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issue: May 2003 APPLIANCE Magazine

From the Top
The Innovation Crisis


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by Dick Topping, director of Appliance Research, TIAX, LLC

Frankly, I returned from my 15th (or so) International Appliance Technical Conference (IATC), held March 10-12, in Lafayette, IN, U.S., a bit depressed.

This conference is somewhat unique in that it focuses exclusively on showcasing technology developments in the worldwide appliance industry, and it is conducted in a collaborative, academic setting, with each conference sponsored by a university. It is a great opportunity for appliance engineers, home educators, professors, and students to collectively learn about the industry. The past several years have shown growing participation by overseas appliance technologists (although several presenters could not attend this year because of the world situation and an inability to get visas).

But this year, business was not as usual. The major U.S. original equipment manufacturers (OEMs) sent very few staff. And the staff that did attend seemed too stressed and busy to absorb much of the information and the experience. The reduced attendance meant that supplier displays were poorly attended, leading to questions about whether to display at all next year. Most surprisingly, innovation from traditional sources appeared to be severely limited.

What struck me at this year's IATC is the magnitude of the innovation crisis that the appliance industry - not to mention technology industries in general - is facing. The economy's slowdown has hit the appliance industry hard - which in turn has stifled investments in R&D, technology, and staff development.

This innovation crisis has its root in the decreasing productivity, "stagflation," and the eroding competitive edge of the U.S. economy that commenced in the 1970s. This was followed by the 1980s era of reengineering, which became a euphemism for downsizing. Many corporate R&D labs were reduced or eliminated altogether as corporations began outsourcing their R&D and innovation to small technology start-ups. The dot-com bust of 2000 hastened the demise of many of these start-ups, as the venture capital needed to grow or maintain these businesses has become next-to-impossible to obtain.

The challenge for the major appliance OEMs is daunting, given the current ever-shortening payback periods and an ultra-conservative financial environment. But one thing is clear: innovate they must, or their smaller or international competitors will continue to grab market share.

Take the Korean company LG Electronics, Inc., which is now the fifth largest producer of refrigerators in the world. Last fall they introduced the Internet Refrigerator, an appliance that boasts a 15-in LCD display and its own LAN port to enable high-speed Internet access. While its computer display is not meant to replace the home computer, it offers computer access in the hub of most homes - the kitchen. The refrigerator is capable of keeping track of what foods are inside, how long the foods have been there, and it can warn you when you are running low on certain items - all without having to open the door.

In addition, it allows the ability to leave a video message for a family member or housemate, check e-mail, or surf the Internet. While this approximately U.S.-$8,000 refrigerator may not be everyone's cup of tea, it does represent a truly innovative combination of technologies, foreshadowing future trends that will appear in mass-produced products. Field experience with this unit should serve LG well in developing its future market strategy.

Then there are the true inventors who push the edges of appliance functionality. Kirk Campbell, a policeman and helicopter pilot from Sacramento, CA, U.S., with no connection to the appliance industry, felt strongly enough about a potential household safety problem that he developed a prototype and patented a device to help. His plan: to tie appliances into home security alarm systems. If an appliance is left on when leaving or going to bed, for example, the security system will stop a homeowner from arming the system until the appliance has been turned off. Monitoring cooking appliances could go a long way in deterring the 86,000 residential fires per year that fire department data indicate involve ranges and ovens. Mr. Campbell spent his own money to come to the conference and display his invention, hoping to learn from us and to find a business partner. Whether the concept ultimately makes commercial sense or not, that kind of drive and enthusiasm is rare of late at a conference largely attended by the traditional appliance industry companies.

Ironically, the appliance industry is currently trying very hard to develop long-term, enhanced customer relationships by providing innovative, quality products and backing that up with superior customer service. But we need to evaluate progress and chances for success against a perceived lack of enthusiasm, commitment, and investment in technology. Companies soon will be faced with the challenge either to change traditional approaches to meet 21st-Century customer and business paradigms or to be replaced by others more flexible and willing to take risks.

Where do you weigh in?


Dick Topping

Dick Topping is director of Appliance Research at TIAX LLC (www.tiax.biz). He can be reached by phone at 617/498-6058, by fax at 617/498-7206, or e-mail at topping.r@tiax.biz.

From the Top appears bimonthly in
APPLIANCE Engineer¨.


 

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