Case

Assignment

CIBA VISION: THE DAILY

DISPOSABLE LENS PROJECT

Submitted to
Prof. Ganesh N Prabhu

In partial fulfilment of the requirements of the course

‘New Product Development’

Indian Institute of Management, Bangalore

On
th
7 July, 2015

Submitted By:-

Group C (Section 2)
Gita Sowmya Parlapalli 1411370
Mohit Kumar 1411307
Rajat Mangla 1411121
Vishwas Sharma 1411137
Introduction

CIBA Vision is a leading manufacturer for optical contact lenses. It provides a wide range of
product portfolio with more than 20 lines of RGP and soft lenses – 200,000 SKUs contributing
98% of overall sales. The company positions itself as a “one stop” shopping destination for all
contact lenses, with conventional contact lenses being its strongest segment. Its focus has been
on providing differentiated product offerings which give higher margins with lower volumes.
Lately, with novel product launches such as seven-day disposable lens from J&J, CIBA Vision
faces a major threat of product portfolio obsolescence. With consumer preferences shifting
towards the highly convenient disposable lenses, CIBA Vision is contemplating a new and
potentially risky project for manufacturing a “daily disposable” contact lens.

We believe that this initiative requires brainstorming on various topics of project organization
such as the R&D team structure i.e. physical geographic location and its autonomy, required
financial investments, cannibalization threats to existing business, reducing manufacturing costs
and developing long-term competencies. Successful execution on all of these dimensions will
lead to a successful future integration and an effective overall cross-functional coordination
within CIBA Vision.

Given the firm’s history of failures with cross-team projects due to internal conflicts and the
criticality of this project for the overall business, CIBA Vision should go ahead with creation of
an autonomous project team based in Germany. The project leader must be given all the required
resources, staff i.e. chemists, engineers etc. and a complete autonomy for designing his/her own
research teams and departments. There must be minimal baggage from existing business model
in US and team must be allowed to develop its own competencies and processes. They can also
leverage the existing unutilized capacity of the manufacturing plant in Germany to
simultaneously work on the process development. From an overall organization’s perspective, a
leaner yet robust product portfolio with well-directed budget allocation is recommended. Focus
on efficient resource allocation and long-term planning will be much required, as explained later
in this report.

Identified Focus Areas

Based on the understanding of the case, the following focus areas have been identified:
 Team Development and Process Streamlining: Identify the most optimum team
structure for building and running an efficient process which inculcates innovation
 Resource Planning and Prioritization: Re-define CIBA Vision’s existing business
strategy and product portfolio for efficient resource allocation
 Internal Capability Development: Building expertise for future such projects and
successful integration with existing organization

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Team Development and Process Streamlining

Though the entire organization is broken into three independent areas, each handling the R&D,
manufacturing and marketing in their respective geographic areas, CIBA Vision faces numerous
challenges in terms of its organizational structure:
 Unfavourable overlap in terms of production and distribution of products, between
Atlanta operations and other geographies. This often leads to sub-standard products
 Lack of dedicated and autonomous innovation team at a pan-organizational level
 Conflicts between R&D and manufacturing functions, often leading to blame games. In
the absence of an integrated business strategy which combines their narrow targets into a
collective framework, both functions are currently working in silos.
 Lack of integration teams for smoother passage from R&D to mass-scale manufacturing
 Friction amongst company executives resulting in delayed and unplanned decisions.

These challenges clearly highlight a missing interface between the product, functions and
geographies. We recommend a form of an ambidextrous organizational structure to help
CIBA Vision drive successful innovation and connect these three simultaneously. The basic
premise of this approach would be to drive exploration (encouraging creativity and
innovation) and exploitation (effective implementation of above ideas) simultaneously.
 The daily disposable lens project would be provided a separate, autonomous innovation
unit. This new team will be based in Germany.
 A senior ‘Product Manager’ for this project will be identified, who will have full
accountability for the project.
 This team will be allowed to develop its own approaches, setups, people expertise etc.,
but will reside within the overall organization.
 A clear reporting mechanism would be outlined defining clear roles and responsibilities.
 Personnel would be trained to transition into this new structure.
 Knowledge sharing could help accelerate learning. For instance, the R&D teams of two
products could interact to develop a greater understanding of material science.
 A reward scheme could be instituted to appreciate efforts in technology breakthroughs.

