Manufacturing’s great debate:
idea or execution? Which is most
important to innovation success?
Innovation is a central component of the manufacturing industry. It can take many forms and address many
functions. It can be a simple tactic for improving shop floor operations. It can be a concept for a new type of
product or service. It can be a revolutionary approach that completely disrupts the way you do business. But all
innovations start much the same way: as an idea.
But then what? How does an idea evolve from inspiration to execution? Sometimes it’s a mystery, sometimes pure
luck—and sometimes an idea comes to fruition via a carefully orchestrated process with many individuals
participating, each person playing a vital role.
How critical is innovation to the growth of your business? And what can you do to create an environment that’s
conducive to creative thinking and encourages your people to act on those ideas?
2Manufacturing Industry Perspectives
3 How does innovation fit into your
3 How does your organization
4 What do CIOs say about innovation?
4 What’s the CEO’s perspective?
5 What can you do?
7 How do you start?
Table of contents
3Manufacturing Industry Perspectives
How does innovation fit into
your growth strategy?
Manufacturers can’t afford to invest resources in ideas
that bring disruption with little gain. Instead of relying
on luck, hunches, or lofty visions, manufacturers need
to apply strategic planning to their innovation
strategies—from an idea’s inception to its execution.
When carefully orchestrated, innovation can have a
Not only should innovation be an important
component of manufacturers’ growth strategy,
manufacturers should also closely align innovation
with IT spending and human capital investment. While
these areas have logical connections, some
manufacturers seem uncertain about how to commit
to all three in a meaningful, synergistic way.
In the January, 2017 Manufacturing Barometer
report, PwC found that 85% of manufacturers
predicted positive growth for 2017. Surveyed
companies also anticipated significant increases in
capital expenditure spending and overall budget
increases for the coming year. How these investments
will be made, however, shows some disconnects.
While 67% of manufacturers said they planned to
focus on new products and service introductions, only
52% of manufacturers were planning to increase R&D
spending. And, less than half (42%) of manufacturers
said they planned to invest in IT. For some
manufacturers, it seems they hope to introduce new
products, but do it independenetly of new R&D and IT
PwC’s 2017 CEO Survey reveals even more of this
potential contradiction. The results show that 70% of
CEOs recognize that the speed of technology change
is a top concern. But only 23% of CEOs state that
innovation is a priority. Meanwhile, only 15% of CEOs
report that human capital is a priority, and 15% of CEOs
claim that digital technology is a priority. These mixed
messages seem to indicate that manufacturers
understand the connection between technology,
talent, and innovation, but are uncertain what their
investment priorities should be in these areas.
How does your organization
With approximately two-thirds (67%) of manufacturers
focusing on new products and services, today’s
manufacturing environment means that frequent, rapid
product releases and continuous adoption of new
technologies are an important ingredient of
manufacturing’s evolution. New ideas spur interest,
excitement, and investment. But reaction to the fast
pace of innovation varies. Some companies thrive on
innovation, always eager to be early adopters of new
technologies and setting the pace for others to follow.
Other companies, however, notoriously lag behind,
with their grumbling workforces that resist change of
Most manufacturers fall somewhere in between,
championing a few breakthroughs, casually observing
change as it bubbles around them—content to
embrace innovation when an opportunity strikes them
as unavoidable or relatively risk-free. Perhaps a
customer may force adoption of a value-add capability
or an aggressive competitor will force the
manufacturer to match features so as not to lose
This lackadaisical, wait-until-we-have-to approach may
have worked in the past. Today, it’s becoming
increasingly high-risk to sit on the sidelines watching.
Being disengaged doesn’t stop the avalanche of
change and disruption from touching you.
4Manufacturing Industry Perspectives
Inevitable change happens all the time, with or without
endorsement from a supervisor, a manual being
issued, or a series of training sessions being held.
