Cornerstones of Innovation
By David A. Prawel, President & Principal Consultant, LongView Advisors Inc. and Michael P. Richardson, Director of Engineering, Delphi Steering Systems

Fierce competition on a global scale is driving new product development at an unprecedented rate. A manufacturer's ability to advance, test new ideas and converge on ideal solutions quickly can be the key to the next competitive win. At the same time, products are more complex than ever before and suppliers of key sub-systems are spread around the globe. These are the facts of life in manufacturing today. A recent article in Fortune Magazine said it well - "Because of globalization, companies are finding it harder and harder to compete on price, making the pressure to add value through [product] design ever greater".

Winning companies have recognized that their key business drivers are increasing the "customer" value of their product; accelerating time to market, higher efficiency and improved productivity of people and processes. Increasing customer value requires a keen understanding of the value chain to gain valuable insights into cost, quality and functionality, all of which help to reduce cost and enable zero defect product launches. Accelerating time to market boils down to faster product cycle times; faster iterations of trial and error cycles and faster convergence to winning product designs. Higher efficiency and productivity means doing more with the tools available, while improving processes to minimize errors and make people and technology more effective. Simply said: To win, one must innovate faster than the competition.

All of this requires smart people. Innovation, after all, is not about technology, it's about smart people and how they use technology to solve problems. It's about smart people working together, in a common direction, within an environment that nurtures innovation. Such an environment must be built on excellent global communication, world-class leadership driving process and methodology and best-in-class technology. Taken together all of these elements stimulate creativity, faster product cycles, standardization of things that work and disposal of those that don't.

Sidebar… Innovation is not about technology, it's about smart people and how they use technology to solve problems.

Let's dissect this further…

Communication

If people are going to work together effectively, they must be able to communicate efficiently, on a global scale. Designers have to communicate with other designers as an idea evolves. They must also be able to communicate with engineering, analysis, manufacturing, and all other functional team in the value chain, inside their company and externally…locally and globally. And the information people need to share is rich content - not just talking to each other, but sharing ideas visually, discussing change orders while reviewing engineering drawings, working together on a specification or what have you. Kevin O'Marah, vice president and fellow at AMR Research, reported in a recent study of 600 manufacturers over a ten year period, that poor communication is the biggest roadblock to new product development. Effective innovators must be great communicators.

Collaboration is an overused term. To some it means simply sharing email or chat sessions. To others it refers to more complex joint visualization in a shared workspace within the Internet. Too often it means whatever the last marketing person suggested it should mean. Contrary to what software vendors would have you believe, collaboration is a process, not a technology. You can't sell it and you can't buy it - you can only do it. The American Heritage Dictionary defines Collaboration as "…to work together, especially in a joint intellectual effort." This sounds simple, but on a global basis it is very difficult. Collaboration is a critical pre-requisite for connecting people who would otherwise be working independently within "islands of automation". Cost saving implications are huge. Consider the cost reward for five minutes saved in each engineering change, when complex products can easily require many hundreds of engineering changes before they launch into production.

Sidebar:
Cornerstones of Innovation:

• Excellent global communication
• World-class leadership driving process and methodology
• Best-in-class technology

Leadership

Managers must be effective leaders and smart people are often the most difficult to manage. Managers must be able to get people working in a common direction without stifling creativity. They must be able to clearly articulate their vision, thoroughly engage every brain in the organization towards this common vision, stimulate passion for the mission, and extract every ounce of effort available from the team. This will increase the extrinsic value of their people and the effectiveness of the team overall.

Management must also stimulate the pursuit of excellence - not just in final product quality but also in the path to success. They must incite a top-down dedication to development and deployment of integrated business processes and best practices. Managers must always be on the lookout for process improvements and methodologies or "best practices" that produce better results, and motivate their people to engage these processes and methods and incorporate them into product cycles across global operations. Standardizing on methodologies that work can be one of the most effective means of reducing cost and increasing efficiency in a manufacturing operation. It is remarkable to recognize the number of companies who have yet to standardize their business processes for operations as common (and critical!) as defining what happens when a change order is completed. Consider who gets notified, how and when (including the designers or engineers on the other side of the world who need to see and act on the result). Consider also which technology is used for each step in the process. Countless studies have been done and papers written about the measurable and intangible benefits of standardized methodologies like Six-Sigma, CM2 or the Toyota Production Method - methods that work readily develop their own market pull. Standardized methodologies reduce cost and waste and increase productivity and efficiency, helping manufacturers produce higher quality products, faster.

