Iphone 4S : For Steve

Steve Job’s passing has generated a lot more coverage and attention worldwide than I could have imagined. Steve’s imagination and uncompromising drive for style, simplicity and robustness has won over the heart of many customers and followers, even at a higher price point.

From what I read Steve really disliked office politics, and now his passing has really surpassed the attention of what any typical great political leader would receive. The USA is admired for Steve’s style boldness, imagination and determination. Every time a new portable device was introduced the sales turned out to be significant multiples of what analysts were expecting, what a great success story.

Many device manufacturers must have noticed that marketing products is more than just about price points, even for the mass markets. An Iphone is for everybody, because it is cool and good enough to justify the money spent, it’s that simple really. This is what the customers want.

Achieving 100% quality from the factory

As Murphy’s law says: if something can go wrong it will. Perhaps it should be adapted to: if somebody can do wrong they will (or maybe that was the implicit meaning).

Even with all the checks in place: testing random samples, design integrity test and 100% on line critical function test shipments still go wrong from time to time, and I am putting the emphasis on shipments. During shipping temperatures and humidity go up for several weeks inside the container, anything under stress (by design or not), vulnerable to humidity and humidity related effects will undergo some type of material degradation, sometimes even causing chemical reactions with the product losing some or all structural integrity or some other function.

The Temperature Humidity test is supposed to catch this weak spot but then only a few samples are tested because it’s time consuming (24-96 hours) with limited test capacity. Picture this scenario now: somebody somewhere in the organization decides to: 1) replace the adhesive with a cheaper – no brand alternative – to save a few pennies, 2) an old batch of poorly stored and expired adhesive will be used up first, 3) there is serious dimensional variation affecting the adhesive strength 4) the curing time was too short during the night shift, 5) the surfaces didn’t get properly cleaned, 6) variation in the tool texture caused the adhesion surfaces to be too smooth for certain cavities

Whichever the cause the results can be disastrous, way beyond replacement value of the product (and that is represented as a gesture of goodwill), but that’s all you can recuperate unless: critical material and performance specifications are in the PO at the very minimum. This is what I recently learned from 2 US lawyers in Shenzhen: a customer can successfully sue for – lost revenue – , substantially more than replacement value, if any if the documented specifications in the PO or contract are not met. This also implies that putting these specifications on engineering drawings, although important, bear no legal significance, at least not in China.

I have known program managers who put product build readiness in the contract: if the ODM for whatever reason causes a delay or serious quality issues for a trial build, the ODM is on the hook for the travel expenses of the entire team. Now if a PO would just have the critical specifications in there, and the consequences of not meeting them would be clearly lined out, I am sure some pencils would be sharpened. In general most decent factories have very good work instructions with good and bad practices both documented in a very visual and easy to understand way. But any production batch starting from thousands of units and up will have statistical variations coming from all directions that have to be addressed, and that doesn’t even include human individual decisions or errors.

I am sure that every customer prefers to have perfect quality products rather than taking the suppliers to court for lost revenue, but with the risks going up for the supplier they might take some extra measures, and make this part of the standard procedures (that’s a Kaizen right?). If you look at higher volume forward looking factories they’re using work cells rather than assembly lines. Work cells are accountable for performance and yield as a unit, work cells also look more organized with better component flows, the accountability and visibility however have the most impact in my opinion.

Designing with the customer : Graf Stealth Skate

VentureTech was previously known as Solid Design and consulting, the 1^st Pro Engineer certified engineering provider in the US North Pacific back in 1994.

One of our high profile customers was a Swiss hockey skate manufacturer setting up operations in Canada: Graf. Their hockey skate newest design was a 3 post version, with the looks of a Roman warship, turning out to be a stealth skate as we called it, for its comparatively silent approach on the ice surprising any opponent player.

Graf contacted a famous design firm in California and got quoted a lofty US$200,000 for the design of the skate plastic connecting piece. Graf ended up hiring a sculpture artist and us (now Venturetech) to do manual and digital sculpting for a fraction of that price.  You can still see this high end skate in most hockey equipment stores today.

Most of our customers know very well where they want to go, they understand their markets, see the opportunities and have very good feel for design. During every project we go through various digital iterations originated from simple mockups for usability studies, also performed by the clients.

And we take it one step further: we ensure meeting aggressive cost targets as well. Our design and engineering process is therefore a blend of aesthetic design and engineering, with product and tooling (budget) costs in mind.

And these cost targets don’t necessarily mean limiting the design, one of my clients showed her first injection molded presentable product which resulted in an immediate large order. Certain very innovative aspects of the design are in the process of being patented and we turned out to be as efficient on engineering budget (probably better) than with the Graf ‘Stealth’ Skate.