Lack of communication and training around a process
change can cause serious backlashes of worker
resentment, resistance, and poor adoption rates. For
example, a manufacturer may delay setting a policy
about employees using their own mobile devices on
the shop floor. No decision can easily be interpreted
as saying “anything goes.” Employees will simply start
accessing data through their smart phones, pulling up
reports on tablets, and sharing documents via social
media tools. Lack of control can create chaos and
security breaches that will be hard to fix. This is just
one of many potential obstacles that can arise from
slow adoption of new concepts.
What do CIOs say about
What are the obstacles that need to be overcome in
order to successfully implement an innovation
strategy? A Deloitte Consulting survey addresses
that question from the perspective of the CIO: “This
year’s survey found substantial gaps exist between
business expectations and IT capabilities, in key areas
including innovation. 57% of CIOs report that the
business expects them to assist in business innovation
and developing new products and services, but over
half state that innovation and disruption priorities
currently do not exist or are in the process of
Mark White, principal, innovation office chief
technologist at Deloitte, compared innovation in
manufacturing to an iceberg. C-level executives,
directors, and managers in non-IT roles are often
involved in the portion of the disruptive project that is
above the water, while the CIO focuses on the unseen
90%. That is where the hidden dangers and obstacles
to successful execution await. “What many business
leaders currently regard as ‘digital’ is predominantly
the part of the iceberg that shows above the water,”
says White. “Legacy systems, rigid organizational
structure, and antiquated processes encumbering the
shift to digital often lies below,” he adds. Because
those outdated structures and obstacles are
well-hidden, navigating through an innovation project
can be treacherous.
While this can be seen as a burden some CIOs
recognize that high-profile projects are good career
boosters and welcome the challenge.
“The CIO is well positioned to influence and support
the whole ‘digital iceberg’ and to help create the right
strategy, platforms, and services to realize the holistic
digital enterprise,” says White. This means that CIOs
are ideally situated to support a company-wide
emphasis on innovation.
What’s the CEO’s
For a different perspective, KPMG surveyed
manufacturing CEOs to get their view of disruptive
innovation in manufacturing. In a summary, Douglas K.
Gates, global head of industrial manufacturing and
aerospace & defense for KPMG, writes, “CEOs from
the manufacturing sector worry that their organizations
may not be winning the war for technology-driven
innovation. Their direct reports and other closely
related executives, by contrast, seem to indicate that
matters are well in hand. More than likely, the truth is
somewhere in the middle—meaning there’s a lot more
work ahead for leading manufacturers and for the
most intrepid, enormous opportunity. To improve the
odds for success, CEOs need to take action.”
5Manufacturing Industry Perspectives
Among industry CEOs, concerns surrounding
technology, innovation, and disruption are abundant.
Manufacturing executives in KPMG’s survey
■ 75% worry about new entrants disrupting the
■ 73% worry about keeping current with new
■ 70% worry about competitors’ ability to take
■ 65% worry about product and service relevance
three years from now
While the C-level is concerned, the shop floor
personnel seem more confident. The KPMG survey
focuses on manager levels, largely in operational
areas. The survey found:
■ 53% say they are already hard at work disrupting
■ 52% say they are “current” on technology
■ 48% say their technology is cutting edge
This gap in perception clearly indicates the executive
and managers have work to do. Communication about
the vision vs. execution must be a priority.
What can you do?
What can you do to make sure your company
encourages, nurtures, and adapts to the high rate of
innovation? Here are seven guidelines to help kick off
a strategic approach that considers the entire
process—from inception to execution:
1. The creative spark
New ideas can come from anywhere and can
originate in the most unlikely places. While a
manufacturing company often has an engineering
team, product development department, or R&D
division, individuals on these teams aren’t the only
ones who engage in problem-solving. An old
proverb states, “necessity is the mother of
invention.” The people who have the greatest,
hands-on familiarity with the products—the people
who use the products, and the people who are on
the assembly line who manufacture the
products—may come up with the most practical
ideas. Manufacturers need tools for capturing and
harnessing these kernels of innovation. Online
portals, collaboration tools, and message boards
replace the traditional suggestion box, making it
easy for individuals to submit ideas.
