||NEXT-GENERATION MANUFACTURING PROJECT
NGM companies must develop and maintain
an environment that promotes, fosters, and rewards creativity and
innovation. Success in the next generation requires a progressive
innovation strategy that moves from being an art, as it is currently, to
being a systematic discipline. Achieving this will permit companies to
recreate innovation as a sustainable process, not dependent only on the
creativity and determination of individuals who come and go. Innovation
then would become a process on which company executives could rely and use
to make rational investment decisions.
“Every organization - not just
businesses - needs one core competence: innovation. And every organization
needs a way to record and appraise its innovative performance.”1
Companies are beginning to realize that ideas can come from anyone in the
organization. However, there are problems that stand in the way of
benefiting from these ideas because of a lack of vision, policy, practice,
process, and management commitment to innovation:
- Most employees do not know that their
ideas are welcome and needed.
- Management does not know how to manage
the flow of ideas.
- Ideas that do get through to
management are seldom implemented.
- Businesses of today have many
challenges to face, including:2
- Accelerating rates of change
- increasing levels of competition
- Globalization of business
- Rapid technological change
- A more diverse workforce
- Resource shortages
- The transition from an industrial to
a knowledge-based society
- Unstable market and economic
- Increasing demands of constituents
- Increasing complexity of the
Through these changes, innovation emerges
as the key competency that must be managed to lead companies into the next
generation. In this new environment, companies must make strategic
decisions as to where to place themselves on the Continuum of Enterprise
Approach to Change and Innovation.3 (figure 1.0-1).
Drucker, Peter Fl, “The Information
Executives Truly Need,” Harvard Business Review, January-February
Higgins, James M., Innovate or
Evaporate: Test and Improve Your Organization’s IQ - Its Innovation
Quotient, The New Management Publishing Company, 1995, pp.5-8.
Adapted from meeting notes of the
Business Practices Thrust Team of the Next-Generation Manufacturing
Project, 25 June 1996.
A Next-Generation Manufacturing Imperative
The NGM Business Practices Thrust Team
Innovation is the creative process of
improving everything from business practices to the technology used to
develop and deliver products and services to the development of the
products and services themselves. Modern innovators have gone from
creating products to creating solutions. Innovative solutions then become
platforms for future innovations.
Innovation tends to flourish where
fundamental constraints are lifted and/or where a sense of urgency is
present. For a company to position itself competitively in the
Next-Generation Manufacturing (NGM) environment, it is essential that
everyone in that company be involved in modern innovation strategies and
Why is it Important?
As the level of competition becomes more
intense due to accelerating change in the global business environment, the
ability to stay ahead of the wave is increasingly important. The NGM
company must quickly generate solutions through use of evolving innovation
Changes initiated to make people more
motivated at work also serve to increase the level of innovation. People
are the most critical element in the innovation process.
NGM companies must create an
organizational structure, culture, and measurement and reward systems
that encourage innovation. This includes placing value on risk-taking
and learning from failure in the creative process of innovation.
- Innovative behavior can be taught
- Companies that apply a systematic
approach and rapidly make use of emerging technologies dominate
their markets. These companies maintain their competitive position
by fostering an innovation-driven culture.
- Evolving information technology
brings new opportunities to light through innovative knowledge
- Companies that understand the value
of long-term effects of good innovation policy restructure their
processes to facilitate strategic changes.
1. Individual companies can develop a
process to promote and reward innovation throughout all the operations
of the business. They can require innovation as a prerequisite for
management positions and form or join consortia to develop mechanisms
for stimulating innovation I all facets of enterprise operations -
market development, product development, process engineering,
manufacturing, supply chain management, customer service, etc.
Industry and academic associations and
consortia can embrace forward-looking, cross-cutting programs like NGM
as a way to institutionalize innovation in approaching problems that are
beyond the ability of any one organization to solve.
ACTION PLAN RECOMMENDATIONS
Only two decades ago, the concept of
producing defect-free products (zero defects) was at best a slogan -
something to rally around, certainly not attainable or even necessary.
Today it is part of the price of admission for manufacturing companies
approaching six sigma (3 parts per million) quality levels; some are even
beginning to take aim at 3 parts per billion! Fast cycle times, still a
discriminator in the mid - 1990’s, is recognized by the pacesetters as a
common trait of the NGM community. How were these kinds of improvements in
achieved? Through innovations in how work was done, both on the factory
floor and in the development process. The NGM company will look, think,
and do work differently than today’s manufacturer and will be
The ability to innovate not only products
and services, but also process, strategies, organizational structures, and
enterprise designs, and to rapidly change them, will become the next
discriminator, and perhaps soon the price of admission for U.S.
manufacturers in the world market.
“It is important that comparative
studies (between countries and companies) focus on the search for factors
which determine innovation excellence, in particular properties such as
‘innovation power to initiate innovations’ and ‘effective
implementation.’”39 Development of any innovation strategy should be
viewed from both the micro- and the macro-economic levels.
Action Recommendations for Companies
There are a series of initiatives that
can be taken from the individual company perspective, albeit with the “extended
enterprise” in mind. A dynamic economy demands participation on
regional, national, and global scales in order to optimize results. Thus,
there are actions from the larger perspective that, if implemented, could
directly impact the quality and effectiveness of local and internal
One way to begin is to calibrate
innovation capacity with the Knowledge innovation Litmus Test:40
- Is one person chartered with overall
responsibility to manage the corporate-wide innovation process?
- Are there performance measures -
quantitative and qualitative - to assess your innovation process?