Reaching gift status in China

I was discussing a packaging project with my engineer and with all the projects going through it is really interesting to see the marketing approach of various customers.

I remember marketing folks at Philips mentioning that their first shaver was introduced in the US at too low a price and didn’t sell well. After increasing the price to $89 sales took off but this was back in the 60’s.  In today’s dollars that would be $650.

The high end model shavers are selling for 4,000 Yuan in China, which is $615! My packaging engineer told me these shavers are very popular gift items, similar to Iphones, Ipods and other luxury items such as Gucci sunglasses etc. Doing a little math and info from a recent factory visit these shavers are representing US$200M in annual sales:  a ‘small slice’ of the overall shaver market in China according to the GM doing the presentation.

Before Iphone got introduced on the Chinese market 2 million were already in use. A business week article was discussing how Iphone would fair in China after the failure to market in India, and just before that people were limited to  buying 2 Iphones with cash in Apple stores going to…? You see similar trading going on into China with Amazon’s Kindles, not for sale over here.

The feedback on the Iphone India experience was very feature and cost oriented but you don’t see these discussions in China: if the product is high quality, looks cool, works well, foreign well known brand the price doesn’t seem to matter that much because it’s a status symbol (same as everywhere else I guess).

Giving gifts is a whole different story, making me realize how important giving good high end gifts can be, not only in China, also in other countries such as Thailand. Don’t bother showing up with something cute, symbolic, well meant with a good heart, the resulting disappointment and embarrassment is only limited by the fact that as a foreigner you don’t know any better!

Mind modeling: the new 3D design tool?

Idea bouncing (aka ping pong) happens a lot during the conceptual design stage. Customers have developed thoughts about their new designs and we start talking. During my hay days working with industrial designers at Microsoft talking about any type of constraints would be taboo, the mantra was: just make it work (the ‘Apple way’).

After a while I started to agree with that approach, design constraint free at first, find a manufacturing solution soon after and cycle a few times through options. I also noticed that even CAD modeling in 3D can put the chains on and force you into a direction, no matter how proficient one is. Testament to this is the emergence of new 3D modeling tools skinning around scanned point clouds, easier digital sculpting tools with force feedback etc.

We used to have various levels of computer savvy industrial designers, but they mostly started sketching, then sculpt in clay or other material, after which usability would get involved and the 3D scanning and skinning would begin for initial volume feasibility study. Only a few designers would go direct to digital, also depending on the product outlook. A more boxy shape would end iterating a lot sooner than any type of curvy swoopy design.

Whichever way used: there are plenty of parameters triggering multiple iterations and the more space constraints the more iterations, and more input from various directions would obviously spawn more design cycles, up to a point where we had to put hard deadlines for the delivery of the design, which we didn’t have in the early days causing havoc with the schedules.

Many have discovered that breaking through idea logjams happens in off times, when you relax, have time to think away from your desk and work environment. I have made this a working method in fact, I absorb all the ideas, directions, questions, and challenges first and the go off thinking and designing during commute times to other appointments (not behind the wheel, no worries…). Some go home and work in peace and quiet without interruption to do some deep thinking which feels the same to me.

After so many years of 3D digital modeling you can do this in your head, iterate and visualize the end shape, and go through various options.  I think most people can, as long as you can turn off your computer for a while… Tinkering is also making a come back btw! Still hard to replace touch and feel…

A Sense of Urgency in today’s competitive world

Walking on water is an expression I heard more and more over the last 5 years. The world seems to be going through a time warp; things can’t happen fast enough anymore, development cycles are getting compressed to months versus years only a decade ago.

Digital tools and risk management processes seem to be the worm holes of the new engineering age, as well as a huge increase of scale, companies employing thousands of tooling engineers, while driving through standardization to the ultimate.

Engineering and design are happening on parallel tracks, with core engineering and technology progressing steadily (but at a faster pace), design wrapping itself around whatever state of technology available, which we call skinning.

A supplier basically has a functioning product, the client’s design team models a new skin around that, adds some more mechanical or electrical features and comfort and voila, there comes a new product out the design studio, sort of like using Lego building blocks.

After you have gone through several such development projects you learn that every new feature, meaning new to you or the supplier’s development team, carries a higher risk. That is a very simple rule one can use for the DFMEA (Failure Modes Effect Analysis) procedure.

This higher risk means: must design well and perform solid engineering thinking, virtual test (simulation), CAD to reality check (everything looks big on the screen), prototyping and understand the achievable tolerances of certain tooling elements as well as the impact of injection molding processes on the part performance (yes: it’s not a black box).

