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Insight Prysmian Magazine

A new innovation metric to achieve sustainable, long term results

Innovation is a key driver for Prysmian to achieve its goal of leadership in three areas: the energy transition; digitalization; and sustainability. Measuring New Product Innovation is a more effective way to gauge a design’s potential for supporting these goals.

 

 

New products are key to maintaining a leadership position in any industry. Not only do they increase sales, they can often command higher margins. Therefore, Prysmian Group has an “innovation strategy” in place that aims to generate continuous, long-term growth. Measuring the impact of innovation on sales is a pillar of this strategy. In 2019, Prysmian achieved an innovation milestone of €1 billion generated by new products developed by its Research & Development team of over 900 people and other units of the company.

Prysmian’s innovation projects contribute to its overall goal of positioning itself as a cables industry leader in three areas: the energy transition from fossil fuel to renewables; digitalization; and sustainable products. The group’s Research & Development staff’s role in achieving these goals has been traditionally measured in terms of contribution margin by the Design to Cost program, which focuses mostly on costs and encourages the use of better materials, more efficient processes, and innovative designs. Now it has a new metric: the New Product Introduction Vitality (NPID) program, giving an even clearer view of R&D’s impact on Prysmian’s business.

The NPID metric is also relevant to measure and document the group innovation performance for external stakeholders such as the Dow Jones Sustainability Index. Prysmian communicates a comprehensive picture of innovation management with its Open Innovation, DTC and NPID initiatives.

“New Product Introduction Vitality gives us an even clearer view of the impact of R&D on our business in terms of sales,” says Luca De Rai, Group R&D VP Energy and Innovation. “We can drill down and see what element is adding the most in terms of new design, new materials and new technology. It also helps us to set clearer priorities, matching our activity to the business expectations in terms of timing, final cost of product and technical features.”

Luca De Rai

Group R&D VP Energy and Innovation

The NPID program creates a “portfolio” by dividing new products into three categories: technology transfer, product development, and innovation. Sales for each category are monitored over a three-year time frame, starting with their first sales figures.  As certain products mature and drop out of the program, they will be replaced by others, ensuring a steady flow in the pipeline.  The metric got started with a pilot program in 2018 and continued through full-year 2019. The goal is to set eventually annual targets across different regions, and the challenge will be guaranteeing a steady flow of new products to join the portfolio once old ones drop out.

“Setting a new metric for R&D’s contribution is a really important activity, because innovation and product development is what you need to stay in the position of a leader, says De Rai. “If you continue to improve the number of products that are new in present portfolio, you can enjoy a better margin and a better market share.”

For Prysmian, the key to successful new product development roadmaps is to be close to customers. Maintaining accuracy in business cases can often be a challenge. Through a close collaboration between R&D, BU and Sales teams, Prysmian is continuously improving its communications with key customers to choose the right new product development initiatives. With NPID, the R&D team will be held accountable for time-to-market for the new developments, and commercial teams will be responsible for delivering the projected margins.

“At a group level we have already seen a 20% improvement in the new products success factor in 2020 compared to 2018,” says De Rai, referring to the NPID success factor that measures the portion of the new product development initiatives that deliver sales in a timely manner.

To help R&D manage its NPID portfolio, Prysmian is working on a digital platform that allows the user to have a bird’s-eye view of all projects simultaneously so they can be monitored to assess progress, relevance, priority, and future impact.

“R&D has an important role to play in driving the innovation roadmap process,” says Fabio Romeo, Head of Corporate Strategy and Development, and member of Prysmian’s Innovation Steering Committee. “We should strive to be agile in responding to customers, while reducing complexity internally in our product portfolio. The Innovation Steering Committee takes the NPID initiative seriously, to make sure our resources are focused on actual customer needs so that we use them in an efficient way.”

Fabio Romeo

Head of Corporate Strategy and Development, and member of Prysmian’s Innovation Steering Committee