The Manufacturer US - "The Innovations Arms Race"

The future of US manufacturing depends on innovation. Pamela Derringer discovers a variety of ways to inspire an innovation culture.

When cheap Japanese electronics first flooded the US market decades ago, Americans dismissed the Far East as copycats, incapable of creating anything original. Our nation’s pride and economic security rested in our undisputed leadership in ingenuity and inventiveness.

But the erosion has since spread to Chinese factories and Indian computer programmers—the low-paid, high-volume grunt work—and, more recently, to brainpower. The Chinese are graduating four times as many engineers as the US every year; Korea is pioneering stem cell research and Japan is outfunding US tech centers in nanotechnology research and competing with Hollywood as a film and music hub.

“America is in an innovation arms race,” says Mark Turrell, whose Imaginatik software company has given Fortune 500 companies, such as Georgia-Pacific and Bristol-Myers Squibb, a web-based vehicle for channeling employee brainpower across the enterprise. “Corporations earn four times as much profit from innovation, which has become a business imperative of escalating importance.”

US manufacturers must be innovative leaders to compete in today’s global marketplace. But what is the secret to creating and nurturing a culture of innovation in a world of increasingly huge and geographically dispersed corporations?

Jamie Flinchbaugh, a partner in the Lean Learning Center in Novi, MI, says that a company must be totally immersed in the needs and wants of its customers (as opposed to product-driven). Innovative companies must encourage employees across-the-board to become students of what’s in front of them, questioning everything and constantly experimenting with better ways to do things. “Once an organization starts to do this, they ask the right questions and, all of a sudden, they have new, patentable technology,” says Flinchbaugh. “Open-ended questions without answers are more likely to lead to innovation.”

Another way to promote an innovative culture is to reduce the organizational workload on engineers and scientists, Flinchbaugh says. By reducing their time spent on paperwork and meetings, companies can give them more free time to tinker and think, which, in turn, spawns new ideas.

The key to fostering an innovative culture, says Mark Turrell of Imaginatik, is leadership and management. Does management listen? Will it take action? “A new CEO with a different attitude can change a company culture overnight,” he says.

The most effective approach for soliciting ideas from employees, believes Turrell, is to seek help in solving a specific business problem, within a relatively short window (two or three weeks). “Everybody’s busy but a deadline forces people to become creative very quickly.” A good innovation process must be executive-led with clear targets, dedicated resources and focus around particular business challenges (such as new market entry) and then be divided into development stages, he says. And its scope shouldn’t be limited to new products; it can include better processes, new technologies, marketing tactics, distribution channels, pricing models and even better ways of protecting intellectual property.

Imaginatik’s Idea Central, Turrell’s main software product, facilitates this process with a web-based platform for soliciting and evaluating employee ideas. Two years ago, Georgia-Pacific, a $20 billion global corporation, was looking for a way to tap the ideas of its employees well enough to meet its innovation revenue goals. According to Cedric Steele, director of insights and innovation, and Randal White, IT innovation manager, having employees in so many professional disciplines spread out in so many locations, meant that a web-based product like Idea Central was the only way to bring people together to solve a specific business problem.

“At Georgia-Pacific, we have a maverick spirit and a lot of ‘can-do’ people who look for ways to improve the system and this gives them a more channeled means to submit ideas and a more dynamic exchange,” Steele says. “People with ideas are burning to share them,” especially if they know the ideas will be well received and acted upon.

Idea Central has capitalized on this positive spirit by encouraging participation from unlikely sources, people whose junior status or area of expertise would exclude them from a formal idea-gathering session on a particular topic, White says.

Georgia-Pacific recently held a two-continent ideation session that was very productive, says Steele. “Europe is really on fire about this.” One big innovative win was a plant employee’s suggestion for reducing the cardboard cores in paper towel rolls. This idea has saved the company four percent of its production costs over millions of units, yet might not have survived the hurdles of conventional decision-making channels.

A recent nine-day web session netted 371 ideas, two of which, according to Steele, would have cost $300,000 apiece from a project consultant. The company suggestion box, in contrast, has received 84 ideas in just under a year. “An online exchange results in a lot more robust thought about turning an idea into reality…and how to get around an obstacle,” Steele concludes.

Automatic Feed, a $40 million, 56-year-old Ohio company that makes complex, multi-million dollar steel coil equipment for the automotive industry, was faced with a daunting innovation challenge: a total re-engineering of its manufacturing process. The need for change was clear, explains CEO Kim Beck, because the overwhelming majority of engineering time was spent modifying parts for individual customers, then getting the reconfigured machines to work, rather than improving the overall designs. Yet the task of completely reengineering the company’s design and manufacturing processes was so daunting that Automatic Feed left the concept on the shelf for five or six years without taking any action. Hardly an innovation culture, you might say.

Reflecting on a situation familiar to many manufacturers, Beck admits: “We were so busy just trying to get our designs out the door that we didn’t have the time. We understood the need but we didn’t refine the concept until late 2003.”

Finally, global price pressure on the automotive companies and, in turn, on Automatic Feed, prompted the company to launch an all-out initiative to convert to a standard, modular design, dubbing it SMART Machine Systems. The new approach required a complete revamping of internal operations, with close interdepartmental collaboration and a “very dramatic” change in the design-build process, with every department tasked to do its part to make the concept move forward.

“It became a whole new culture,” says Beck, affecting everything across-the-board from order fulfillment to quality control and engineering. Each work group used to just do its job with no concern for the problems it passed along to those in the next phase. But now they know they have to work together to resolve these issues, he says.

“People realized that they had to change their attitudes because the market changed,” Beck says. “They became more flexible in accepting change and able to see the good in some of the change and that helps keep the idea of change going.”

The new process has also “re-energized the engineers” by making their work more productive and pleased customers, who are happy that the installations are faster and easier. In addition, it has reduced mechanical assembly by 50 percent and electrical wiring by 65 percent, meeting or exceeding company goals, Beck says.

Innovation is not just about new products. It’s also about finding better ways to do things.