The rationale for basing this team in Germany would be two-fold. Firstly, the team would be
completely free from any influence from the US organization. Secondly, they would be able to
leverage the superior German expertise in product and process innovation. We propose that
CIBA Vision should expand its small R&D operations in Germany, into a full-fledged team
which is focussed on the daily disposable lens project. The operations at Grosswallstadt plant
may not be halted and the unutilized 50% capacity be used for the manufacturing for pilot
project. The R&D and manufacturing operations in Germany would be working in tandem on
this pilot project. Our assumption is that the firm will be willing to bear the high manufacturing

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costs in Germany, in returns to identifying the best practices for collaborative action, which may
be taken over for application in US.

Resource Planning and Prioritization

Presently, CIBA Vision manages a big product portfolio of over 3 million SKU combinations
across 20 lines. Although it is not mentioned in the case, but we assume that the firm will have
multiple product lines other than conventional contact lenses. We think that with this segment
stagnating and new segments arising fast such as the disposable lens, the firm should
seriously consider dis-continuing some of the other existing products. There would be three
major impacts/follow-ups for the above recommendation:
 Discontinuing non-profitable/minor segments would free up allocated capital investment,
which could be re-invested back into the daily disposable lens project. This could release
the financial burden on the project.
 It would require a shift from existing positioning of the firm from being a final stop to all
contact lens needs, to positioning itself as specializing in conventional lens offerings and
later include disposable contact lens offerings as well.
 Any revenue impact from decline in sales from these closed segments, can be more than
compensated with the above refined position statement and a supporting marketing
strategy, which focusses on tapping into new consumers who do not wear contacts
.
As per the case, another essential requirement for CIBA Vision is to re-think its current line of
projects. The company is struggling with a lack of both financial and human resources due to a
large number of running projects, with no clear accountability. Moreover, most of them seem to
be focussed on small incremental enhancements rather than any radical or major improvements.
We suggest that the company should tackle this on a high priority, through following steps:
 All current projects should be either merged or scrapped or modified, so as to reduce the
total into a manageable number.
 There should be equivalent focus on both product innovations as well as process
improvements, within the above refined list of projects.
 Since each project will require different technical skills, each project should receive its
independent project leader and completely autonomy, along with their own R&D and
finance divisions.
 All of the project leaders should report directly to the CEO or a high-ranking executive to
avoid any baggage and influence of existing organization. At the same time, they should
be encouraged to sharing of expertise and leveraging the existing organization.

We believe that providing such flexibility is essential for generating an innovation based culture
and processes. It would help in developing an organizational culture which not only stresses on
minor improvements but also on breakthrough achievements, which are necessary to compete in

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this market. Moreover, this will help CIBA Vision in long-term planning and gain “first-mover”
advantage in numerous other probable ground-breaking technologies.

Internal Capability Development

Failure of ‘Excelens’ and ‘Godzilla’ projects revealed a lot of loop-holes in CIBA Vision’s
approach to product development. Other than intra-department lack of coordination between
R&D and manufacturing, it exposed in capabilities of the company in terms of production
engineering as well. There was dire need of in-house manufacturing and research competency
development if CIBA had to make a breakthrough in low-cost manufacturing technology.
Keeping in view the long term perspective, below are few recommendations to develop internal
competency for better product development:

 Uplift R&D team:

Product differentiation had been the success mantra for CIBA since its inception.
Currently they were not able to produce any ‘path-breaking’ development in the existing
as well as new products. Previous failures highlighted that the current research team
lacked technology to make considerable breakthrough in manufacturing process
efficiency to lower cost. Hence, R&D team needed an overhaul through external inputs.

We believe that firm should focus on development and perhaps even acquisition of
external technology through tie-ups with other research firms. There are evidences in
literature such as Sony, in 2012, followed a similar strategy in order to drive value
creation through revitalization of existing business operations.

 Internal Manufacturing Audit:

CIBA, in spite of having in-house manufacturing facility, was not able to realize the
benefits of opportunities to conduct real-time development work and efficient traceability
back to product designs. It could be seen in the ‘Excelens’ example where manufacturing
wanted a technical support from the R&D team but they were nowhere to be found. It
showed misalignment and inconsistency in the corporate level as the manufacturing
department and kind of incompetency of the manufacturing personnel.

We think that in order to resolve these issues, CIBA needs to adopt such internal audit
processes to ensure manufacturing performance objectives are fulfilled efficiently.
Companies like Xerox, Motorola have been using internal benchmarking systems in order
to identify problem areas in their manufacturing units. Moreover with the introduction of
short period disposable lens, differentiating high volume/low volume production
processes will be essential.