Accelerated Innovation article.docx
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Accelerated Innovation article.docx
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AcceleratedInnovationarticle
AcceleratedInnovation:
TheNewChallengeFromChina
Magazine:
Summer2014ResearchFeatureApril23,2014 ReadingTime:
23min
PeterJ.WilliamsonandEdenYin
Ratherthanfocusingontechnologicalbreakthroughs,Chinesecompaniesarefindingnewwaystoinnovatethatreduceleadtimesandspeedupproblemsolving.Companieselsewhereshouldtakenotice.
Chinesecompaniesarereengineeringnewproductdevelopmentinwaysthatreduceleadtimes.
Chinesecompaniesareopeningupanewfrontinglobalcompetition.Itcentersonwhatwecall acceleratedinnovation —thatis,reengineeringresearchanddevelopmentandinnovationprocessestomakenewproductdevelopmentdramaticallyfasterandlesscostly.Thenewemphasisisunlikelytogeneratestunningtechnologicalbreakthroughs,butitallowsChinesecompetitorstoreducethetimeittakestobringinnovativeproductsandservicestomainstreammarkets.ItalsorepresentsadifferentwayofdeployingChinesecostandvolumeadvantagesinglobalcompetition.
SiliconValleyandothertechnologyhotbedsmaybeabletomatchthespeedofChineseinnovationinparticularsectorssuchaselectronicsandInternet-basedservices.However,what’sdistinctiveaboutthestrongestChinesecompetitorsistheircapabilitytocombineacceleratedinnovationwithrapidscale-uptohighvolumeatlowcost,andtoapplythesetechniquesacrossawidevarietyoftraditionalindustries.WesawacceleratedinnovationbeingdeployedinChineseindustriesrangingfrompharmaceuticals,telecommunicationsandinformationtechnologytomedicalandindustrialequipment,consumerelectronicsande-business.Althoughitmaynotimpactcompaniesthatareconsistentlyabletodeliverbreakthroughinnovations,itpresentsrealthreatsandopportunitiestomanymainstreamcompetitors.
ThePushtoAccelerateInnovation
WespentthreeyearsresearchingthewayChinesecompaniesareacceleratingR&DandinnovationthankstothelowcostandabundantsupplyofChineseengineers.(See“AbouttheResearch.”)WefoundthatChinesecompaniesareindustrializinginnovationtoimprovespeedandcostbyapplyinglessonsfromproductionlines,pushingtheboundariesofsimultaneousengineeringtocuttheleadtimesfornewproductdevelopment,rapidlyincorporatinguserfeedbackintonewdesignstodrivedownthelearningcurvefasterandrestructuringtheirorganizationstospeedupproblemsolving.Thesedevelopmentshavepotentiallyhugeimplicationsforhowcompaniesshouldthinkaboutglobalcompetitionandwhethertheyneedtorethinkandreengineertheirestablishedinnovationandproductdevelopmentprocesses.
AbouttheResearch
Webeganourresearchwithface-to-face,semi-structuredinterviewswithmorethan50representativesof23Chinesecompanies,inanefforttounderstandtheirapproachestoR&Dandinnovation.Wethenrevisitedcompaniesthatappearedtobepioneeringnewapproachesforspeedingupinnovationandnewproductdevelopmentinordertogetmoredetailabouttheirprocesses.Weconductedin-depthdiscussionsaboutexemplaryprojects,probingintospecificsabouthowtheinnovationcyclehadbeenaccelerated.Ourquestionsincluded:
thestepsintowhichtheinnovationprocesshadbeendivided;thenumberandqualificationsofstaffinvolvedineachstep;theroleofcustomerandmarketfeedback;andtheorganizationaldesignanddecision-makingprocesseswithintheinnovationteam.Wealsoaskedeachrepresentativetocomparethespeedandcostachievedonthecompany’sprojectswithsimilarproductdevelopmenteffortsundertakenbymultinationalcompaniesoperatinginChina.Theseperceptionswerethencross-checkedthroughinterviewswithpeopleatanumberofglobalcompanies,whomweaskedabouttopicsrelatedtotheemergenceofacceleratedinnovationinChina.
IndustrializingtheInnovationProcess
Theclassicimageofinnovation,especiallyearly-stageR&D,isofaninventororasmallteambrainstormingandexperimentingwithnewideas.Large-scaleandtightlydefinedprocessesaregenerallyseenasinhospitabletocreativityandinnovation.Althoughinnovationmaybesystematizedandscaleduptoinvolvethousandsofscientistsandengineersinsomeindustries,suchaspharmaceuticalsandIT,thecoreR&Dactivitiesnonethelesstypicallyrevolvearoundaset(perhapsalargeset)ofrelativelysmallteams.
AnumberofChinesecompaniesarechallengingthisconventionalviewbypushingtheboundariesofsystemizationandscaletoawholenewlevelintheireffortstoaccelerateinnovation,leveragethepotentialofalargepoolofcompetentbutoftenunexceptionaltechniciansandengineersandreducecosts.Theirapproachistodividetheinnovationprocessintoalargenumberofsmallstepsandthenassignteamstoworkoneachstage.Thegoalisforthis“assemblyline”toacceleratetheprocessanddeliverresultsquickly.
