Breaking down the barriers to innovation at an established manufacturing company
When you lead a manufacturing company, it’s hard to avoid hearing about innovation and all the great things it can do for your brand:
Innovation can boost your workers’ productivity. It can make your customers more loyal. It can insulate you from changes that might otherwise derail your business.
We all understand the importance of innovation, which is the practice of creating new sources of value. But as of today, 94 percent of executives are unhappy with their firms’ performance on innovation.
We believe there are two reasons why:
Assessing what successful innovation looks like can be challenging.
The things you have to do to innovate in a meaningful way can feel foreign and uncomfortable when they’re new to your organization.
Accept those two things, and your likelihood of successfully innovating skyrockets. But you’ll still have to do the sometimes difficult and uncomfortable things that innovation requires. Luckily, those things are much easier when you have an experienced partner guiding you.
Read on for four common barriers to innovation and how to overcome them.
Barrier 1: Limited access to data
You’ve probably heard data compared to oil. Or gold (“a gold mine of insights”). Key to both of these metaphors is not just how valuable data can be but also that data in its raw form is unusable.
Older companies and those that have undergone a series of mergers and acquisitions over the years feel this keenly. Your systems may exist in siloes that don’t speak to each other. You have decades’ worth of data, but much of it is likely outdated. What's current may exist in multiple formats in multiple locations.
What's more, you know that it’s likely that ~20 percent of your data could yield the lion’s share of actionable insights:
What are early signs of a high customer lifetime value?
What are the first indicators that a customer might leave?
Where are the biggest opportunities to cross-sell or up-sell?
What additional features or functionalities do customers want most?
What are the biggest frustrations in customers’ experiences?
The challenge is finding that 20 percent of your data and then knowing what to do with it to extract these and other insights. In other words, until you can actually use your data, all of that stays hidden.
What's more, every day that passes without modernized data infrastructure is a day that you’re falling behind competitors who are modernizing their data.
It’s like eating gruel off a golden table while the roof leaks.
The good news: we know how to break down this barrier!
Breakdown strategy: To overcome inaccessible data, you have to (no surprises) make your data accessible. In practice, that means…
Assessing an organization’s data.
Cleaning, organizing, and integrating that data.
Creating systems for querying the data and displaying insights.
Training internal teams on how to recognize opportunities
In many cases, this isn’t work in-house teams have expertise in––and that’s okay. An innovation partner with deep experience in data strategy can help guide the process of turning decades’ worth of data into new value streams for ITW Test and Measurement Companies.
Barrier 2: Familiarity with hardware vs. software innovation cycles
Innovation in manufacturing––what’s sometimes called Industry 4.0––often involves manifests as devices with both physical and digital components. For example: a hardness tester with a cloud-connected sensor that transmits testing data to a centrally accessible interface or dashboard, along with algorithms within the system that can translate usage data into business-level insights (e.g., repair and replacement forecasts for the finance team).
These devices tend to be wildly popular with customers because they both enable heavy-duty industrial work and reduce the administrative load associated with documenting, translating, managing, interpreting, and applying that work.
But to create and iterate physical-digital products (i.e., those that participate in the Internet of Things, or IoT), manufacturers have to embrace innovation cycles for both hardware and software.
These cycles are totally different:
Software innovation cycles are short. The rate of change is rapid. To add a new reporting tool to cloud-based software, you can design, build, and user-test a version in a matter of weeks. If there are bugs after deployment, you can push an update with relatively minimal impact to customers’ operations.
Hardware innovation cycles are much longer. Change happens at a more deliberate pace and involves extensive forethought. Each new product must last for years at a time, and often has to enable activities or outcomes that are highly regulated. Small “bugs” can translate to huge problems for customers that destroy a manufacturer’s reputation.
Because hardware innovation today practically demands a digital component, hardware manufacturers have to embrace software innovation cycles alongside those for hardware.
The biggest challenge is often finding a middle ground: updating and adapting software to ensure that it meets customer expectations and is not vulnerable to hackers while also making sure hardware is suited to the high-precision materials testing work customers rely on it for.
Breakdown strategy: Work with someone who has experience balancing hardware and software innovation cycles, ideally in a manufacturing setting.
An innovation consultant with this experience can not only help you recognize the most promising opportunities to use Industry 4.0 technologies to modernize your product fleet but also help your organization build these components in a way that lets you deliver ever-increasing value to your customers.
Barrier 3: Resistance to change
By definition, innovation requires change. Most of us accept this in the abstract: of course innovation requires change! We want new, better products so we can win over new customers and keep our current customers coming back.
