When it comes to developing a new product, an importing business cannot always do it all alone.
Sometimes it is possible, and I strongly suggest the following steps for complex products: (1) develop a prototype with a few technical blueprints, (2) refine it in contact with a good Chinese manufacturer.
But let’s say you want to develop a tablet PC or a mobile phone, while making substantial changes to the OS (say, Android). You will have no choice but to work hand in hand with a manufacturer that has a solid engineering team with know-how in hardware and firmware.
This type of R&D collaboration is called co-development, and it presents its own challenges. I took a few notes when Gary Newman, VP of international sourcing at Schneider Electric Partner Business, did his presentation on this topic in the ”Made in Asia” seminar (organized every year by the French Chamber of Commerce in Hong Kong).
If 2 companies co-develop a new product, and each has an 70% chance of success, what is the overall chance of success on the project?
70% x 70% = a 49% chance of success only!
Newman advises to consider these criteria before co-developing:
- Value proposition of partner
- Clear IP protection
- Deliverables & delivery risk
- Speed to market
- Project cost
- Technical bandwidth, internal & external
- Skills & mindset of co-develop project management team
Anybody see additional criteria?
If you only master half of the competences required to reach your business objectives, than 49% chances is much higher than the 0% you would stand alone. And if you have to build the whole set of competences alone, succeeding in that would probably be less then 70%.
Cooperation is always hard, of course, and this is why the selection of the partner is key. I would say that even before selecting the partner (or as part of the cooperation scenarios to consider) the analysis and selection of the platform to use (or the set of competence really required from the partner) is as important.
In the example of the tablet and customized OS, the selection of the hardware type will be crucial. Whether it is highly customized itself or pretty standard will have a huge impact on the type of relationship that are develop with the partner and whether this relationship has chances to remain stable in the long run.
I fully agree. Start with the exact need you have, and then look for an ideal supplier that can satisfy that need. Not the other way around.