- Do your training/educational programs
have provisions to incubate and spin-out new products and businesses?
- Does your local, regional, or
international presence operate as a distributed network of expertise
that learns from as well as distributes it to customers?
- Is there a formal intelligence
gathering strategy to monitor the positioning of both current and
- Does the rate of production of new
products and service exceed the norms of your industry and create new
markets in which you can excel?
- Has a strategic alliance manager been
designated to create and manage the network of partnerships and joint
ventures to leverage your firm?
- Does your marketing image portray an
organization with the capacity to create and move ideas into the
marketplace to make your customers successful?
- Have resources be allocated to
articulate a compelling vision internally and share company expertise
externally through publications and participation in major forums?
- Is your computer/communications
capability treated as learning tool for internal conferencing and
external business leverage on the World Wide Web?
Cozijnsen, Anton and Vrakking, Willem,
eds., Handbook of Innovation Management, Basil Blackwell Ltd., 1993, p.12.
http://www.entovation.com, Copyright 1996
Entovation International, All rights reserved.
The following ten steps can enable a
company to see where it is on the scale of innovation management
capability and how it can establish a strategy. These steps represent
various aspects of the innovation process: creation, conversion and
commercialization. They are not intended to be all-inclusive, but are a
starter set of ways to think about the innovation process as a system of
interdependent activities. As with any corporate-wide initiative,
companies must establish key players, agree on a framework for dialogue,
create an implementation strategy (ideally, after stakeholders have been
interviewed), manage the process, evaluate results, and be open to new
ideas and unexpected business opportunities.
- Foremost, the innovation process
should be made explicit by identifying a corporate officer and
cross-functional team responsible for the process. Innovation can be
stated as a core value of the firm, thereby ensuring that all
participants in the process recognize its importance.
- Once the process is defined,
including the roles of all stakeholders, attempts should be made to
define the metrics of progress - both tangible and intangible - that
define the performance of the system. Recognize that metrics
difficult to define may be the best measures of success. Develop the
“business case” based on a new value proposition that promotes
creation, exchange, and application of new ideas. Develop key
indicators and early warning signals that might be tracked in a
periodic review. Be attentive to what incentives can be built into
the system to foster the behavior necessary in an innovative
- Take stock of the education/training
capability of the firm and form where its ideas originate. Consider
the implications of a “real-time” learning environment that may
not be classroom-based. Provide an infrastructure the incubation of
new business ideas that might develop into products/services and
even new business that might contribute to the bottom line.
- Consider your local, national,
regional, and worldwide presence. How might these locations be
converted into a distributed learning network that treats
stakeholders, including customers, as sources of knowledge?
- Pay attention to the competitive
environment, but ensure your radar is wide enough to capture
potential competitors who may not even be a factor in your industry
today. Ensure that any intelligence activity is designed as a
feed-forward system to those with the need to know. Where
appropriate, rely on the finest computer and communication
technology available to facilitate the process.
- Review the metrics of your own
product and service development - for example, the number of new
products/services fielded in a given period as a percentage of
sales. Perform a serious analysis of the knowledge economy and the
implications for your business. Consider some new adaptations that
capitalize on knowledge-based products and the knowledge delivery
- Take stock of the variety of
alliance - research, joint venture, cooperative marketing, etc.
Determine how they are being managed in ways that are consistent and
provide documentation of successes and failures. Consider the
portfolio of research alliances developed by your competitors, their
inherent strategy, and potential impact on your performance.
- Review your media/advertising
strategy to see how it maps to the intellectual capacity and
innovative environment you have or seen to establish. Review how
marketing and public relations strategies are linked with other
functions in the innovation process in ways that promote
simultaneous development and optimize resource leverage.
- Rethink your leadership strategy in
an age that demands the visible sharing of knowledge. Determine your
sphere of influence and how to best leverage the talents of your
- Assess your technical infrastructure
for internal and external communication (e.g., computers, software,
multimedia, Intranets, Internet, videoconferencing, collaborative
applications, etc.) capability and effectiveness of its management.
Consider the overall behavior necessary in the innovative
environment and determine if the systems afford opportunities to
manage the corporate memory, enhance electronic dialogue, deliver
on-site training, and learn from participation for continuous
In plotting their course of action to
embrace innovation management as a core competency, companies need to
- Place innovation management as an
explicit priority in all strategic planning
- In managing change, ensure that the
people within the company are motivated to enhance innovation
- Ensure that the concepts of
innovation are crisp and clearly linked to business success
throughout the company
- Make clear to all the company that
innovation applies to all work, not just product and manufacturing
- Develop and implement metrics and
performance measures that encourage innovative team work
- Avoid punishing failure when
attempting constructive innovation
- Take into account the importance of
innovation when designing and implementing Extended Enterprise
Action Recommendations for Industry
and the Nation
As with all of the NGM Imperatives,
collective action by industry, government, and the academic community is
required to drive the process of change and attack cross-cutting
infrastructure barriers. A national strategy for innovation requires that
the nation focus on:41
- Preserving core competencies in
science and a professional cadre of scientists and engineers
- Facilitating ongoing technical
innovation (e.g., the process by which knowledge is translated into
- Building connectivity among the
performers and users and knowledge and technology - a requisite of
complex innovation systems
- Ensuring a policy environment that
encourages and rewards investment in innovation
- Supporting an educational process in
which individuals “learn how to learn” to adapt flexibly to
Note: This is the introduction to
a major report produced for the ‘Innovation Imperative Paper’ for the
Next Generation Manufacturing (NGM) project for which Debra M. Amidon was