Innovation in Manufacturing:From Product Innovation to
ProductivityVah Erdekian, LGO Industry Co-
DirectorLMP Summit, October 27, 2011
Overview
• Product and process innovation• Product lifecycles• Industry example• Advanced manufacturing• Why Manufacturing?
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Innovation drives disruptive outcomes and major breakthroughs (1)
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For products:
Innovation drives disruptive outcomes and major breakthroughs (2)
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Or for processes:
Impact of Innovation on Industry or Product Life Cycle
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Level of innovation needed is a function of product life cycle (T) / “clock speed” Determining working capital and assets/resource allocation is critical
Production of American watch industry (M. Harrold)
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Impact of product and process innovation on the American watch industry, 1850s-1880s
• User friendly interfaces (setting time and winding)
• Reliability• Size• Availability• Cost
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European, early 1800s
American Waltham 1870s
US watch market share by company (M. Harrold)
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Production and employment in the late 19th Century American watch industry
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Peak employment of ~100K in
late 1920s
Lack of product innovation in 1920s/1930s
• Self-winding capability and electric watch designs were disappointments
• Mainspring design and life expectancy had not changed for 50 years
• Request for tariff protection ended unsuccessfully
• Before decade ended significant number of “American watches” were made in Switzerland
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American Waltham early 1900s
Swiss wristwatch 1940s
Trends of watch size market share (M. Harrold)
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Impact of Innovation on watch industry product Life Cycle
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The pressure to innovate
• Digital Equipment • Nortel Networks• Data General• Lucent• Kodak• Chrysler• GM*• Polaroid• Xerox*
• Palm• RCA• Motorola*• And others
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Lack of product innovation and excessive asset allocation to manufacturing during the latter part of the “growth life cycle” drove these former leaders out of business:
Advanced Manufacturing: Product and Process timelines
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Where Process Innovation Occurs
Product form factor innovation
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Why a career in Manufacturing?
• Not for the faint of heart• Complexity and intensity• Hard skills/soft skills• In the center of all the
action• Diverse set of skills and
knowledge a requirement:• Technical excellence• Financial knowledge• Ability to lead people and teams• Communication skills
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