. It is the prime objective of any Entrepreneur
to operate this circle faster and faster with time. However, at any moment of time, the
flow of Value (& therefore money), represented by this circle would be constrained by
one of the building blocks. That is the pipeline of value flow will be thinnest in the block
that constraints the flow. Which also means that by focusing attention of such constrained
block, performance of the organization (flow of value) can be quickly improved. Since, in
a pipeline, flow rate is dictated by the thinnest section, trying to improve any other part of
the business than the constrained one will not deliver any improvement but would only
exhaust precious resources of the organization.
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5. Figure: A simple 4 block business model
Figure: The circle of value flow of a business
Which means that for NMMC, a candidate organization for Design clinic would be the
one for which Design capability is the thinnest pipe in its value flow circle. Trying to
build design clinic for organizations, where the constraint is not in Design, would not
deliver real results. Just think about an organization where the current key constraint is in
Sales (it does not have sales channels established and the entrepreneur's team is busy in
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6. rolling out new products). Even if the organization realizes that improving its Design is
important, it may just not have enough time to pay attention to any new initiative on
Design process improvement. For such an organization, it would not help be enrolled into
the program.
Figure: For an organization to leverage benefit of improvement in design, its flow of
value must necessarily be constrained by its design resource.
….
In this regard, design must be seen by the entrepreneurs as a part of the overall system
and a methodology must help in identifying change in the design process of the
organization. Now since all organizations are not same, it is important to search out those
specific organizations that are constrained by design.
Once organizations whose business is constrained by lack of design capability are
identified, the next job would be to identify those elements of design that prevents a
particular organization from adding value through design.
Once an element of design is identified, in an entrepreneurial environment, it is possible
to get quick results by enhancing that particular aspect of design for the organization.
However, as this particular aspect of design is addressed, one would find that other
aspects of product design as well as organization design will come on the way. For the
entrepreneur to ultimately leverage the improved Design process, the new capability must
be ultimately capitalized. And if an organization is hitherto not used Design as an
important attribute then it would not have the necessary capabilities to sell the new found
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7. capability. It is important that organizations are then handheld in building a capability to
capitalize on their design quality. Realization of the support provided by NMMC, must
ultimately result in making more money for the entrepreneur. Having a systematic
process to improve one by one aspect of design of the organization will build the culture
of design.
Let us again understand why do we say so?
Because we are talking about MSME and not large well fed and resourced organization.
Most of the MSMEs are led by entrepreneurs. By nature, these organizations are resource
and capability constrained. Often, these organizations are busy in operational mode. Any
approach to improve their business that takes substantial time and attention of
entrepreneurs puts enormous pressure on them and disruptions to their ongoing
operations. In such a situation, having a methodology of improvement that delivers
results after 1 year or even 6 months is too long a period for an entrepreneurs to wait and
invest themselves NOW, for they seldom have that long of visibility of business,
especially in today's ever changing business environment.
In order to do justice with building design competencies in MSMEs it may therefore be
required to have an approach that gives results to them while building their capability.
The engagement must be more of an iterative approach than a waterfall approach. The
approach must allow the entrepreneurs to make quick sellable improvements.
The truth is that in today's competitive environment, an organization must be able to
bring out products rather quickly with features and competencies that build with time,
each iteration and each version.
Clet:03-1-12
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