Peppers: Continuous innovation keeps manufacturers in tune with customers during recession
By Brian E. Clark
Getting business and manufacturing leaders to change the way they operate isn’t easy – especially when times are good -- says author and management consultant Don Peppers.
But, paraphrasing English essayist Samuel Johnson, Peppers says nothing sharpens the mind of an executive like the prospect of his or her firm going under.
“There aren’t very many companies out there in the past few years that haven’t visualized their own hanging,” adds Peppers, who will speak April 20 at the annual Manufacturing Matters! Conference in Milwaukee.
The gathering, which is sponsored by the Wisconsin Manufacturing Extension Partnership, will be held in the Midwest Airlines Center.
Still, Peppers says, people will be disappointed if they expect him to devote his speech to the recession.
“That’s not what I’ll be talking about,” he says. “I’ll be talking about something that is very, very constant to business’s lives, and that’s the need to innovate.”
While some leaders are willing to shake things up, he says a recession also often subdues the willingness to experiment and replaces that with a panic to nail down and hang on to what businesses already have.
“They tend to batten down their hatches and lower their costs,” he says.
“While it’s not a bad thing to pay attention to your costs, the truth is that technology is continuing to rush ahead and the need for innovation is even more critical in an economic downturn than it is when times are good.
“When times are good, even not-so-innovative companies can survive,” he says. “But when times are bad, that could spell the difference between survival and failure.”
He says manufacturers can use innovative thinking to strengthen and deepen their customer relationships.
He says companies too often react to situations. But he says if they learn to think like their customers, they can anticipate their needs.
He says one Wisconsin firm he’s worked with used to get two weeks to turn around an RFP (request for proposal). But that has now been trimmed to 24 hours and may soon drop to a two-hour turnaround time.
He says the customer is trying to “suck cost out of the process and is driving the manufacturer to comply. But it really should be the manufacturer who is sucking those costs out for the customers' benefit.
“So what we do is urge companies to step back from the product – the actual, physical thing – and consider carefully the need that the customer is meeting in all its ramifications ... or the job your product is being hired to do.”
Customers don’t just need the product, he says. They need it delivered at a certain time or place and configured in a certain way.
“They might also need instructions on how to operate it in different situations or invoicing showing prior charges,” he says, urging manufacturers to think ahead about what kind of services customers might need.
Peppers says it’s tough to get many companies to innovate, often because of old habits.
“There is an inherent conflict between innovation and efficient operation,” he acknowledges. “That’s why I call the talk I’m giving ‘Offense or Defense.’”
Using the analogy of a professional football team, he says sociological studies have shown the lockers of offensive players tend to be relatively neat, while defensive players lockers are chaotic and messy because they are the ones who like to upset things.
“That’s the same conflict that exists between operating efficient manufacturing processes, which is an offensive task, and innovation, which involves a lot of messiness ... and a lot of trial and error.”
He says top companies like Apple Computer “tolerates wise failure,” which builds on products that don’t work out to end up with successes like the iPod.
“Before the iPod was the Newton, which was a dog. And before the Macintosh was the Lisa, which was awful,” he says. “Innovation inherently involves unpredictability, randomness. You have to be tolerant of variance."
Peppers says he believes technology will force firms to be innovative.
“Technology waits for no laggards,” he says. “Technology waits for no one. So you can either be on the train driving it or on the track.”