The Factory of The Future

Is the factory of the future about automation and less jobs or about creating hi-tech jobs? See Zvi Feuer's article from Manufacturing Executive on this topic. Here is an excerpt:

"I have a different view of the factory of the future, and although it certainly includes robots and other forms of automation, I don’t see it as eliminating jobs. In fact, I predict the opposite. Factories of the future will actually create jobs. According to Thomas Friedman, the Pulitzer Prize-winning columnist for The New York Times, a 1% improvement in productivity can result in as many as 750,000 new jobs in the U.S."

Click here to read the full article. 

Innovation doesn't matter

James Gardner has provided as provocative post on the Innovation Excellence blog, reasoning that innovation doesn't really matter because it almost nevers pays off. Recent "great" innovators like Facebook, Google and Apple didn't invent anything new.

* * * *

One of the greatest myths of our time is if you create something genuinely new, something completely unprecedented, you’ll have a better than average chance of getting rich.

So ingrained is this idea that a whole generation of young university graduates have stopped seeking a steady career in the large safe corporations their predecessors held dear, pursuing instead the dream of the startup. For most, the dream does not work out the way they expect. Hardly anyone builds the next Facebook, or the next Google, or the next Apple.

But the reason for the poor success rate is counterintuitive and is something of a dirty little secret: despite what everyone says, genuine innovation hardly ever pays off.

Click here to read the full article.

The most popular US brands in China

A great article from 24/7 Wall Street listing the Top 10 American brands in China. The full article reasons that while population growth over the last 40 years (667M to 1.3B) in China has been an attractive market for growing these brands, it is also the rise of the Chinese middle class that has substantially contributed to the success of these brands. 

There were a couple of "wows" for me here. First, KFC number one? Wow! NB: McDonald's doesn't get a mention in the Top 10. Second, Microsoft as No. 3 has a 99% market share? Wow!! NB: The article also mentions Microsoft believes four-fifths its Windows products are pirated. I could go on... maybe one more. For the first time, GM sold more vehicles in China and than the US. Anyhow, enough of my "wows" here's the list of the Top 5. The Top 10 can be found in the full article by clicking here. 

1. KFC

• Market share: 40% (Yum! Brands)
• Industry: fast food
• Competition: McDonald’s

KFC has become a sensation in China. Since the first restaurant opened in Beijing in 1987, the chain has grown to more than 3,200 locations in 650 cities, according to Bloomberg. McDonald’s (NYSE: MCD), the second most prominent fast food chain, operates 1,100 locations. McDonald’s commands only 16% of market share, while Yum! Brands (NYSE: YUM), which owns KFC, has 40%. KFC is so hugely popular that the company’s target is to increase its number of restaurants in China to 20,000. China accounted for 29% of Yum! Brands’ measured-media ad spending and 36% of its worldwide revenue in 2010, according to Ad Age. While McDonald’s restaurants in China have an almost identical menu to those in the U.S., KFC offers local patrons a number of more familiar dishes, such as Chinese-style porridge for breakfast.

2. General Motors

• Market share: 12.8%
• Industry: automotive
• Competition: BYD, Toyota

General Motors passed Toyota Motor (NYSE: TM) in the first half of 2011 to become the largest automaker in the world. It is also the top-selling brand in China. GM’s presence in the country is still expanding. In the first half of 2010, the company sold more vehicles in China than in the U.S. for the first time ever. At that time, China accounted for a quarter of the company’s global sales, according to the New York Times. Since 2000, the company’s market share in China has grown from 3.4% to 12.8%. Last year GM sold more than 104,000 LaCrosses, one of its most popular models in China. GM operates in China through joint ventures with a number of Chinese companies, such as SAIC Motor.

 

3. Microsoft

• Market share: 99.3%
• Industry: PC operating systems
• Competition: N/A

Microsoft dominates the PC operating systems market in China. According to web analytics company Baidu Tongji, the company has about 99.31% of market share. Apple’s Mac OS and Linux have virtually no representation. Due to rampant piracy, however, Microsoft only makes a fraction of the revenue it would make if everyone in China bought software directly from the company. Nearly 80% of PC software is pirated in China. According to Microsoft CEO Steve Ballmer, the company’s revenue in China will only be about 5% of what it is in the U.S., despite almost equal sales of personal computers in the two countries, the Wall Street Journal reports.

