Traditionally, open innovation has focused on the use of ideas and knowledge from outside the organisation in the development of products and services. But openness can be useful for process innovation, too. Research shows that manufacturers can benefit substantially when they look for ideas beyond the factory gates, especially when their operations are already advanced.
With the advent of the fourth industrial revolution, people, things, and companies across the globe are connecting in cyber-physical production systems. Promising technology and business ideas are entering the market with a speed that no individual can match. With these, possibilities for new product and process innovations abound. In such a fast-paced environment, an organisation’s competitiveness depends on its ability to learn ever faster and effectively turn that learning into action. Yet few firms are rigged for speedy learning, which is necessary for the future of manufacturing.
One promising way to mitigate this problem is to ‘open up’. Most large global manufacturers encourage their plants to share innovative practices and success stories with one another. The best ideas that emerge from this sharing then become part of the larger corporate programme, which has a profoundly positive effect on operational performance.
Organisations that already do this informally can extend process improvement activities with a systematic effort inside their factory network. In this way, they gain some of the advantages of open innovation without the risk, while laying the groundwork for other open information sharing about processes.
This tends to work well. Because the plants belong to the same ‘family’, their operations and contexts are usually comparable. This means the hurdles for implementing novel ideas are often lower than when technology and knowledge stem from outside the network. Through open process innovation within the company, the factories lift the productivity bar together.
Open up to your supply chain partners
The best process innovations are not necessarily the least accessible. They can also be found right outside the factory gate. Opening up to suppliers and customers usually provides the most promising path towards finding new and valuable process innovations.
For example, a strategy that may be difficult to establish, but that can pay off richly in terms of process innovations, is to bring key suppliers together in an open exchange of problems and ideas. In such an environment, supply chain partners can establish a safe arena to discuss and implement efficient routines for production, communication, and logistics across organisational boundaries.
Let technology be the driver
The continued implementation of integrated business software for planning and control helps to quickly standardise and scale process improvements. The Industrial Internet of Things (IIoT) brings identification tags and sensors, and enables access, analysis, and learning from hitherto unexploited data.
For example, sharing proprietary machine data with your machine suppliers allows them to learn first-hand how your products serve your customers. They use this insight to improve machine hardware and software and then to improve the production process. Sharing such data can be a cost-effective way to outsource and unlock process innovations for the particular machines.
In addition, plant management must establish routines for gathering ideas from external sources and putting them to use. A good way to do this is to specify and codify the existing knowledge in a set of standards. While standards should never be taken as generally valid across all areas of a company, they make it easier for people to use past learning and help focus improvement efforts. The use of standards and regular standards revision meetings are practical ways to build absorptive capacity, particularly when those standards can be shared online with the entire plant and any sister factories.
In the emerging industrial revolution, those that play fast and open can gain a competitive advantage. But building a culture of openness is not a quick fix. Like trust, it is harder to gain than to lose, so start gradually.
DOWNLOAD The Jolt – Accelerating Business Performance Improvement to find out how chemicals giant DuPont unlocked opportunities outside its factory walls.
|The TRACC framework helps organisations build standardised and integrated good practice and performance capacity across their Plan, Source, Make and Deliver functions. Simultaneously it accelerates their collaboration and alignment capacity to build world class end-to-end value chains, enabling the organisation itself to become the ultimate source of sustainable competitive advantage.|