| Winter 2008 |
Manufacturing/Distribution Advisor
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Create and Protect an "Innovation Environment"
Our last issue of
Manufacturing/Distribution Advisor looked at the "flat world" of
global competition that U.S. manufacturers confront today, and noted
that some companies are meeting this challenge with innovation.
A new process, product or service can provide a competitive edge, and some
innovations have even lifted companies out of the commodity wars entirely.
New ideas and ways of doing things must be protected from pirates and
thieves, of course. But earlier in the game, an even more basic protection is
needed. How can a company create and protect an environment that produces
innovation in the first place?
Room To Grow
Innovative companies construct an atmosphere in which new ideas, insulated
from day-to-day operating pressures, can sprout and grow. Google, for example,
assigns dozens of work teams to invent new products and services entirely apart
from the Internet search engine at the company's core.
A new technology company like Google naturally devotes conscious attention to
the "innovation environment." But such attention is critical for companies in
traditional manufacturing or distribution industries, too.
Product Realization Process
One way to foster and protect an innovation environment is to implement a
product realization process, or PRP. A company can use the formal structures and
procedures of a PRP to evaluate new ideas in a disciplined, objective and
cost-effective way.
A basic PRP model has six phases:
- Concept. Originals start with pencils and thinking caps. Trade
shows, the business press and creativity-enhancing seminars can spark new
ideas.
- Feasibility. The definition of "feasible" can change. A product
that requires reorganizing your stamping floor may seem impractical, but once
market prospects and costs are analyzed, a revamp may be realistic.
- Requirements. What resources will new production require? Be sure
to consider every dimension in your estimate - financial, personnel,
materials, time - and don't forget post-production. Marketing, distribution,
aftermarket, customer service, legal, PR and other spending may continue far
into the future.
- Development. For many owners, firing up the product development
"skunk works" is the most satisfying part of business.
- Testing. Put the prototype under load, see what happens, tweak it
and then test it again until it works.
- Launch. Factory lines are configured, distribution channels
finalized and finally a new product - maybe a new kind of product - enters the
marketplace.
In a well-mapped PRP, each phase concludes with designated "gatekeepers" who
either send the concept forward or lay it to rest. As an idea proceeds, the
stakes at each gate increase: The business plan grows, greater resources are
projected and firmer corporate commitment is required. The process should be
guided to encourage both creativity and selectivity.
Move Groups
Another practice gaining a foothold across a variety of industries is the
establishment of "move groups." These initiatives go by different names, but
they usually involve allocating time and resources to a team of energetic (and
often less-than-senior) individuals with an assignment to push the corporate
envelope.
These groups are rewarded with financial incentives or leadership roles in
exchange for devoting their talents and perspectives to suggesting new
directions for the company's product lines, or perhaps even its fundamental
business approach.
"No" Has Value, Too
Sometimes a company must conclude that a proposed innovation is financially
unsupportable or otherwise unsuitable for its current business model.
But the value of the journey remains. The internal process of selective due
diligence has contributed to (and possibly created for the first time) an
environment where new ways of thinking are encouraged. Such an atmosphere builds
morale and establishes the best conditions for innovations to incubate and grow.
Our firm can help you understand the costs and benefits of innovative
processes and procedures. Please call us and we can help you through this
assessment.
Editor's Note: Bober, Markey, Fedorovich
& Company frequently works with clients on matters such as
this. Please call your partner / manager contact if you would like assistance in this area.
Manufacturing/Distribution Advisor is produced quarterly by Bober, Markey, Fedorovich & Company's
Manufacturing/Distribution
Services Team. If you would like additional information about the services that we can provide to manufacturers and wholesale distributors, please call or email our team leader, James E. Merklin, CPA, M.Acc. at (330) 762-9785 or
jimm@bobermarkey.com.
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