On the assembly side: I can’t stop being amazed how products from certain brands keep tripping over assembly tolerances, delaying introduction by 6 months or worse. And this is not rocket science! It takes discipline to think the assembly procedure through, and understand what a blind assembly with misaligned components through tolerance stacks can do. This comes down to statistics then with possibly 15% of the products having to be re-worked or worse, which will increase your cost!!

Philips factory tour in China: Kaizen, Lean and Lifestyle.

2,500 people generating 250 million Euro in product value or revenue, mostly for shavers, representing 75% of the worldwide shaver production, of which 57% is sold back into China.

The presentation revolved around the work efficiency principles implemented: lean manufacturing, Kaizen, lean management and so forth. The lure of low capital investment and many small improvements to achieve an efficiency improvement only achievable with costly high tech automation style manufacturing in the West.

These numbers and facts provoked some interesting discussions, one of which centering on what is being sold: the product to achieve the dream (lifestyle). This shaver creates a skin so smooth that… (And the customer fills in the rest), my teeth are so white that nobody can resist my smile, we’re perfecting ourselves and our image in a sense.

During my personal discovery tour in the land of new products, business, IP and marketing we received some feedback that the marketing budget should be 2-4 times the product development costs, to make investment bankers believe in the success of your opportunity.  Interesting: advertising and packaging make you long for that image, so that.. , you really do identify yourself with that perfect, confident or happy looking person on the package!

The discussion extended a little further into whom am I paying when I buy these $200 sneakers? The athletes, shareholders, staff, and yes, the producers (even).. and that the West has shifted dramatically to a service based economy: services as a product or services (marketing) to sell a product, lifelong learning (a service) and adaptation.

Ok, back to the work floor, and hats off for the well organized, most likely best factory floor I had seen in a while. The work cell principle really appealed to me, people seem to work as a small team rather than an anonymous link in a long chain and it also creates a better sense of ownership and responsibility that way.

Component and product flow documentation, we once disentangled a crisscrossing confusion of component flows, which can actually do a lot of damage through contamination of sensitive processes. After auditing we did the same type of flow optimization, which was also included in manufacturing practices benchmarking as consulted to us a while ago.

This event was organized by the Benelux Chamber of Commerce in China, and I really enjoyed talking with the group with very diverse backgrounds working in all kinds of industries.

Innovation: the never ending sweat of progress

Athletic performances seem to increase even after 100 years of record keeping. Look at the 100 meter men’s speed progression from 1910-2010; it is a straight line down from 10.6 to 9.6 seconds, that’s 0.01 second per year, sometimes the difference between number one and number two.  What seem to be the contributing factors?  Food, length, training, techniques, coaching, focus, clothing, shoes, track surface, altitude, photographic finish, I am sure you can find rows of books on this subject, with new findings and methods coming out on a regular basis.

Innovation is everywhere and it’s continuous. It’s said that innovation is 1% inspiration and 99% transpiration; I think that the real sweating happens from the idea to product stage, the marketing, growth and financing.  I have seen some numbers flash by: only 7% of patents make money and 50% of products from large disciplined organizations fail to sell.

Often the real innovator is considered the one who manages to break through in the market; well at least they get all the attention and publicity. A nice example is the Ipod. MP3 players existed for a while but Apple changed a few things: a simple user interface, a sleek design, a hard drive and the real breakthrough was considered getting the music industry to agree to selling single songs for $0.99 over the internet, and by the way: single song records did exist a long time ago but faded into the background with the profitable CD.

Thus most of the building blocks already existed; the biggest change was the customer experience through a simple interface, large storage capacity and the availability of easy to buy and download single songs at reasonable cost. Again: the downloading wasn’t new; Napster facilitated free ‘sharing’ over the internet before.

Most people think about product innovation in the first place when hearing this term. During a several day seminar we were presented a much wider spectrum of innovation in the business world based on five pillars: finance, logistics, product development, customer experience and company culture. The trainers highlighted the fact that real breakthrough product innovations only seem to happen every decade or so, with the big example again the Ipod.

The finance part showed cash float for instance: customers paying directly per credit card, the supply chain getting their payments 3 months later. Quite a few patents were applied for in the Logistics world. Product development we all know, the example for customer experience was the Apple store and company culture is seen as one of the biggest assets of any large organization today.

In disciplined larger organizations product development and innovation are driven by marketing, inventions sometimes bubble up independently.  There is a convergence to a marketable end product, beginning with market research and a product road map. The road to finish is very much in flux which can be frustrating, therefore the need for a good company culture and well functioning teams.

