Innovation is no longer the purview of the brilliant focused individual in his basement. It is quickly becoming too complex and demanding even for the mid-sized or large business with multiple engineering departments. Development of smart products using new materials, technologies and manufacturing methods requires an abundance of knowledge and resources that won’t be met by a single organization, nor with traditional outsourcing.
The space program brought us miniaturization, the military new technologies, and governments developed the internet. The changes products, materials and processes are undergoing for the developed world to retain economic leadership require those types of jump-step imagination. Labor rates only define production location when products and processes allow them to.
Many of you are as frustrated as I am that most universities are teaching decade(s) old thinking and generating little meaningful knowledge. But some are doing amazing work. And some are parts of innovative hubs that include businesses, research, investors, a multitude of related expertise, and knowledge capture and sharing. These hubs tend to have concentrated focus, and are becoming the most successfully innovative ensembles imaginable.
Akron, Ohio is renowned for both losing the tire business and for leading-edge materials development. Tire manufacturing is history there, but materials development is vibrant. The University of Akron became a leading research and development organization for materials under the leadership of a prior president. Now, it suffers from dysfunctional administration. The entire Akron region is vested in getting those problems solved and ensuring that the technological leadership of the school is retained. And Akron provides but a single example of how universities, companies, local governments and investors are slashing silos and changing the future.
Continuous improvement is a matter of necessity. Breakthrough advancements within an organization are also required. But neither is enough to stave off low labor rate countries forever.
If success involves more than profits, if it also involves enriching employees, customers, suppliers and the surrounding community, innovation must make labor rates inconsequential to the location of production. That is done by creating products and processes that require an educated workforce and that define market needs.
This approach to innovation and operations strategy does not preclude producing near your markets. The recent GE announcement that it will locate production to minimize the impact of constantly shifting political policies around the world fits fully within this thinking. In fact, not long ago GE opened a jet engine plant in the southern United States to partner with a nearby university that houses rare expertise. It is also operating production facilities elsewhere, as its financial and technological needs are met in many places beyond North America.
Operations leadership is more than a Gemba walk, though that is important. It involves ensuring product development processes that provide speed-to-market with market-verified products. It also involves looking externally to strategically position the organization for continual success. And that cannot happen alone, no matter how intelligent your workforce or how strong your profits.
It’s not enough to visit a neighboring plant to see their Kanban system, nor to travel to Stuttgart Germany to observe advanced manufacturing at its finest, though again, those expeditions can bring value. Operations leadership is responsible for providing access to processes, materials and technologies that define the future, not reflect the past.
AME has long stood for Learn, Share and Grow. As an industry, manufacturers in North America need to inculcate that thinking far beyond what we are doing with day-to-day operations. It must become part of our DNA far beyond production. Learn, Share and Grow is no longer an optional core competency.
As published in AME’s Target Online