Product Innovation Doesn't Just Happen

Recently, Arthur D. Little, Inc. (ADL), a leading global management consulting firm announced a partnership with Case Western Reserve University's Weatherhead School of Management to study the economics of innovation, in particularly looking at how leading companies are deriving value from their innovation investments.

According to the researchers, the old models of go-it-alone innovation are being replaced by new models of domestic and international business collaborations and, they say, progressive companies have developed entirely new approaches in which to effectively execute their innovation activities by leveraging knowledge, capital and talent resources on a global basis. According to Michael Devlin, Associate Dean of Executive Education at the Weatherhead School of Management, "We see innovation as a revenue growth driver and strategic differentiator for today's companies.

Meanwhile, as manufacturers face increasing pressures on their product-oriented strategies, many are starting to look more closely at how they develop new processes to bring products to market faster. According to Datamonitor's new report: Manufacturers Look to Collaborate on and Streamline Product Development, areas such as collaboration are very much on their agendas.

According to Bob Parker, an analyst with Manufacturing Insights, whether and how collaboration is implemented depends in part on the nature of the product. Products that are highly modular - personal computers, for example - are prime candidates for more fully engaging supply chain partners in collaboration. On the other hand, he notes, products that are highly integrated can present more of a collaboration challenge, one that sometimes leads to larger-scale outsourcing, which he terms delegative collaboration. "For instance, if I'm a car manufacturer, I may decide what I want the interior to look like and then go to an outside company to design and deliver on all of that," he says.

Parker says, the key to collaboration is getting suppliers and sub suppliers involved to make sure everything comes together.  That can involve sharing computer aided-engineering and simulation models to make sure everything works together. "It has become a complicated system engineering problem, even for products that are highly mechanical, because now the value in products is often centered in the electronics and software elements, so it makes collaboration a somewhat more challenging proposition," he says.

For companies with very specific needs, not addressable by a modular approach, there is what Parker says the aerospace industry calls "spiral development" which focuses on a few critical specifications such as weight and performance, leaving many of the details to be developed by the supplier. That's the process that was used to field the F-35 Joint Strike Fighter. In that case, he says, "you sometimes end up running an operation that is more about integration than pure product development."  Regardless of how it is done, though, collaboration is an increasingly important factor in competitiveness.