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  March 2013  |  Vol. 6 Issue 1    CONNECT    


GLOBAL R&D

The Global Innovation Advantage:
It’s More Than Just Ideas


  By Paul Tate
Research Director & Executive Editor
Manufacturing Executive


Much is now being said and written about the critical importance of establishing vibrant innovation cultures as a way of ensuring the continued success of manufacturing economies in increasingly competitive global markets.

New ideas are certainly essential to the future of manufacturing. But are innovative ideas alone enough?

The current argument holds that as a significant amount of manufacturing production has shifted East as a result of lower wages and the need to access new and emerging markets, the chances of Western nations maintaining future global manufacturing leadership through production output alone have significantly diminished.

The companion argument is that if you don’t make it, at least you can invent it, and benefit from the intellectual assets and value that such innovations create.

A recent report by Robert D. Atkinson and Stephen Ezell of the Brookings Institution’s InformationTechnology and Innovation Foundation embraces this logic. Their paper proposes that the U.S. government designate 20 institutions of higher education as “manufacturing universities” in order to boost the development of new manufacturing technologies and processes and strengthen the nation’s position in an increasingly innovation-driven global economy. “As a relatively high-cost nation,” argue Atkinson and Ezell, “the only way the United States can regain manufacturing competitiveness is through innovation and productivity, both of which are driven by engineering capabilities that are cultivated, in part, by the nation’s institutions of higher education. University-based engineering programs can play a critical role in supporting advanced research, particularly in areas of relevance for manufacturers, and can help train the highly skilled workforce that advanced manufacturers need.”

Earlier this month in its new business report, The Next Wave of Manufacturing, the MIT Technology Review ran an interview with economist Ricardo Hausmann, director of Harvard’s Center for International Development. Hausmann also believes that innovation is the key to future industrial success, specifically in the development of the next generation of manufacturing technologies.

“The step that makes the most sense for the U.S. is to become the producer of the machinery that will power the next global manufacturing revolution,” Hausmann says. “That is where the most complex and sophisticated products are, and that is the work that can pay higher wages.” These are both strong arguments. Success may well await those nations and companies that can create the next wave of innovations and advanced new production technologies. Certainly many of the emerging manufacturing powers around the world believe this is true. China, India, and South Korea, for example, are pumping vast amounts of money into boosting their R&D efforts in bids to transform their economies for the future—in addition to which they are producing more engineering graduates each year than many of the traditional manufacturing economies of the U.S. and Europe.

But can new ideas alone make the ultimate difference? The real trick for nations and commercial companies has always been how to turn new ideas into something practical that will deliver competitive success. It’s what you do with them that counts.

At Manufacturing Executive, we’ve seen the results of numerous surveys that identified this ”innovation gap” between initial ideas and successful implementation as one of the most critical aspects of any innovation initiative. Companies have often learned the hard way that it takes lots of encouragement, careful planning, effective processes, targeted investment, a willingness to fail, and tough judgements to select the most promising commercial opportunities from the flood of new ideas coming through the system.

What’s more, some observers are not entirely convinced by the innovation argument anyway. Harry Moser, head of the Chicago-based Reshoring Initiative, argues that the current focus on innovation, rather than volume production, is misplaced.

In a companion interview in the latest MIT Technology Review report, Moser says, “I think the return on investment of what we already know how to do—automation, training, Lean techniques—is much higher than investing billions into advanced manufacturing processes. If society looks at the returns from the advanced stuff, it won’t be overwhelming.”

“Since other countries are targeting high tech, we’ll never dominate it enough to balance the trade deficit,” he adds. “The greater value is in putting [manufacturing] technologies to use, not inventing them.”

Perhaps this approach is swinging too far the other way. Surely it is both the development and the practical deployment of new innovations that will rule the future, especially as the dissemination of new ideas becomes increasingly rapid in today’s complex, digitally powered, networked global economy.

This is the core focus of another MIT initiative, the “Production in an Innovation Economy” (PIE) study, which is scheduled to release its findings later this year. The researchers behind the study are trying to understand what could happen if developed economies do become nations of ”pure innovators” and leave the physical production to others. They’re also exploring ways to harness maximum value from new innovations and so help transform manufacturing in the years ahead.

Manufacturing Executive has been tracking this initiative for some time, and you can hear some of the interim results from PIE’s executive director, Professor Olivier de Weck, on one of our exclusive, on-demand webinars here.

The great thing about new ideas is that anyone can have them. Creating well-funded research initiatives to spur our most promising geniuses to greater innovation will certainly help. But that’s not the end of the story. The looming innovation trap is that there is so much focus on idea-generation that we forget the importance of turning new ideas into practical, deliverable results that will make a real competitive difference.

That’s what will ultimately deliver a global innovation advantage, and it’s the real challenge for the next wave of manufacturing.

This article originally appeared at Manufacturing Executive.
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