2. A company culture that accepts risk
An innovative company is usually one that’s willing
to take chances, make mistakes, and learn from
those mistakes. For a truly innovative
environment, risk tolerance is a necessity and
must be reinforced in the company culture. This
mindset starts at the top with C-level officers
encouraging experimentation, rewarding effort,
and acknowledging that not every new idea will
succeed. This eliminates barriers of fear, which
can stifle creativity.
6Manufacturing Industry Perspectives
3. Engage with customers
Today’s customers expect highly personalized
products. Online tools allow consumers to select
features, choose accessories, pick colors and
finishes, and add embellishments for many
products—from shoes to cars. This carries over to
the industrial commercial industries as well.
Buyers of machinery, equipment, and high-tech
components expect the same kind of ability to
interact with the design engineers, providing input
on specific features. This level of engagement
often produces innovative concepts—ideas that
combine practical functionality with non-essentials,
like convenience, comfort, pride, and image.
Branding goods with sports teams’ emblems has
been successful in the fashion industry for
decades. These types of personalization,
endorsements, and co-branding efforts are now
seeping into the industrial space as well.
4. Adjacent innovation and unlikely bedfellows
Adjacent innovation means building upon and
borrowing concepts from enterprises outside of
your industry. For example, hospitals may look to
the hospitality sector for ways to make patients
feel more at home and comfortable. The
equipment industry can learn from the fashion
industry how to let customers accessorize the
equipment cabs and choose from mix-and-match
features. Thanks to easy online searches, whole
new worlds of inspiration are open to creative
thinkers. Ideas can even come from the natural
world via plants, animals, and insects—a
drone that uses an insect-like wing structure for
self-healing is just one example.
5. Hire visionaries and creators
As the skills gap issue continues to plague
manufacturing, some manufacturers have
expanded their hiring parameters to go beyond
traditional engineering and mechanical skills.
Individuals with liberal arts backgrounds are
increasingly being put to work as visionaries, story
tellers, and creative problem-solvers in
manufacturing plants. Since creativity is so critical
to the innovation process, manufactures should
build their product development teams with a mix
of skills—including individuals with imaginative,
creative abilities, who can ask, “what if …”
6. Team buy-in
Innovation, departures from the traditional, and
wholesale change can be uncomfortable for the
workforce—especially if it is perceived that the
change may be a threat to job security. Most
humans are creatures of habit, finding comfort in
the familiar, safe, and predictable. Disrupting
routine—without sharing the reason or the
benefit—can cause stress in the organization.
Involving personnel in the process, though, can
eliminate distrust and foster a sense of ownership
of a new concept—whether it’s a new workflow,
new piece of equipment, or new policy about
processing customer orders. Communication is a
vital part of innovation—at every level.
7. Incremental changes can be easily digested
When planning to roll out an innovative new
concept, it may be beneficial to plan a phased
approach—gradually building on early successes
and moving toward the final project scope.
Manufacturing plants have long endorsed the
continuous-improvement school-of-thought, which
emphasizes ongoing tracking, monitoring,
improving, and evaluating results in an endless
loop. While these changes tend to be incremental,
they still involve a steady ebb and flow of process
change. This forces personnel to cope with
updates to procedures and changes to systems in
a steady, predictable flow, while allowing time to
digest the change. With this method, changes
tend to be nonthreatening and absorbed by the
workforce with minimal disruption.
How do you start?
Learn more about software solutions to
help build an innovative environment
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Manufacturers need to face innovation head-on. While executives acknowledge that innovation is critical to
success, many seem to have unclear strategies about how to build an innovative enterprise and support the
organization with the tools they need.
To begin with, a forward-thinking workforce sets a good foundation. There are also the seven steps above that
manufacturers can use as a blueprint for boosting their innovation capabilities. A company culture that
emphasizes innovation must start it at the top—plus have the IT solutions needed to support communication,
collaboration, and predicting outcomes. Only manufacturers who embrace innovation can turn emerging
opportunities into a true competitive advantage.