WuXiAppTec,apharmaceutical,biopharmaceuticalandmedical-deviceoutsourcingcompanywithoperationsinbothChinaandtheUnitedStates,hasembracedthisindustrializedapproachtonewproductdevelopment.ItsworkonanewdrugforthetreatmentofchronichepatitisCprovidesagoodexample.Aswithmostdrugs,thedevelopmentcycleinvolvesdiscovery,preclinicalandclinicaltrials,regulatoryapprovalandmarketing.Ratherthanrelyingonasmallteamworkinginthelaboratorywithafewmachines,however,WuXiAppTecbeganbydividingtheR&Dprocessintoaseriesofeightsteps,withdozensofpeopleassignedtoeachstep.Theinitialcreationofthereactiveintermediatesrequiredspecializedstaffwithatleastmaster’sdegreesandconsiderableresearchtraining.Theotherstepsrequired“R&Dworkers,”whoaregraduatesoftradecollegesfromwhichWuXiAppTechiresthousandsofemployeeseachyear.Ratherthanrelyingonautomation(withitsassociatedhighcapitalcostsandriskofbottlenecks),WuXiAppTecusesmanualtechniquesthatcanbequicklyscaledupordownasrequiredtokeeptheprojectmovingrapidly.EfficiencyisincreasedbyusingSAP’senterpriseresource-planningsoftwareadaptedfromamanufacturingassemblylinetomanagetheinnovationprocess.ThishighlyindustrializedapproachhasenabledWuXiAppTectocompleteprojectstwotofivetimesfasterthancomparableprojectsusingconventionalapproachesthatthecompanybenchmarkedintheUnitedStates.
PushingtheBoundariesofSimultaneousEngineering
Traditionally,newproductandservicedevelopmenthasbeenorganizedasasequential“waterfall”process,wherecertainstepsneededtobecompletebeforesubsequentstagescouldbegin.Inrecentyears,companieshavetriedtospeedthingsupbytacklingcertainstepsinparallel,anapproachpioneeredbyNASAandnowcommonlyreferredtoas“simultaneous”or“concurrent”engineering.Althoughtheconceptofsimultaneousengineeringissimple,manycompanieshavefoundithardtoimplementinpracticebecauseofbarrierssuchasunwillingnessbyengineerstoreleaseinformationearlyanddifficultiesincoordinatingmultidisciplinaryteams.1
Chinesecompanies,however,arenotonlyembracingsimultaneousengineeringbutpushingittonewlevels.ConsiderLenovoGroupLtd.,whichacquiredIBM’spersonalcomputerbusinessin2005andisheadquarteredinBeijingandMorrisville,NorthCarolina.In2005,itsnewproductdevelopmentcyclewas12to18months.Sincethen,Lenovohasmanagedtocutthecycleinhalfbyapplyingsimultaneousengineeringacrosstheentireinnovationprocess,beginninginR&Dandcontinuingthroughdesign,manufacturingengineering,qualitycontrol,procurement,marketingandservice.Foreveryproject,teammembersworkondifferentelementsinparallel,underthesupervisionofoneleader.Lenovoovercomestheusualproblemsofimplementationbybreakingdownitsproductdesignsintoseparablemoduleslinkedbystandardizedinterfaces;redesigningitssoftwaretobecompatibleacrossallactivitiesassociatedwiththenewproduct;establishingshortlinesofcommunicationwhereeachteammembercanrepresenthisorherrespectivefunctionaldepartment;andintroducingopendesignprocesseswhereinformationissharedwiththeentireteamasearlyaspossible.
GuangzhouPearlRiverPianoGroupCo.Ltd.,whichisbasedinGuangzhou,China,andistheworld’slargestpianomaker,hasappliedasimilarapproachtoitsmanufactureofmusicalinstruments.Pianosaremadeupoffourmaincomponents:
theresonancesystem,thekeyboard,thepedalsystemandthecase.Westernpianomanufacturershavetraditionallyworkedsequentially,withteamsoftwoorthreeprofessionalsspendinguptotwoyearsgoingthroughallofthestepstocompletion.PearlRiverusesamoreindustrialprocess.Recently,forexample,foritshigh-endKayserburgpianos,thecompanyusedateamof23workers(includingsixdesigners,10individualswithexpertiseinareassuchasprocurement,manufacturingandsales,threecomputerengineersandtwoproducttesters).Thisteamwassupportedbyanadditional40craftspeopletoenablerapidprototypingofpossiblenewdesigns.Usingthisapproach,PearlRiverwasabletolauncharangeof10newKayserburgpianosinlessthanfivemonths,atatotalcostofjust$1million.PearlRiverexecutivesestimatethatWesterncompetitorsusingtraditionaldesignprocessesandsmallteamswouldhavetoinvestaround$10millionoverseveralyearstocompleteasimilarsetofnewdesigns.
InnovationprocessesbasedonindustrializationandsimultaneousengineeringarealsobeingusedinChinatodevelopnewInternetservices.ConsiderTencent,aleadingChineseInternetserviceportalthatisbasedinShenzhenandwhoseQQinstantmessagingservicehasmorethan800millionactiveuseraccounts.Tencentdevelopedanewintegrat
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