The NGM Study found that four out of five manufacturers recognize the importance of customer-focused innovation. For world class innovation, however, manufacturers need to do more than recognize its importance. One area of focus was the innovation strategies and practices currently implemented by American manufacturers.
Overall, manufacturers reported their progress toward world-class customer-focused innovation has remained largely unchanged from 2009. Most manufacturers are succeeding in identifying talent and implementing talent-development strategies, but other areas of their innovation strategy need improvement.
Innovation Strategy and Practices
The study focused on three strategic elements for reaching world-class innovation: strategy, talent and development programs, and business systems and equipment.
Strategy: Most manufacturers have a company-specific strategy to guide innovation, and 24% define that company-specific strategy as having full functional involvement and buy-in. Approximately 21% have a generic strategy with little or no functional involvement or buy-in, while 7% of firms have no strategy. The right strategy, when bolstered with functional involvement and buy-in, is integral to long-term R&D success. It provides a roadmap for what the company wants to achieve and can serve to focus and stimulate R&D efforts.
Talent and Development Programs: One quarter of manufacturers have both talent and development programs to drive customer-focused innovation into the next generation. Two thirds of manufacturers report sufficient talent, and 43% have talent development programs in place. Seventeen percent of firms have neither talent nor development programs. Identifying and developing talent is one of the major obstacles facing manufacturers as they move into the next generation. The numbers indicate manufacturers are aware of these challenges, with two thirds obtaining sufficient talent and almost half implementing development programs.
Business Systems and Equipment: Approximately 18% of manufacturers report that their business systems and equipment are state-of-the-art and can support customer-focused innovation long-term. Another 64% report that systems and equipment meet current requirements, while one in five have either inadequate systems and equipment or none at all. Inadequate or outdated equipment could present the biggest challenge to future innovation. Without the proper equipment, manufacturers cannot meet customer needs and they may fall behind.
The number of manufacturers investing more than 5% of sales into new-product development/R&D dropped 10 percentage points from 2009, to 22%. This raised concerns among the study developers about manufacturers’ ability to meet customer demands for new products faster. Approximately 29% of manufacturers report regular monitoring and reviews in place to measure return from customer-focused innovation. Fifty six percent had only ad hoc monitoring and reviews or no measurement. Without standards for monitoring and review, the effectiveness of the R&D program cannot be properly evaluated.
IMEC’s product development specialists can help your company with a systematic product development strategy. IMEC works with you in developing and testing prototypes, selecting and acquiring new materials, enhancing your industrial design capabilities, and reducing the steps in the manufacturing process. Other aspects of product development projects include assessing market feasibility, product planning, market launch, and product portfolio management. For more information, consult a product development article available on the IMEC website and contact a local IMEC representative to develop a plan tailored to your needs.
Look for the next blog discussing the NGM Study’s findings on innovation results and the characteristics of world-class innovators.