Leadership Briefing from
CST VII/VIII
Publication Date: June 2003
"Automaking and the New Century: Social Response Product Development as Corporate Strategy"
By Bruce Piasecki
President & Founder
AHC Group
ABSTRACT:
An in-depth case study on how Toyota and Honda utilized a social response product development strategy to liberate a new family of hybrid technologies.
EXCERPT:
SOCIAL RESPONSE PRODUCT DEVELOPMENT
The automaker that wins the race to build and sell the superior car will shape consumer preferences, thereby boosting sales and profits. The winning firm will fashion a corporate strategy that drives auto emissions to near zero while simultaneously providing high levels of performance, safety and comfort.
Social response product development means that instead of manufacturing products solely in response to consumer preferences, as discerned through market research methodologies, companies must restructure their operations to actively shape market desires by creating new products. These products — supported by new manufacturing, quality control and resource management techniques — must bridge the gap between traditional expectations of performance, safety and environmental responsibility.
The model of social response product development is built on four dimensions, like the structure of a house:
- knowledge depth — the ever-growing basement
- knowledge endurance — the expanding sides
- knowledge dependence — the ceiling of use
- knowledge floors — the ground base
. . . . .
THE APPLICATION OF SOCIAL RESPONSE PRODUCT DEVELOPMENT BY AUTOMAKERS
The breakthrough at Toyota was recognizing that new technologies mean that a new knowledge floor can be laid, one that makes it possible to meet all consumer expectations of performance, safety and environment (fuel efficiency, emissions, resource efficiency, alternative fuels) without the tradeoffs previously required. Toyota has changed the rules of the game by leveraging its knowledge depth to introduce superior new cars like the four-door, five-passenger Prius. The Prius achieves fuel efficiency rates of 50 miles per gallon, twice the regulated corporate average fleet requirement of 25 mpg.
The move to hybrid cars — those that can run on multiple fuels, most commonly, gasoline and electricity — will be understood as truly exceptional when the realization sinks in as to how absolutely ordinary it will make the hundreds of millions of cars now littering the current knowledge floor. This floor — containing everything from gas-guzzling SUVs and commercial trucks to Europe's newest smart cars that are still dependent on the ordinary hundred-year-old combustion engine — has been permanently superseded.