How difficult is it for most manufacturers to master the core disciplines needed to excel at new product innovation? Very difficult if you believe the experts. For every 3,000 raw ideas, only one successful product makes its way to market. Others say nearly two-thirds of new products fail within two years. And a recent survey by the Product Development Management Association (PDMA) reports that 67% of industrial firms are not satisfied with the success of new product launches.
Cause for concern? You betcha. After focusing on squeezing efficiencies out the manufacturing operation for the past few years, manufacturers are once again shifting their focus to the elusive art of innovation. Not that recession-wary manufacturers are rushing to pad their R&D budgets; a recent study of 20 manufacturers by Forrester Research Inc. (Cambridge, MA) indicated that more than half expect to keep budgets static over the next three years, with only 5% planning drastic increases.
So if budget increases aren't the solution, how can progressive manufacturers nurture the innovation processes that are so critical to their long-term success? Experts say the answer lies in changing longstanding business processes that govern how companies foster innovation internally and collaborate with partners. And a key to supporting those new processes lies in implementing new technologies that can improve collaboration across an extended value chain and increase sharing of ideas amongst a broader population of users -- not just engineers.
"There used to be an assumption that investing more in R&D would translate into more innovation, thus more revenue," says Navi Radjou, a vice president at Forrester Research. "That assumption is coming under attack ... because the process of taking an idea from an R&D lab and bringing it to market is broken."
Specifically, what's broken, Radjou contends, are many companies' abilities to capture information about what customers want and to communicate those requirements back through the design chain in a timely fashion. It's a complex collection of capabilities -- part collaboration and part knowledge capture. Today, that process is largely manual although it's assisted by mainstream communications tools such as e-mail, fax and, in some cases, engineering management systems such as product data management (PDM). Most likely, the process is led by a marketing team, which might conduct a survey to gather requirements. Those requirements are then fed back to the design and engineering groups weeks later.
PDM and the more comprehensive product lifecycle management (PLM) platforms have solved some of the issues related to streamlining this chain of communication. Many of the PLM suites such as TeamCenter from UGS Corp. (Plano, TX), for example, have been augmented with new communications and collaboration functions aimed at soliciting customer feedback and requirements early on in the conceptual process. Some of these same PLM platforms are honing in on helping companies determine which new product ideas present the best opportunities. Products such as Accolade from Sopheon Corp. (Minneapolis) do so through new analytical capabilities and portfolio management features that rank the feasibility of new product ideas based on metrics.
Another area that holds promise is knowledge management software that can help dispersed companies capture unstructured information and manage it in such a way that fosters reuse. That can help engineering departments, because it allows them to avoid being required to continuously reinvent the wheel. Finally, CAD tools are also being packed with an array of advanced collaboration features that help promote a free-form exchange of ideas.
Next Wave of Innovation
Despite all these technology advances, most manufacturers still haven't implemented the tools that will help them properly engage customers, brainstorm new ideas and share the burden of bringing the right products to market. "There's a new realization that the future is not about getting things to market faster, but getting the right product to market at the right time -- that's a paradigm shift for manufacturing," Radjou says. "What's still lacking is a way to make the customer center stage of the innovation process. We still tend to view customers as the guy who receives the innovation from you, but a pull mechanism is needed."
The next wave of innovation is tools that help manufacturers discover the new product ideas that will resonate in the marketplace, says Mike Burkette, an analyst with AMR Research Inc. (Boston). It is the step before the new product concept stage where, Burkette says, technologies like improved CAD tools and direct materials sourcing capabilities have already lent a hand in speeding up design. "Discovery is the opportunity that's coming down the pike," says Burkette. "Most companies today are struggling to organize all the knowledge around potential ideas, to determine what the market opportunity is and to assess ... their ability to develop a product."
Products from companies like Framework Technologies Inc. (Burlington, MA), Integrated Development Enterprise Inc. (Concord, MA), SAP America (Walldorf, Germany) and Sopheon are addressing a piece of the problem by delivering software than can be used to rank and prioritize new product ideas. Framework's latest ActiveProduct 10.5 release, for example, has a feature called idea forum, which company officials say is the virtual equivalent of an idea box that can be used for collecting ideas, not only from employees, but from external suppliers and customers as well. It also has what Framework calls Active Charter scorecard capabilities for "triaging" ideas and moving them into the initial phases of development.
