Advanced Manufacturing and Cluster Based Development Policies. Thinking clearly about innovation and the future of American manufacturing

Transcription

1 Advanced Manufacturing and Cluster Based Policies Thinking clearly about innovation and the future of American manufacturing Edward (Ned) Hill Dean, Levin College of Urban Affairs Cleveland State University for the NGA Center for Best Practices States and Innovation: Setting the stage for job creation

2 Lessons form Pennsylvania LESSONS FROM SUCCESSFUL SMALL AND MID-SIZED MANUFACTURES Advanced Manufacturing 2

3 Manufacturing enterprise transformation o Foundation: strong objective strategic plan o Systematic elimination of waste in the production process, improving quality, and shortening the time it takes to get product to market (lean manufacturing techniques) o Measure what is important and establish a culture of continuous improvement o Empower the core workforce and free senior management to work on the business o Engage in product development in a niche market, coupled with an effective sales and marketing strategy Source: Pennsylvania s True Commonwealth: Executive Summary Advanced Manufacturing 3

4 Manufacturing enterprise transformation It is evident from discussions with the leaders of some of Pennsylvania s best manufacturing firms that lean manufacturing and other production process improvement techniques do not cost jobs; they save companies. With those saved companies come saved jobs. o "If you re not doing lean, if you re not doing some sort of continuous improvement, I don t know how you re still around, said an Eriearea manufacturer. Source: Pennsylvania s True Commonwealth: Executive Summary Advanced Manufacturing 4

5 Manufacturing enterprise transformation: the secret sauce o To succeed, manufacturers today cannot just focus on cost containment or on growth; the imperative is to do both o Full disclosure of operating financials and performance metrics to the corporate team o Reinforced with meaningful gain- sharing on a monthly or quarterly basis with employees o This systematic approach to enterprise transformation for small and midsized manufacturers is not taught in any business school Source: Pennsylvania s True Commonwealth: Executive Summary Advanced Manufacturing 5

6 Observation: Three big challenges Strategy, Innovation, Performance Improvement Key issue Strategy Discussion SMEs: Challenge is formulation Large firms: Challenge is implementation Importance by firm size SME Large firms Product innovation Leadership/necessary, process/system, implementation Performance improvement SMEs: Process improvements What is the lesson to be learned? Key: Low High Source: Manufacturing Pennsylvania's Future, presentation documents Edward (Ned) Hill 5

7 CLUSTERS AND TECHNOLOGY

8 Structure of an industry cluster Sources of competitive advantage Source of stickiness Customer Forward linkage Value chain of a Driver Industry or an Industry Cluster Tacit Knowledge Driver Industry or Function Talent Supply chain Tacit Knowledge - Thought Leadership - Standard Setting - Demonstration Projects Supplier Backward linkage Labor pooling Regionally thick supply in globally thin occupational markets Advanced Manufacturing 8

9 Where innovation can take place within a business its broader than most public policies envision and it is more than technology Source: Edward W. Hill and Jon Shelton, Typology of Innovation Advanced Manufacturing 9

10 Impact of innovation o o o Sustaining innovations o Product rejuvenation o Product transformation Disruptive innovations new product classes and platforms Epoch-making innovations restructures society, creates new ecosystems of market Advanced Manufacturing 10

11 Advanced Manufacturing 11

12 Product Life-cycle Stages o Incubation o Take-off o Maturity o Decline o Rejuvenation Advanced Manufacturing 12

13 Influence and role of the product cycle Arundel Street Consulting Quest Team Advanced Manufacturing 13

14 STRUCTURE PUBLIC POLICIES AS A PORTFOIO Advanced Manufacturing 14

15 Successful regions and organizations fight commoditization. They retain their intellectual capital Product/ Process Complexity Science or Technology NewCore Processes Next Generation Extensions Tuning / Incremental The Regional Innovation Portfolio Customization Add-Ons & Enhancements Product Mobile Intellectual Capital Platform Addition to Family Next Generation Potential Economic Impact Technology New Core Processes Conceptual R & D Retain Intellectual Capital Science or Technology Four Lessons 1. Region s change their growth trajectory through product mix 2. Firm-level decisions on product investment determines regional product mix 3. Regional productcentered economic development strategies should represent a balanced portfolio of investments 4. Identify market failures in product development and change management Hill, E.W. and Patrick Gammons, Regional technology Advanced portfolios Manufacturing (Cleveland State University, in process). 15

16 Product/ Process Complexity Science or Technology New Core Processes Next Generation Extensions Tuning / Incremental Successful regions and organizations fight commoditization. They retain their intellectual capital The Regional Innovation Portfolio Customization Add-Ons & Enhancements Product Mobile Intellectual Capital Addition to Family Platform Next Generation Potential Economic Impact Technology New Core Processes Conceptual R & D Retain Intellectual Capital Science or Technology An Endogenous Portfolio focuses on product development through a portfolio of technology push and pull. Growing local competitive capacity that combines: Industry-creating potential of: Disruptive technology through conceptual research and technology development, Revitalization of firms & economy through technology development Evolutionary change that comes from new platform development and market extensions, Product line vitalization derived from product development and managerial improvements, with the Market share growth through Customer responsiveness of product customization. Advanced Manufacturing 16

17 Think of product mix as an investment portfolio Portfolio Composition Innovation State Customization Product Platform Ohio Level of Innovation Bay Area RTP Austin Technology Conceptual R & D Lessons The intersection of a firm s business strategy (competitive advantage) and a region's economic development investment strategy (comparative advantage) takes place in the firm s income statement. If the region does not make a unique contribution to maximizing the top line or to minimizing some of the middle lines the business is only attached to the region through the value of the personal investment of the decision makers in the region. Advanced Manufacturing 17

18 Think of product mix as an investment portfolio Portfolio Composition Innovation State Customization Product Platform Ohio Level of Innovation Bay Area RTP Austin Technology Conceptual R & D The optimal portfolio for a diversified, mature, regional economy may have a portfolio peak similar to the line represented by Austin. With the average company involved in product development, demonstrating significant weight on both ends of the spectrum. The mix of the region s portfolio has a direct effect on innovations ability to impact: A. Economic Impact B. Types of Jobs C. Growth Engine D. Retention Through product sales and productivity growth Advanced Manufacturing 18

19 Edward (Ned) Hill, Dean, Levin College of Urban Affairs Cleveland State University Cleveland, Ohio T (216) E e.hill@csuohio.edu Web Site: Pennsylvania s True Commonwealth Executive Summary: Full Report: