Manufacturing companies are at their most efficient and therefore lowest cost when they are executing on their business plan. Outside the walls of every manufacturer, however, other manufacturers are working to out innovate the competition. If you fall asleep or get complacent, you will suddenly find yourself scrambling to catch up.
True innovation — discovering or finding disruptive technologies, practices and processes — can be expensive for a well-oiled corporate machine. The entire system is designed to deliver optimum performance on the linear path of the business plan.
Leaving that path with a new technology or practice is painful and will cost you in lost profits, at least temporarily. But you have stakeholders that expect a certain income level, commission, flexibility of schedule, security or safe repeatable routines from you that they can count on to be the same tomorrow as they were today.
So you strive to be the industry leader, to find that newest tech, the next process improvement, the next advancement in equipment or machinery. You introduce innovation to the entire company. You try to create the culture that will attract the best people. You hire an innovation manager, someone who has a proven track record at companies just like yours.
Finished before the start
I worked with a large manufacturing company that makes commodity plastic commercial products. The CEO of the company hired an experienced vice president of innovation and handed him the keys to R&D. He immediately held an internal all-hands R&D symposium on innovation to develop the culture that would drive new ideas and attract smart, inventive people. He brought in experts in finding new technologies inside and outside the company. As a team they visited the local big name research university to see all the new stuff they were working on, the newest leading edge polymer research. It was exciting to see.
The R&D team returned to its respective divisions with a new outlook, ready to roll up their sleeves and start innovating.
After a few weeks, the vice president of innovation resigned. Good people left. Research was back on the previous focus. What happened?
Clarifying the message
Turns out that to the CEO, innovation meant finding lower-priced plastics and reducing cost throughout the company. He wasn’t interested in disruption, only in lower costs to drive profits to please the stakeholders with minimum change.
He hadn’t defined for the team what innovation was to him. You can imagine what the cost could be to the morale of the R&D team, to the manufacturing groups, to the sales team. The company has been through a series of layoffs to help reduce costs and improve the short-term profit picture since.
Every company is demanding innovation. Is your company truly ready to embrace what innovation is and all that comes with it? To create the culture that attracts the best people? Can you afford it? Will your stakeholders accept it? Have you defined what innovation means to you?
John Myers is entrepreneur-in-residence, director TA2 at the University of Mount Union. He is helping the University of Mount Union build out its entrepreneurship program, connecting with manufacturing companies to provide R&D and to establish a patent and IP commercialization policy as well as managing its incubator.