By Don Pital, Growth Services Group Manager, Georgia Manufacturing Extension Partnership (GaMEP) at Georgia Tech
Management systems have been around for many years and help companies develop a process-based approach in a particular area. Most people are familiar with ISO 9001, a quality management system which facilitates the process of translating customer requirements into customer satisfaction. In addition management systems have been placed around energy, sustainability, safety and health issues, and more. However until recently, there was not a documented process around innovation. NIST/MEP, along with a partner organization have placed a formalized process around innovation strategies, helping manufacturing companies put in place a process to ideate, test, maintain, and sustain an innovation system.
Innovation can be categorized into 4 areas:
- The product or service provided
- The process by which the product or service is produced
- The organization management or business model used to create value for the customer
- The sales and marketing method(s) used to reach the customer
Regardless of category, innovation can be defined as a commercialized idea or simply an implemented idea that adds value to the organization and more importantly, that a customer is willing to pay for.
According to the recent Georgia Manufacturing Survey, companies that compete with primary strategies around innovation versus high quality, low price, or quick delivery had roughly twice the profitability as defined by the 3-year average annual return on sales. However only 10 percent of manufacturers surveyed had strategies for growth that fell into the innovative category. Why is there such a large disconnect?
Most organizations over the last 20 years have developed robust shop floor methodologies that are highly defined and structured (i.e. lean, six-sigma, quality systems). These efforts tend to produce tremendous bottom line cost savings and productivity improvements but are not routinely used for growth strategies like new product development or expanding the customer/market base.
By implementing an innovation management system, a defined and documented process that transforms internal and external inputs for growth (i.e. existing and emerging products and customers, technologies, industry/ competitor/global trends) and translates them into actionable ideas, manufacturers are able to create an ideation and actionable pipeline to increase top-line sales and product/service demand.
The innovation management system provides a disciplined “Deming-like” Plan-Do-Study-Act rapid cycle approach to evaluate, bring clarity and filter ideas, leaving only the ideas with the best opportunity to succeed in the pipeline. By studying idea clarity, definition, customer benefit and how the benefit is delivered, ideas get eliminated or further refined for evaluation. An innovation management approach increases development speed and decreases risk by clarifying the idea before true development costs are incurred in a formal stage-gate or other product development system.
By involving representatives from different groups of your organization in the ideation process, you will garner ideas that are innovative. By using an innovation management system, your company will be able to take an objective approach, designed to push the most desirable ideas to the forefront, increasing your business and competitiveness in the marketplace.
The Georgia Manufacturing Extension Partnership (GaMEP) at Georgia Tech is a member of the NIST MEP network and has Certified Innovation Engineering Black Belts on staff ready to assist you in the implementation of an effective innovation management system. As a first step of determining if an innovation management system is the correct course of action for your company, attend one of the GaMEP upcoming Innovation Management Workshops. Workshops will be held throughout the state in early 2013.
This is part of a series of articles for manufacturing improvement. Download a pdf of Incorporating a Management System Approach for Innovation.