4. Boeing

• Market share: 52%
• Industry: commercial aircrafts
• Competition: Airbus, Embraer, Bombardier

Boeing currently has more than 50% share of the Chinese market for commercial aircraft, according to Forbes. The company’s presence in China most likely will increase in the coming years. Air passenger trips in China have increased 16% from 2010. Boeing expects the aviation market in China to more than triple over the next 20 years, requiring an increase of about 5,000 planes valued at $600 billion. Boeing and China have a two-way relationship. According to Boeing-China President David Wang, speaking to CNC World, “China is already Boeing’s biggest customer outside of the United States and Boeing is the largest purchaser of made-in-China aviation parts and components.”

 

5. Nike

• Market share: N/A
• Industry: sportswear
• Competition: Li Ning, Adidas

Nike is China’s leading manufacturer of sportswear. It is followed in market share by Chinese company Li Ning, which holds one-third of the market, and Adidas, although some research puts Adidas in second place. In June Nike reported annual revenue of $2 billion in Greater China, according to Reuters — double the amount made by the company in 2007. Although Chinese companies currently hold a significant market share, they are locked in heated competition to keep up with the expansion of foreign rivals. Concerning sportswear in China, HSBC noted in a report that, “Local brands will lose more market share to imported brands over the next 12 months as the former struggle with inventory issues, while the latter benefit from consumers trading up.”

The rest of the Top 10 lines up like:

6. Coca Cola/Sprite

7. Procter & Gamble

8. Intel

9. Starbucks

10. Apple

Click here to read the full article.

Manufacturers Need to Focus on Focus

This article is from Industry Week and follows a previous Thought Catalyst post on the importance of Measuring What Manufacturers Measure.

Both articles are about focusing on what is creating the most value for your customers, such as:

• Which customers are most likely to provide the strongest, most sustainable profit stream?
• Which market segments offer much more-or less-potential than others?
• What products/services/features are the entry point for customers with the highest potential, and which offerings are ultimately dead ends?

..etc

The author mentions a company that was bending over backwards in added services to its largest client. In doing so, it was in fact making a loss on the contract and would be more profitable without them. He says manufacturers commonly make the mistake of investing time and resources in low return initiatives.

Therefore invest time in focusing on core strengths and the overarching $64 million question: what can you do better than your competitors?

Click here to read the full article.

Here's a solution: why not declare a war on manufacturing?

I love this article. It's a US take on the woes of manufacturing and the Government's (lack of) response to it. Author AJ Sweatt reasons previous "wars" have meant an increase in the problem they are actually trying to prevent eg War on Poverty, War on Drugs. Waging such a "war" against manufacturing would then see the industry increase by up to 13 times. Of course, he is highlighting the Obama administration's lack of action in support of the manufacturing industry.

Click here to read the full article.

Avoiding innovation's terrible toll

A really interesting article from the Wall Street Journal.

The article says corporations are more vulnerable than you think - if they are older than 40 years they are doing well, and importantly innovating well. The article discusses what has kept IBM alive for over 100 years and what is keeping Apple and Google at the top of their game.

Click here to read the full article.

The Principles of Lean Innovation

We've been operating in the Lean Manufacturing sphere for over ten years and during that time we've seen Lean methodologies permeate beyond operational implementation in manufacturing environments to be applied in sales, healthcare, finance and administration.

We believe that Lean itself is a form of innovation where managers can make the most out of existing resources, but below is a post on Lean innovation, which applies Lean thinking to the innovation process.

Click here to read the post - or contact us about Lean implementation.

Innovation through subtraction

Wow.. a great post from Tim Kastelle on Innovation Excellence. Tim is aligning his current reading about the natural world with innovation concepts, such as his recent post on the Coelacanth. This latest post is about the multi-dimensional insights a drawing (of a caracel) provides, as opposed to a photograph in understanding the subject. Good innovators, he argues, understand their customers similarly without the need for focus groups.

Click here to read the full article.