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by Jeff Moad, MA Editorial Staff Posted on Wednesday, November 15, 2006 12:51:38 PM   | Abstract: | With low-cost competition breathing down their necks, manufacturers look to new product innovation for growth. Here's how you can become an innovation leader. |
Until recently, it was practically unheard of for engineers working in different business units within defense contractor BAE Systems' Electronics and Integrated Solutions (E&IS) Group to compare notes, much less collaborate on new product designs. Engineers in each of the 19,000-person group's five business units typically went their own way, ignoring the new product plans in other business units, even if that meant that more than one unit would end up spending time and money designing, say, the same type of sensor. "We didn't have a lot of insight into what our other units were doing that might be synergistic," recalls Adam Barnard, program manager at BAE's Johnson City, NY, facility. "We didn't have the ability to combine signal-processing elements from one unit with controls from another to obtain a new capability." Then, about a year ago, in an effort to cope with intensifying competition and rising customer expectations, officials at BAE decided to take a more structured, coordinated approach to how the group innovates. The E&IS group adopted a new set of processes under which various functions within each business unit -- engineering, manufacturing, and marketing, for example -- collaborated to create new product development roadmaps spelling out key customer requirements, new products planned, required technology, and development milestones. Then, using road-mapping software from Alignent Software Inc. (Carlsbad, CA), BAE was able to see where the new product development plans from different business units would intersect. And that, Barnard says, allowed BAE to begin to use technology from one business unit in new products from another, cutting development time and cost. "We are trying to go from an ad hoc, ill-defined process to a more defined, repeatable, quantifiable approach to innovation," Barnard says. BAE isn't the only company pushing to get more bang from investments in new product innovation. As manufacturers begin to emerge from a prolonged focus on operational efficiency and cost-cutting, many are starting to target growth from new product innovation. At the same time, intensifying competitive pressure from low-cost offshore manufacturers is forcing their counterparts in developed countries to turn out the right new products much more quickly in an effort to avoid commodity-pricing purgatory. As a result, manufacturing CEOs are more focused than ever on stoking the innovation engine. In a recent survey of 1,070 executives by the Boston Consulting Group (BCG) -- mostly in manufacturing and mostly in the U.S. -- 72% said innovation is among their top-three strategic priorities. Forty percent said it is their company's top strategic priority. Companies identified by executives as innovation leaders -- including Apple Computer, 3M, and Toyota -- had generated significantly better-than-average returns to shareholders over the past 10 years, the BCG research found. "After focusing for several years on things like quality, lean, and Six Sigma, companies have rediscovered growth," says Jim Andrew, senior vice president at Boston Consulting Group and the head of its worldwide innovation practice. "Acquisitions are difficult to make pay off. But CEOs are realizing [that] organic growth through innovation now can have a big impact on the bottom line and the stock price." It's not surprising, then, that manufacturers plan to boost their spending on innovation, including research and development as well as new product development and deployment. Forty-one percent of respondents to the BCG survey said they are increasing spending on innovation by greater than 10% this year, up from the 27% who said they planned to increase innovation spending by that much last year. Page : 1 2 3 4 5 ... NEXT |