Transformational change: the revolution to come in electronics design

GUEST OPINION: Like the proverbial comet-strike that wiped out the dinosaurs, the global recession has changed the climate for electronics. You’d better think about changing your organization’s design culture—and maybe your corporate culture—to adapt.

By Gerry Gaffney, Altium -- EDN, 6/16/2009

The electronics industry is in a time of flux. The recession has placed a stranglehold on the economy, product life-cycles have shortened, and organizations reacting to the recession are preparing to lay off workers. In essence, global market forces are causing havoc in an industry that has found comfort with steady, incremental change. But with globalization and technological developments changing market dynamics, it is time for organizations to reassess their business processes and start making some radical transformations.

 Transformational change as a theory and practice in electronics design

 In management theory, transformational change is when an organization shifts its fundamental beliefs and operations. It is a radical approach that often occurs when either internal or external influences threaten an organization’s strategies. Organizational transformation typically occurs for three reasons: legal, political, economical, or technological conditions that shift the basis for competition; a shift in product life-cycle; or internal company dynamics.¹

 The above motives must resonate with organizations and the electronics engineers they employee. These shifts in the “basis for competition” are already in process. Organizations can not sustainably compete by relying solely on price or first-to-market strategies alone. Global market forces make this almost impossible. So, with this in mind, how do organizations begin to shift the basis of competition in their favor?

 Legal, political, economical, or technological conditions that shift the basis for competition

 Globalization has meant that competition for customers now comes from all over the world. Emerging countries are starting to enter the electronics industry, with vigor. China is the perfect example of this. In the last 10 years there has been a strong focus on innovation. In the years 2000—2005, China had the highest growth in R&D expenditure, making it the fourth-highest overall investor in R&D worldwide. This resulted in a 35% growth in patent applications.²

 And this is just the beginning. Just this year the Chinese government announced a three-year, US$87.7 billion stimulus package³ for the electronics industry alone, showing that its commitment to becoming a leader in innovation is as strong as ever, even in the current downturn.

 This rapidly changing global market has been made worse by the current recession, but these changes were happening before the recession hit. This places increasing pressure on organizations. Manufacturing, sunset industries, and low-skilled work have traditionally been sent overseas, not high-technology. But the reality is, as China and other countries grow as electronics design powerhouses, more jobs will come under threat. And what had set electronics designers apart in the past will no longer do. To survive, a change in differentiation strategies will be required.

 It is important that organizations redefine their fundamental values and restructure their strategies in line with the economical and political conditions. This will ensure that organizations retain their competitive advantage. With this in mind, decision makers need to ask themselves: What secures your position as a market leader? If the answer is “price” or “first to market,” then the organization might want to rethink how it interacts with its market. The reason? In this new era, these strategies are not sustainable and too easily replicated elsewhere.

 So what will work? Organizations and electronics designers need to focus on real and sustainable differentiators such as creativity and innovation, because while skills can be off-shored, ideas cannot. Decision makers need to remember that it is the implementation of ideas that truly separates one product from the next, the world-beater from the also-ran.

 Shifts in product life cycle

 There is an interesting dynamic occurring in the electronics industry. The life cycle of a product hardly lasts longer than a fashion season. And in this day and age, people want more for less, more personalization, more quickly, and in a variety of colors. This situation poses an interesting problem for the electronics industry. Consumers and marketers are the ones powering change, not electronics designers.

 And what’s wrong with this? Consumers and marketers too often think within an existing paradigm. Putting this into perspective is Henry Ford, who once said, “If I had asked people what they wanted, they would have said faster horses.” The real job for electronics designers is to create something new that people desire and that cannot be answered by anyone else. The iPhone is a classic example of this. It wasn’t smaller or faster, it simply changed the way consumers experienced a convergence of existing concepts in a new way.

 So how do organizations and electronics designers revolutionize product development and reclaim it for themselves? Organizations and electronics designers need to throw out the rule-books and start focusing on how customers will interact with the product. There needs to be radical change where the old “divide and conquer” or sequential method of product development is replaced with an experimental and collaborative process. Without the freedom to explore ideas and experiment, it becomes too easy to fall into old, restrictive patterns of thinking. For true innovation to occur, there needs to be an open-minded culture supported by tools, team structures, and work processes conducive to flexibility. Because, in the end, it's design innovation that ultimately sets a product and user experience apart from others.

 Internal company dynamics

 The evolving nature of electronics has been the stalemate of organizations and electronics designers. It has created a culture of inertia, where change cannot be implemented unless it has been applied in small, digestible portions. While this has worked in the past, times are now changing too quickly for this to be sustainable.

 For too long, electronics design has centered on a very formal and straight-forward process. The typical process has become much too bureaucratic, whereby each designer is provided with a list of specifications and constraints relating to particular tasks. The designer completes each task and then passes it (often over a literal wall) to the next engineer to complete the next task. It’s a stalled approach that limits collaboration and creativity between teams. Try something new in one domain and you run the risk of stalling the project and infuriating your peers. It is a rigid process that completely disregards a rather fluid market.

 These older design methods work almost like the bureaucratic structures of the past. They make organizations inflexible, and it becomes too hard to adapt to change. Current design processes, like those bureaucratic structures, need to be flattened so that changes can be implemented more easily. This allows designers to focus on creativity, rather than a set of specifications. It is an organic approach to design that allows ideas, wherever they may take you, to flourish. This is the basis of real innovation.

 However, making these kinds of radical transformations can be difficult. Work culture and procedures are generally ingrained in the psyche of employees. So implementing these changes requires an overhaul of thinking, and to do this, electronics designers will need to be open to aggressively explore new techniques, willing to unlearn dated working patterns, in order to realize this competitive change in their organizations. This approach also requires continuous education and up-to-date tools to be successful. And while this may be difficult at first, it is a necessary change. This ingrained inertia in the electronics design industry needs to be challenged, because without complete transformation, organizations will be quickly left behind.

 So, when thinking about product differentiators and business strategies, organizations need to think beyond current processes and start thinking radically. Today’s models are quickly becoming obsolete in this rapidly changing global market.