For example, because of the design methodologies developed and standardized by Delphi Steering (Saginaw, MI), Delphi engineers all over the world can easily view, markup and retrieve drawing and model data from Delphi's product data management (PDM) system. Delphi's Horizontal Modeling™ and Digital Process Design™ methodologies enable controlled, automatic updates to all in-process models and drawings from a single 3D design model, all of which are stored in their PDM system. An engineer from North America may be working in another country and addressing manufacturing problems. The engineer has the ability to go online to access the PDM and retrieve the product and/or process information required to address the problem. After reviewing the product and process information related to the part/assembly, the engineer determines that a simulation needs to be performed at a specific operation. The engineer marks up an online drawing with information needed for the simulation and emails it to the simulation specialist, perhaps a supplier, on another continent. The in-process model for that specific part is retrieved from the PDM system and the simulation is performed. The results are emailed back to the original engineer and the manufacturing problem is resolved.

Andy Grove, the chairman of Intel, said in an August 2003 Fortune magazine interview, "Strategic actions with profound consequences are not caused only by technology-based innovations. Some of the most profound come from process innovation."

In the end, faster product cycles result from faster iteration of changes. Processes and technologies that enable efficient iteration directly contribute to cost reduction and increased productivity. Managers should look for processes that encourage "what-if?" and lead to fast convergence on best designs and help people try new things and test each other's thinking. They should capture and standardize these best practices and drive them into their global organization. The shortest distance between to points is a straight line, but rarely do any processes involving creative thinking approach anything like straight line as they explore relevant boundary conditions. Along their path to innovation, creative people naturally stray from the straight line. Standardized methodologies and effective management will help channel the creative energy to engage every person in the pursuit of a common vision.

Technology

Accelerating Innovation in this age of globalization requires best-in-class technology. Technology supports innovation. It helps bridge the gap between vision and reality and between islands of automation. Technology supports collaboration, process, best practice and methodology. Paradoxically, on average, eighty-five percent of IT expenditure in a typical enterprise manufacturer is spent on back office technology, such as enterprise resource planning (ERP, e.g. SAP), while only fifteen percent of the typical IT budget is spent on new product development.

Many technologies, if implemented and used within the framework of good methodology, can provide excellent foundations for innovation. CAD, CAE, and PDM are among the most important. Among the fastest growing segments of the manufacturing software industry is product lifecycle management (PLM). PLM is like the track upon which your product environment runs. It incorporates functionality to support collaboration, PDM and many other aspects of the product development process. According to CIMdata (Ann Arbor, MI), PLM is a strategic business approach for collaborative creation, management, dissemination, and use of product data across the extended enterprise, from concept to end of life - integrating people, processes and information. Many reports have been written documenting positive business impacts, such as faster time to market, decreased cost, increased product quality, customer satisfaction and design re-use. However, like all technologies of significant complexity, these results aren't guaranteed and are not possible without a large cost/time investment. Integrating CAD and PLM and ERP and PLM can also be quite onerous.

PLM systems are indeed quite complex and expensive. To maximize your chances of a positive result, it would be wise to implement a PDM system and process first, to store and manage product data, and surround it with carefully designed methodology and best-practice. Further details about PLM systems and their advantages and disadvantages are beyond the scope of this article. For readers interested in learning more about PLM, the World Wide Web is a rich resource, or contact your CAD vendors.

The key cornerstones of world-class innovation are excellent global communication, experienced leadership and best-in-class technology. Manufacturers that build operational excellence into their business by building an innovative environment based on process-excellence, best-practice and methodology, will increase the "customer" value of their product, reduce cost, accelerate time to market, and increase efficiency and productivity of their people and business.

If you have any questions or would like to discuss this further please contact the author at dprawel@longviewadvisors.com.