the International Appliance Technical Conference, I commented
on what I saw as the appliance industry's
increasing focus on short-term returns. By curtailing R&D
investment, the industry is opening the door wider to international
competitors and new, smaller, more nimble domestic competitors
that are poised to quickly gobble up market share.
The response I received from that article was positive. I had hit a
nerve. And the situation appears to be getting worse. Since writing the
article, I've heard that some companies have not only stopped short-
and long-term R&D investment, but they're not even investing in capital
improvements. Also, as Professor Rebecca Henderson of MIT's Sloan School
recently pointed out at a meeting I attended, many companies are even
ill-equipped to encourage their entrepreneurial staff internally to bring
innovations quickly and successfully to market.
While my article pointed out the crisis the industry is facing, it offered
no ray of hope as to what the industry can do now to combat this period
of ultraconservative investment. I hope to remedy this here.
So what's an OEM to do when business demands force a focus on short-term
projects and existing products versus future growth and innovation? How
can OEMs combat the increased pressure on technological innovators to
be "relevant and timely" (i.e., non-innovative)?
What's needed now are new models for bringing ideas to market. TIAX
recently surveyed top executives of companies in industries ranging from
commercial and residential systems to healthcare and consumer packaged
goods. We found that most agreed strongly that: 1.) innovations from
universities, national labs, startups, and R&D labs typically require
substantial development to prepare them for market; 2.) most organizations
have plenty of new ideas, but have a problem in rapidly implementing
them as new products; 3.) it's more difficult for new technologies to
get to market today than it was 3 years ago; and 4.) building R&D
capabilities to tackle new challenges is risky and takes a significant
amount of time.
Again, most of this is not surprising, but an important point is that
it's not just the appliance industry that's in trouble. It's the American
innovation process—the world's past model of achievement and success—that
needs fixing; truly creative (and courageous) approaches will be needed
to restore growth and prosperity for our future generations.
With R&D spending sharply reduced, many companies have turned increasingly
to universities, research hospitals, and other sources of innovation
to pick up the slack. That's why U.S. locations like Ann Arbor, Palo
Alto, Research Triangle Park, and Cambridge have thriving technology-related
businesses springing up next to the institutions producing the innovators.
However, this is not a complete solution because there is often a "gap" between
the innovation process and commercialization that neither the research
community nor industry is well-appointed to handle.
Another approach is to co-locate and share facilities with a university
or hospital. Under this model, staff from the university and industry
partners can work together on innovative technologies to enhance prospects
for successful commercialization. But not all prototypes or hypothetical
models can be successfully translated into manufactured products. Keeping
research cost effective, relevant, and timely is a must.
Unfortunately, as industry further cuts R&D and searches for innovation
from outside sources, it can weaken even its ability to quantify the
risks and benefits of new technologies. If a company identifies a technology
possibly worth the risk of investment, it may not have adequate knowledge
of and experience with enabling surround technologies to achieve successful
commercialization due to the cutbacks in "non-core" technical
That's why I believe that industry will turn increasingly toward technology
facilitators—companies such as Battelle, Sarnoff, and TIAX—that
have proven track records of transforming ideas into successful products.
These companies can provide help anywhere along the path, from conceptualization
to commercialization, and bring the important perspective of lessons
learned from many different industries.
In any case, the demand for top-line growth will never diminish. Working
with external sources will become increasingly important to implement
innovation. Our industry has to overcome a culture much more comfortable
responding to the competitor next door than viewing him as a potential
collaborator against a less defined, but more significant future business
Our challenge is to implement a new industry business model—effective,
collaborative partnerships for rapid, innovative product development.
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 email@example.com.
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