We seem to learn and develop faster in a group. Now imagine a group of hundreds of millions, collaborating or competing with the help of the internet. Back in the days when the DNA helix form was discovered, scientific papers were published around the globe; everybody would build on other’s stepping stones.  Computer visualization tools weren’t powerful enough to help find this shape, unlike today’s 3D visualization of chemical building blocks.

The newest IC’s cannot be designed without computers anymore, especially with the competitive pressure s of companies around the globe. The millions of transistors need virtual simulation and test. Moore’s law, which is 40 years old, states that the number of transistors placed inexpensively on an IC doubles every 2 years. Does this mean that the compounding effect (similar to savings rates on a deposit) of technology supporting technological progress was embedded in Moore’s Law from the beginning?

Back to the individual inventor, with as biggest challenge selling the new product. I recently visited the ‘Knowledge Gate’ at the Eindhoven Technical University, a one stop shop for innovators with a chamber of commerce, patent attorneys, technical library, high tech companies etc. Great idea!

You get what you negotiate: well sometimes you can be lucky

Clients of mine started sourcing a complex mechanical product with a pretty decent supplier in China, but asked me to review their testing and documentation procedures.  I was happily surprised to see good work instructions with embedded workmanship quality checks, further on and off line testing as well as a good incoming quality check. (IQC).

The supplier was also very proactive in durability testing the products and improving components, they reported problems on their own and proposed fixes as well. I consider my client fortunate because I have seen much worse with much larger factories.  In this sourcing case the supplier is aiming at brand name products, each client is considered a reference in building up the factory’s name plus that the engineering staff was a spin-off from a much larger high end supplier.

In general the supplier wants you to succeed, which means more than just successfully loading your products on the boat.  We had to do some explaining that product returns cost much more than the actual cost to manufacture and ship, besides the damage to the client’s name and brand image.

The factory’s internal quality check procedures are crucial to ensure consistent component and material quality.  Even with the right intentions an inferior material can “slip through” the purchasing department and contaminate the end results. Good suppliers even IQC their own manufactured components such as plastics and cables.

The financial and image risks of even the smallest defect increases exponentially once the product leaves the factory undetected. This is why the incapability to detect is a multiplier in the failure modes effect analysis procedure.  Shipping, storage and other transportation environmental effects, such as humidity and temperature cycling, must be simulated or at least anticipated. The worst part about these environmental effects is their slow failure mechanism, sometimes ranging from 3-6 months.

Why Apple Ipad2 is ahead of far bigger competitors: could this be the China factor(y)?

We all know the US advantage: vision, marketing, content and software, but Apple made the announcement that while the competition is trying to catch up to the first Ipad, Apple’s 3^rd post PC device was released, increasing the gap ever more.

 How can Apple beat Samsung, one of the critical component suppliers, at its own game? Hardware! I watched a TV5 documentary about the Korea economic miracle, showing Samsung and its 40,000 people strong R&D facility.

The only knowledge I have of Apple’s manufacturers in China is that they’re mindboggling huge, have armies of manufacturing engineers and I am sure engineers supporting product architecture as well, plus that  there is supposed to be an Apple building on one of these suppliers compounds near Shenzhen China.  Some local and US Apple engineers are stationed here permanently, many of them fly back and forth to dictate the Apple way and look.

After the doom and gloom of a possible Japanese hegemony of the electronics industry back in the 80’s, the US made a strong comeback by innovation in the computer, software and component area.  And this coincided with the growth of the Taiwanese suppliers; I think they were taking advantage of the closed Japanese supply model by being more flexible, easier to work with , not so much burdened by loyalty inside the country or complex social behavioral rules for Western clients and so forth, just more hungry for business in general.

Then these Taiwanese companies moved out to Thailand, Malaysia, and Indonesia before finally “settling” in China, the big industrial migration of the century it seems. It’s not people moving anymore: it’s industries with some expats following in its slipstream (like VentureTech) and a million Taiwanese engineers, managers etc. Taiwan is as much an island as Japan, with some historical differences obviously, but also with a “shared” past, which left the Japanese management style in Taiwan according to some professional colleagues here in Shenzhen.

I have to say: as intended, the working class in China shaped the country over the last decennia, and not only because of low labor rates.  I have seen beautiful paintings in a Shanghai museum glorifying construction workers back in the 50’s, well that vision materialized.  China might also soon have the largest English speaking community in the world! On a side note here: English language schools continue grow and prosper, parents are laser focused on their (one) child’s education.

One can attribute this combined Ipad2 success mostly to supreme vision, conviction & courage, innovation, marketing, design, software, content, strong home market and so forth but you still need a large enough supply base, independent from your competitors, with strong manufacturing engineering support etc. to get this product to market fast enough to keep your competition looking at your heels from a distance…