Reading Time: 5 minutes

The Need for Product Resilience in Volatile Times

Main Takeaways

Reading Time: 5 minutes To create resilience in Product Development, identify product variants as unique products; slice your value streams by customer-centric end-to-end product thinking only; and install product teams as cross-functional, cross-department entities only.

We live in Volatile Times

It is a platitude, that our personal life and the biological, political and economic environments we live in are continuously unstable. And most of these instabilities are caused by ourselves. Since the origin of mankind at all times and everywhere, events and situations happen that we can't foresee. They blast our laborious plans which we have to adjust costly to the new constellations.

However, in the last century, these changes became more frequent and got a stronger and stronger impact. In the 90th of the last century, a new concept emerged to describe these turbulences properly: the social-political, economic, and biological habitat we live in is volatile, uncertain, complex, and ambiguous. In short, we live in a VUCA world. The list of economic crises since 1990 is long. Mention the three most prominent ones only: the Dotcom Bubble in 2000, the Financial Submortage Crisis in 2007-2008, and the Supply Chain Crisis in the pandemic (2019+).

Some industries started in the 90th immediately to prepare themselves to better react and cope with unforeseen situations. Others stayed in a kind of stasis thinking they would resist by their market history decades, by their company size and by their economic power. Since at least 2018+, this decision became fatal because the volatile economy hit faster than ever — and with greater force and impact than in 1990.

Just as the global industry has only recovered from the pandemic, it is now being hit again. The pandemic showed us the vulnerability and dependencies of our supply chains and related shortages in product development resp. general service delivery.

Now we're faced with economic struggles stemming from emerging global territorial economic conflicting interests. Not only the supply chains are in question. And in addition, in the past proven ways of collaboration and cooperation, established in several geopolitical alliances and corporate companionships are under scrutiny. New concepts such as de-escalation from China, or returning recently outsourced production lines to their original countries, break the old idea of global markets which grounded the economic fundament of the 20th century.

In consequence, many industries must currently question whether their long-running products are still competitive. Overnight many companies have to realize that their products and services became outdated. Accordingly, automotive OEMs restructure dramatically and suppliers went bankrupt. Retailing firms went bankrupt. Even industries which claim to be agile are today struggling to become resilient. Since the start of 2023, Amazon, Meta, Google/Alphabet, Microsoft, and many Silicon Valley Tech companies have laid off more than 10000 employees. And the recent bankruptcy in the US financial market affects the investment capitalization of startups worldwide. Worldwide, several startups had to shut down or restrict and pivot their business models.
All of this happened in the last four years.

In business leadership volatility became most prominent as a metaphor and synonym for competition in disruptive innovative markets. When hearing the words "volatile times", "disruptive innovation", "business resilience", or "business agility" today managers get either stiffed with shock or embrace opportunities. The latter are the minority. It is significant that many of the traditional manufacturing companies (e.g. Automotive, Maritime, Avionics) are still not able to position themselves resiliently in the face of a volatile economy. They are failing for 20 years in implementing Agile Product Development properly.

To make a hard cut:

A company creating customer products or services MUST be able everytime to change its product design, production processes and workflows as fast as possible with minimal organizational frictions as possible on demand SOONER as its competitors will do. — If NOT, it will DIE, sooner or later. — Mostly sooner!

To survive, manufacturers as well as digital service providers have to have to set up their product development in a resilient way. Otherwise, they will vanish from the market — see the aforementioned list of bankruptcies.

Resilient Product Development as a Solution

Resilience is the capacity to withstand or recover quickly from difficulties. Resilience in Product Development is only possible if the grounding organization itself accepts as soon as possible that it is essential for economic survival to get rid of old-fashioned, crusted structures. Instead, successful Resilient Product Development is based on rigid customer-centric end-to-end product thinking. React as fast as possible to changes in market/competitors and in customer demands. And most important: always vote for the customer!

To establish this rigid end-to-end thinking, the organizational consequences are immense. The organisation must as soon as possible eliminate in total all competence/knowledge silos, eliminate all work item hand-overs, and stage gates, and eliminate segregation of marketing/customer acquisition, product development, and product maintenance. The company has to change from sequential workflows and managing workflow dependencies for the benefit of collaboration and working in parallel across teams and products.

Consulting for more than two decades in different industries in product development, I have a distinctive opinion on this topic. We can achieve resilience in product development only, if

we identify product variants as unique stand-alone products by themselves. — Products are no projects. Product variants are caused by distinct customer orders. They always have a rigid end-to-end customer relationship, projects do not necessarily. It doesn't matter whether the product is a one-shot order or a long-term prospective obligation. Products have different life cycles.
we slice your value stream only by products, not by our own organizational workflow. — We make money with deliver the product fast. We lose money by managing unneeded dependencies.
we install product development teams only as cross-functional, cross-department entities. — Get rid of sequential siloing and hand-overs. Instead craft each product team by getting all competencies (people) together at "one table" needed to develop, produce, deliver, maintain, promote, and shut down the product at the end of its lifetime. In the final, the product teams will consist of people from HR, Marketing/Sales, and Development/Testing working tightly together.

For sure this organizational change will affect dramatically all employees, across all departments. Teams and departments remain not necessarily stable over time. Instead, they can be fluid and dynamically reshaped flexible to adjust the product's design, development, promotion/sales, and maintenance according to actual needs.
There are promising approaches to managing this kind of people flexibility: Dynamic ReTeaming Patterns (Helfand 2019), unFIX framework of Dynamic Value Stream Crews (Appelo 2022), Fluid Scrum Teams (Ageling 2021, Jan 17), FAST Agile (Quartel 2022) to name a few.

To put it short, the CEO and middle management of product manufacturing resp. developing companies have to commit absolutely to facing all these issues in all their consequences.

However, one important question remains.

"Why do fail many companies in setting up resilient manufacturing or development processes?"

My assumption: it is a combination of their indifferent understanding of their own product(s) and their inability to cut off the toxic attachment to outdated organizational structures and development processes. Since most manufacturers are caught in the latter, failing is inevitable. Many digital service providers are caught in related traps. More in upcoming posts.