But the reality of innovation is that it also requires us to change our behavior. It requires us to question things we’ve accepted as settled fact and accept that there are things we don’t know and try new things that may not work. It may require us to work differently day to day.
That’s uncomfortable. It can be frightening: when you try new things, you don’t know what to expect. You aren’t sure which signals mean you’re in trouble and which mean you’re on the right path. That means you don’t know when to keep going and when to shift gears.
But again: innovation requires change. Staying competitive requires innovation.
This is maybe the best illustration of the value an innovation consultant partner can offer. Because innovation consultants are familiar with the ways of working that lead to innovation, they can guide others. Specifically, innovation consultants can…
Explain and demonstrate new ways of working that drive innovation.
Push manufacturing teams to try new things.
Offer guidance on when to pull back when something isn’t working.
Help the team learn from these small “failures” and use those lessons to move forward.
Provide encouragement and context to help people commit to the new way of working even when it’s uncomfortable.
To overcome a resistance to change, it’s important to understand that real, ongoing innovation requires buy-in across an organization.
One innovative leader won’t be able to carry the company. Why? Because part of innovating is trying new things and part of trying new things is learning what doesn’t work. I.e., failure. To support long-term innovation, leaders at all levels must be open to these micro-failures.
Again, this is where an innovation consultant offers value: they can help organizations try and adjust course in such a way that failures are both small and instructive. When organizations begin to reward experimentation, that’s when they can become truly innovative.
For example: maybe one of your engineers has an idea for a design tweak to one of your manual polishers. What's your next move? You can’t simply make the change to all your products and hope for the best––that would be a potentially catastrophic way to test a hunch.
But what if you sketched the new design and put it in front of a customer who uses the machine often? They could offer some feedback on what they think, which could lead to further consideration of the current design. You could create mockups of increasing fidelity, gather feedback on each round, and use that feedback to inform the next iteration.
Gradually, you would have a product update informed by user feedback, which makes it far less risky to launch.
Breakdown strategy: To get the organizational buy-in necessary to innovate (i.e., to continuously try new things and reward an approach to work that embraces experimentation), educate leadership about what innovation looks like in day-to-day work.
Emphasize the need to try new things, learn from them, and use the information you gather to improve your existing products (both hardware and software).
Highlight the role of an innovation consultant in making this change: an experienced guide who can steer you toward a new way of doing things that positions you for long-term competitiveness and success.
Barrier 4: Limited understanding of Industry 4.0 and its potential impact on business
ITW Test and Measurement Companies have gotten where they are today in part thanks to its commitment to improving processes via the USa framework. Part of what Industry 4.0 promises is a new batch of technologies and applications that can simplify and automate business processes.
But when company leaders have a limited understanding of how those technologies (including machine learning, AI and knowledge graphs, spatial computing, augmented reality, and IoT) work, they may not recognize the potential for these technologies to improve existing processes.
Breakdown strategy: Again, education will play a key role. Introducing Industry 4.0 technologies within the familiar USa framework might spark curiosity that leads to fruitful conversations.
In many established organizations, one of the hardest parts of embracing a culture of innovation is the first hurdle of getting everyone on board to do things differently. Sometimes an illustration can help.
Picture a commute. In the first few weeks of your job, you try a few routes and figure out the best one: it’s not the shortest by distance, but it has the least traffic and lets you avoid stress. You drive this route for two years.
But all of a sudden you realize that there is a lot of traffic on this route. You do some research and realize there's major construction on the nearby highway. What do you do? The highway would slow you down even more, but your favorite route no longer gets you to work stress-free.
If you decide to keep driving that route anyway, it’s akin to resisting innovation: you’ll have to leave earlier and earlier to make it in on time, and spend more and more on gas to fuel your car idling in traffic. You’ll arrive stressed out.
Or you could try new things. You could embrace innovation.
Maybe you explore new driving routes. Maybe you dust off your street bike from the garage and cancel your gym membership. Maybe you start asking your coworkers about carpooling.
Maybe you do all three––carpooling and biking and trying different routes and one day as you’re chatting in your carpool you learn that your coworker’s kids need a babysitter this summer and your kid needs a job and suddenly, by changing just one thing, dozens of new avenues of opportunity open.
That’s what innovation is like. You don’t keep doing things the way you’ve always done them. You adapt as the world around you changes.
Ready to break down the barriers to innovation?
Materials testing will never go out of style. But the functionalities and experiences people expect from their materials testing equipment will evolve. If you’re curious about how you might explore and meet those evolving expectations by embracing a culture of innovation, let’s start a conversation.
Published by Patrick Turley