Leading companies are building cultures focused on identifying and realizing new opportunities to satisfy customers.
By Jason Tuma
While some business sectors use “innovation” as a non-specific buzzword, innovation has a precise meaning within manufacturing. It means identifying and capitalizing on new opportunities to improve products and services, internal processes and functions, and even management practices.
At leading manufacturers, innovation has become a structured part of daily activities, as well as a consistent plank in planning. Unlike in the past — even as recently as a decade ago — innovation in manufacturing goes beyond product design and engineering. It applies to functions such as sales, marketing, distribution, after-sales service, sourcing — essentially, all of the ways that manufacturers create value in a highly competitive global economy. Common denominators of successful innovation strategies are that they are focused on increasing customer satisfaction and have a long-term focus.
“Innovation is certainly about more than just products, and it doesn’t stop with process innovation,” says John Schober, Director of Innovation at MAGNET, which serves as a networking and advocacy agency for Northeast Ohio manufacturers. “Innovation is about creating value for your customer, and manufacturers have the opportunity to create value for their customers by also looking at their business models, their service offerings, or their delivery channels, to name just a few.”
In March of 2010, executives from some of the country’s largest manufacturers testified before Congress in support of government-funded programs that further manufacturing innovation. Their message: Innovation is what will keep the United States competitive in a global marketplace, and without it, overseas manufacturers will take away market share.
“In order to be relevant, we need to ensure that government R&D programs are focused on ways to provide high-quality assembly, non-destructive evaluation, and high rates of repeatability at large volumes,” Susan Smyth, Director of General Motors’ Manufacturing Systems Research Lab, told the House Committee on Science and Technology. “We need to focus attention on technologies that enhance our virtual and flexible manufacturing capabilities at the project level. Areas such as robotics, virtual manufacturing, and sustainability are key technology areas . . .”[1]
In Northeast Ohio, there are obvious opportunities for product-related innovation in technology-driven markets, such as medical instrumentation, biotech (industrial and medical), electronics, and automation. But what about manufacturers tied to “traditional” industries such as steel, autos, and heavy equipment? What are the opportunities there?
“We expect that these non-traditional sectors will provide opportunities for manufacturers in our more-traditional industries,” Schober said. “GrafTech and Cardinal Fastener are telling examples. GrafTech found opportunities in the electronics market for its flexible graphite technology, and Cardinal Fastener found opportunities in the wind market for its fasteners.
“And for companies that remain focused on traditional industries, many opportunities will come from trends related to the cost and availability of energy — for example reducing weight in cars, minimizing waste energy [or material] in steel making, and optimizing energy usage in heavy equipment.”
Schober said one of the things limiting small- to medium-sized manufacturers from reaching their full potential through innovation is the struggle to find the right balance between supporting the current business and developing the future business. Small to mid-size firms are more inclined to use the same internal resources for managing the current business and developing the future business. In this battle for organizational resources, developing the future business often loses out.
Manufacturers can address this problem by adopting best practices in their organization that facilitate a focus on the future, and thus innovation. Outside service providers can help in this effort, but they often are tailored to meet the needs of large firms and startups — both in terms of cost and content — leaving small to mid-size firms without this option.
“MAGNET has an initiative in the works right now to address this gap for firms here in the region,” Schober said.
So is now — as the economy rebounds — a good time to start an innovation initiative?
“The ‘right’ time to expand efforts to innovate is very unique to the circumstances of a company,” Schober said. “What is most important is not that manufacturers expand efforts to innovate now, but that they find the right way to manage innovation over the long term. Too many manufacturers never give innovation its appropriate attention.”
[1]Alpern, Peter; “Congress Hears Call for Manufacturing Innovation,” IndustryWeek, March 22, 2010
