Quality Magazine

Manufacturing Excellence: Lighting the Innovation Fire

October 24, 2008

It occurred to me that most talk on innovation has been about culture change or product development. The real-life stuff happens in manufacturing where we are losing our livelihood faster than we can imagine. It should awaken us now, otherwise consequences may be more drastic than thought possible. Our government cannot keep borrowing from wherever, and still do well.

Interestingly, President George W. Bush signed the Executive Order 13329 titled Encouraging Innovation in Manufacturing on February 26, 2004. It states, “Continued technological innovation is critical to a strong manufacturing sector in the United States economy. The Federal Government has an important role, including through the Small Business Innovation Research, and the Small Business Technology Transfer programs, in helping to advance innovation, including innovation in manufacturing, through small businesses.”

To me it sounds like a political statement to get the monkey off the back, as I do not see any action or hear any talk about innovation by our political leaders. I recognize that some organizations are doing their best to highlight the issues, knowing that solutions may neither rest in the hands of the bodies such as the National Science Foundation and Small Business Administration, nor the not-for-profit organizations such as Council of Manufacturing Associations and The Manufacturing Institute.

Instead, it is an issue that must light the fire in every individual’s mind at all levels through awareness, mass education and long-term initiative similar to landing on the moon or becoming energy independent. Without such an initiative, the other visions will remain far-fetched.

According to the report, “U.S. Manufacturing Innovation at Risk,” a study by Joel Popkin and Kathryn Kobe for the above manufacturing council and institute, the following facts-or appropriately called warning signs-must be known to everyone:

  • The manufacturing recovery after the last recession lags that of earlier recoveries by almost 50%.

  • Manufacturing capacity remains underutilized.

  • The U.S. share of global trade in manufacturing has decreased by about 25%, falling from 13% in the 1990s to 10% in 2004.

  • Manufacturing still offers better paying jobs, employs 25% of scientists and 40% of engineers.

  • America invests more than any other country in research and development (R&D), yet U.S. growth in R&D has averaged only 1%, not keeping up with other countries.

    The investment in R&D stood at about $290 billion in 2003, 40% of all R&D spending in the industrial world. Now, the success rate of R&D has been widely quoted at less than 5%. If the most critical process in the country works at about a 5% success rate that obviously must become the number one priority for every business to improve and innovate. Instead of innovation in manufacturing, innovation in R&D should become even more urgent.

    Coming back to innovation in manufacturing, corporate leadership must ensure an innovation strategy that has a manufacturing component. In other words, the corporate strategy must state growth of manufacturing, creation of manufacturing jobs and innovation of such products through R&D.

    Professors Shaker Zahra and Sidhartha Das of Georgia State University identify four dimensions of the innovation strategy: making innovations in products and processes a competitive priority; allocating scarce resources by favoring projects that enhance the company’s manufacturing competence and skills; defining the focus and source of future manufacturing innovations; and differentiating its offerings and value to customers.

    The innovation in manufacturing can encompass technology development, workforce skills development, technology transfer, buy or innovate decisions, fundamental research in manufacturing methods, optimizations, effectiveness of quality improvement methods, new manufacturing competency development, streamlining R&D, employee idea management, support functions, manufacturing models, measures of successful innovations, and most importantly, leadership.