Innovate Your Way to Growth While Minimizing Risks
Introduction
Manufacturers work hard to minimize disruptions to their operations and invest significant resources to minimize production risk. They also are under constant pressure to find new ways to deliver more value to their customers. Sustainable business growth is critical to delivering this value. Many achieve that sustainability through experimentation.
But innovation and experimentation involve risk, which could lead to wasted resources, not meeting expectations, or a lack of return on investment. Sometimes precious resources will be devoted to experiments that will not work out. But just as there is the risk of failure, there is risk associated with not being innovative as well. For instance, the business may not stay competitive.
Manufacturers can reduce their innovation risk by linking initiatives to the unmet needs of their customers. They need to anticipate how their customers’ needs will change in the future.
Focusing on Cost is not Sustainable for Growth
The notion that “cheaper is where innovation goes to die” has never been made more evident than during the recent disruptions in the global supply chain. The traditional focus on low, per-unit cost of production has proven to be shortsighted as the onset of the COVID-19 pandemic led to factory shutdowns in Asia and a cascading series of issues that still haunt U.S. manufacturers such as failed deliveries, unreliable schedules and massive increases in shipping costs.
A smaller manufacturer cannot focus on cost alone in the supply chain. It must value reliability and however it and its partners can add value. A manufacturer can mitigate risk with a disciplined approach to its supply chain with redundant sourcing and by finding new suppliers. Many small manufacturers are now realizing the benefits of doing things differently, which can include increasing efficiencies, growth and competitive advantage. This applies to new product development (NPD) as well. Manufacturers can mitigate risk in innovation with a disciplined approach to NPD.
A Disciplined Approach Will Help Manage Risk in Innovation
Manufacturers can better manage innovation risk if their organizations are aligned behind an initiative. This starts with an appetite from leadership to dedicate resources to the initiative and depends on good timing to take advantage of opportunities and the market.
About ELGC
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