"We provide software and methodologies to take manufacturers from idea capture through concept analysis then through product design and rollout," says James Horne, Framework's vice president of marketing and technology.
Moving forward, AMR's Burkette sees products like Framework's Active Charter incorporating tools that will allow engineers and others to share unstructured data -- e-mail, notes, etc. -- as well as structured data such as CAD files. UGS is among the PLM vendors already taking steps in this direction. Its decision to build the TeamCenter Community collaboration solution around Microsoft Corp. technologies, including its SharePoint Services, ensures that anyone can participate in the new product development stage using familiar productivity tools like Microsoft Office, calendars and shared workspaces without having to segue to the structured environment of an engineering management system.
"PLM vendors have been all about structured data collaboration, and there [are] lots of good metrics and productivity advances," says Chuck Grindstaff, executive vice president of products, UGS. "But unstructured information is where this is going. For all the relevant data stranded ... in someone's head, [capabilities like TeamCenter Community] provide a way to get more of that information and share it with the right people."
One software company taking the notion of sharing knowledge in the form of structured and unstructured data even further is Invention Machine Corp. (Boston), which markets the Goldfire Innovator application. At the core of Goldfire Innovator is a patented semantic knowledge engine that lets engineers search in natural language through their company's proprietary R&D materials as well as a built-in knowledgebase of external patents and scientific content, says Stephen Brown, Invention Machine's vice president of marketing.
Don't Reinvent the Wheel
"Most inventions are not brand new, they're just applied in a new way," he explains. By providing the natural language search capabilities, engineers can intuitively identify and easily locate the knowledge they're seeking, which promotes reuse, Brown maintains.
Of course, there are legions of manufacturers looking to improve upon innovation by sharing knowledge and collaborating in much simpler ways. Collaboration platforms designed from the ground up to handle the exchange of robust engineering and CAD files fit that bill, by providing a forum for engineers -- along with folks in other departments -- to give input on designs, suggest changes and have a creative back and forth not possible with traditional forms of communication like phone and fax. CoCreate Software Inc. (Ft. Collins, CO) counts its OneSpace.net among the collaboration platforms sparking that kind of creative exchange for product development, says John Alpine, CoCreate's chief technology officer.
FCI USA (Etters, PA), a manufacturer of connectors for the telecommunications and automotive markets, has tapped OneSpace.Net to train inexperienced workers in countries like Mexico and China in its product development processes as it moves manufacturing to these new locations, says Jeff Toran, director of lab and engineering services. Selected because of its ease of use, OneSpace.net also serves as the platform for these dispersed teams to collaborate on new designs and custom variations for customers without having to travel. By bringing together a range of people involved in the product design and manufacturing processes, OneSpace.net is also emerging as a platform for exchanging ideas, Toran says.
"Some of the engineers are from other disciplines and they often have different ways of looking at things," he explains. "By bringing together people with different ... experience, there's a technology transfer just by people talking and working on designs. Without a platform like [OneSpace.net], that ... exchange is more haphazard and much less frequent."
Some vendors, such as PLM provider Aras Corp. (Lawrence, MA), believe that helping manufacturers build up their innovation muscle has more to do with supplying metrics to help measure their new product creation performance. In Version 6 of Aras PLM, the company has added dashboard and scorecard features to help companies measure their product development performance, including engineering efficiency, engineering optimization, time-to-manufacture and product innovation. "This gives executives and managers the ability to understand what portion of their energies are going toward innovation as opposed to non-value added or corrective-type actions," says Marc Lind, Aras marketing director. "If you're not measuring it, you can't manage it, and if you can't manage it, you can't improve it."
The bottom line: In 2005 and beyond, manufacturers need to bolster their innovation capabilities. Says AMR's Burkette, "In order to improve the top line and grow the business, manufacturers need to shift focus to product differentiation. Otherwise, they'll continue to battle it out in the low-margin area around commodities."