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Innovation in Manufacturing: From Product Innovation to Productivity

Innovation in Manufacturing: From Product Innovation to Productivity. Vah Erdekian , LGO Industry Co-Director LMP Summit, October 27, 2011. Overview. Product and process innovation Product lifecycles Industry example Advanced manufacturing Why Manufacturing?.

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Innovation in Manufacturing: From Product Innovation to Productivity

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  1. Innovation in Manufacturing:From Product Innovation to Productivity Vah Erdekian, LGO Industry Co-Director LMP Summit, October 27, 2011

  2. Overview Product and process innovation Product lifecycles Industry example Advanced manufacturing Why Manufacturing?

  3. Innovation drives disruptive outcomes and major breakthroughs (1) For products:

  4. Innovation drives disruptive outcomes and major breakthroughs (2) Or for processes:

  5. Impact of Innovation on Industry or Product Life Cycle • Level of innovation needed is a function of product life cycle (T) / “clock speed” • Determining working capital and assets/resource allocation is critical

  6. Production of American watch industry (M. Harrold)

  7. Impact of product and process innovation on the American watch industry, 1850s-1880s User friendly interfaces (setting time and winding) Reliability Size Availability Cost European, early 1800s American Waltham 1870s

  8. US watch market share by company (M. Harrold)

  9. Production and employment in the late 19thCentury American watch industry Peak employment of ~100K in late 1920s

  10. Lack of product innovation in 1920s/1930s Self-winding capability and electric watch designs were disappointments Mainspring design and life expectancy had not changed for 50 years Request for tariff protection ended unsuccessfully Before decade ended significant number of “American watches” were made in Switzerland American Waltham early 1900s Swiss wristwatch 1940s

  11. Trends of watch size market share (M. Harrold)

  12. Impact of Innovation on watch industry product Life Cycle

  13. The pressure to innovate • Digital Equipment • Nortel Networks • Data General • Lucent • Kodak • Chrysler • GM* • Polaroid • Xerox* • Palm • RCA • Motorola* • And others Lack of product innovation and excessive asset allocation to manufacturing during the latter part of the “growth life cycle” drove these former leaders out of business:

  14. Advanced Manufacturing: Product and Process timelines Where Process Innovation Occurs

  15. Product form factor innovation

  16. Why a career in Manufacturing? • Not for the faint of heart • Complexity and intensity • Hard skills/soft skills • In the center of all the action • Diverse set of skills and knowledge a requirement: • Technical excellence • Financial knowledge • Ability to lead people and teams • Communication skills

  17. THANK YOU Vah Erdekian erdekian@mit.edu

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