Smarter Product Development

Global competition is in a take-no-prisoners mode. To compete, the U.S. manufacturing community is re-examining its innovation and product development processes to be better, faster and cheaper.

The manufacturing community is and has been painfully aware of the critical importance innovation and product development play in the competitiveness of their organizations. Survey results tell the tale, with nearly three-quarters of respondents to a Boston Consulting Group survey ranking innovation among their companies' top three strategic priorities. A far smaller percentage has been satisfied with the payoff of their efforts.

The U.S. government appears more recently to have fully acknowledged the role innovation and product development play in the creation of a dynamic economy, particularly with regard to job creation. The Advanced Manufacturing Partnership is evidence of that increased awareness. In June, President Obama launched the partnership, a national effort to invest in emerging technologies to grow jobs and enhance U.S. competitiveness. Accelerating product development is key to reaching those goals, the launch announcement noted. The plan includes a $500 million investment to start the effort.

"With these key investments, we can ensure that the United States remains a nation that invents it here and manufactures it here," the president said at the announcement of the Advanced Manufacturing Partnership.

The growing focus on innovation and product development as keys to competitiveness raises a number of questions: What is the manufacturing community -- not only manufacturers but all the players who contribute to the health of this sector -- doing to be more successful in their innovation and product development efforts, and what should they be doing?

This article marks the third in a four-part series on the competitiveness challenge facing the United States and its manufacturing community, highlighting the areas of innovation and product development. It explores those questions through the words of three product innovators.

Eaton: 'We Need Innovation to Grow'

If you want to grow your company in any significant way, innovation is a required element. That's Eaton Corp.'s perspective. The Cleveland-based power management manufacturer aims for 12% to 14% growth every year "and the lion's share of that has to come from organic growth," says Michael Wynblatt, Eaton vice president for engineering technology.

Organic growth typically requires grabbing a larger share of an existing market or entering entirely new markets or segments. These options require purchasers to either give up a competitor's product or possibly buy from a company with which they are not familiar.

"Why is someone going to start buying Eaton, maybe for the first time ever? Probably only if the product is very distinctive, and has high differentiation from what the competitors have," Wynblatt says. "Innovation is the way that you get there."

Those highly differentiated products also deliver higher margins, he notes.

Wynblatt helps drive Eaton's innovation efforts. He is responsible for Eaton's Innovation Center. The center is spread across six locations globally, four of which are in the United States and one each in India and China. Wynblatt is based in the Southfield, Mich., location. The center employs about 100 individuals.

"We have the job to think about what could be those innovative new products," with a particular focus on advanced technology, explains the Eaton vice president. As such, the team is focused on developing the highly differentiated nuggets of technology that can lead to innovative products. In addition, the innovation center validates product ideas, working closely with Eaton's business units. The idea is then turned over to the product development organization.

The upfront work is extremely important, Wynblatt emphasizes, given the expense of product development. "To make that kind of investment, you want to make sure that the product is going to work and that customers are going to want to buy it," he says.

The Eaton Innovation Center has evolved over time and continues to evolve, Wynblatt says. It began as a corporate office on research and development, focused more strictly on technology than the current model and less on tying those technologies to innovative products.

The Innovation Champion

He notes that a key component to the current model is the "innovation champion." That project leader is responsible not only for overseeing the technology, but also it is his job to overcome all of the barriers that any new innovation faces, whether it be a technical, business case or organizational barrier.

"I think that is what makes this model successful," compared with models that distribute the job functions among multiple individuals, Wynblatt says.

The Globalization Effect

While globalization has presented manufacturers with new challenges in innovation and product development, it has presented new opportunities for innovation as well.

For example, at one time Eaton's customers largely resided in western Europe and the United States. "Now we are very much thinking about what the customer might want in China, or India, or eastern Europe or in Latin America," Wynblatt says.

And what they want is not necessarily the same in all regions. It's the innovation center's job to discover those differences. Wynblatt provided the example of a hydraulic technology that has the potential to produce significant fuel savings, depending on how a vehicle employing the technology is used. In its investigation, Eaton discovered that a particular vehicle was used very differently in China than in the United States, changing the business case for the product.

"If you are building a product and you're making assumptions about how it will be used that are wrong, then you can bet you're not going to sell too many," he says.

DARPA is Shrinking Time

"The reality is that innovation happens when you try to make something," said Kaigham Gabriel, deputy director of DARPA, at a January workshop on "extreme" manufacturing. DARPA, or the Defense Advanced Research Projects Agency, is the research and development arm for the Department of Defense.

Ironically, DARPA does not directly manufacture, although it engages with manufacturers, individuals and institutions in pursuit of its mission. In some respects, the theme of DARPA's manufacturing programs reflects the aims of many manufacturing companies: to remove time.

"We are trying to address shrinking the time it takes from designing, developing, testing and fielding systems," Gabriel says.

Semiconductor Industry Provides Evidence

He points to the semiconductor industry as evidence that such time can be removed, even as systems become more complex. In the late 1970s, he explained, Moore's law (which states that the number of transistors that can be placed on a chip will double approximately every two years) was both good and bad news for semiconductor firms. That bad news was the increasing complexity meant that for many firms it became more difficult to design, test and build new products in a time frame the market would tolerate.

Eventually the semiconductor industry largely decoupled design from fabrication in an effort to control for time, while the focus shifted from component performance to system performance.

"When you focus on the system first and flow the performance down, you only do what you have to do with the components as opposed trying to do the best you can with the components and flowing those back up to the system," Gabriel says.

"If you applied those same principles, we believe you can have the same sort of benefits in controlling for time for the sort of complex defense systems that we're talking about," Gabriel says. He has the experience to make that educated guess. Prior to joining DARPA, Gabriel was the founder and chief technical officer of semiconductor company Akustica.

Gabriel suggests that the power of speed in innovation cannot be underestimated. For DARPA that translates to "increasing the number and diversity of people who can contribute, who can make, who can design, who can realize their designs, and increasing the speed at which those cycles of innovation and design happen," he says.

One example of that effort is a recently completed design challenge related to DARPA's Adaptive Vehicle Make effort, a portfolio of programs that addresses revolutionary approaches to the design, verification and manufacture of complex defense systems and vehicles. The challenge, completed earlier this year, solicited design ideas through crowdsourcing and applied manufacturing techniques to compress the production time line. According to DARPA, the result was a fully functioning military vehicle designed and built in less than five months, compared with traditional timelines of five to 10 years.

Take a More Flexible Approach

Joachim Ebert: "It was astonishing to see the level of documentation they had around the product development processes."

Joachim Ebert, a partner with management consulting firm A.T. Kearney, believes many U.S. companies struggle with product development due to their struggle with the "gated" product development process that many employ. Gated processes are characterized by the concepts of stages or phases. The number of stages can vary and incorporates processes such as concept exploration, business analysis and ultimately a ramp-up to production. Between each stage are the toll gates, which provide management with an opportunity to review the output of the prior stage or phase and decide whether to proceed.

Ebert said that companies' struggles with the gated process have led to additional bureaucracy and documentation requirements. He described his observation of the process at several manufacturers: "It was astonishing to see the level of documentation they had around the product development processes. Frankly, it stifled the organization because 60% of the activity the engineer would have to do was administrative in nature."

Needless to say, it had an adverse impact on productivity.

Ebert draws an analogy between product development processes and manufacturing processes. At one time manufacturing relied primarily on production lines that could produce a single product. Adding a new product to a line was costly, and manufacturers had to "subordinate themselves to the constraints of manufacturing."

Today flexible manufacturing equipment allows companies to produce several different products on the same line with relatively few constraints from a manufacturing perspective, the consultant says. "I feel that same breakthrough in thinking is required for product development."

He says it is time to consider moving from the "fairly rigid, gated process" with its somewhat one-size-fits-all approach to a flexible process that not only affects product development but also the product development organization, Ebert says.

It also means moving away from the mindset of inspecting quality in, "which was the traditional manufacturing mindset and you very much see that in product development." Ebert says a more beneficial approach would be to focus more strongly on problem prevention through effective knowledge management.

He points to the introduction of the Pontiac Solstice (now discontinued) as an example a product that went to market in record time and emerged from outside General Motors' regular product development organization. The company put it together in a very pragmatic fashion, "to some extent inventing the process on the fly," he says.

"Don't misunderstand me, I'm not saying get rid of all the discipline that is being brought about by a gated development process," Ebert says. Just recognize the amount of nonvalued-added bureaucracy it may be adding unnecessarily to the product development process.

Ebert says he observes that many companies don't seem to have an overarching strategy in place with regard to product development. "Historically we see a lot of focus on manufacturing improvement -- everybody has embraced lean manufacturing, flexible manufacturing," Ebert says. "I have a feeling product development is still lagging behind."

During the next five to 10 years, he predicts, "We'll see a very strong focus on making product development much more nimble and more flexible."

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