op-performing global companies, much like their competitors, are banking on innovation to drive growth. But, unlike their competitors, they are investing in the product development capabilities, the supply chain process infrastructure, and the sophisticated information systems needed to support and synchronize innovation across the value chain. In stark contrast, most companies betting their future on their current innovation projects are not prioritizing investments in the supporting processes and infrastructure. Our research shows why this is a bad gamble.Over the last two years, we have studied the growth strategies and the supporting operations of nearly 650 companies around the world. From the executives participating in this research it is evident that for most companies today innovation is seen as the chief source of growth. Despite this expectation that innovation will drive corporate fortunes, our research also makes it clear that building or restructuring business operations to profitably bring new products and services to market is near the bottom of most companies' priorities.Our research shows this disparity between goals and infrastructure investment to hold true in just about every industry we have analyzed -for example, consumer products, automotive, chemicals, and process, pharmaceuticals, high technology and telecommunications equipment. However, overcoming this ''innovation contradiction'' is crucial to survival and success in increasingly complex global markets. The challenge becomes more formidable because companies continue to increase the complexity of their operations by globalizing sourcing, manufacturing, engineering, and marketing/sales operations. This growing complexity makes it ever more difficult to manage product lifecycles optimally.Of the nearly 650 companies from North America and Europe in our study, few have invested adequate resources in infrastructure to support innovation [1]. However, those making significant investment have generated far better business performance, with profit levels up to 70 percent higher than other groups of companies studied[2] (see Box 1). As we see from our research across leading companies -such as Mondi, Samsung Electronics, Porsche AG, and Rohm & Haas -a key factor to success in global markets is the ability to coordinate innovation across their global, complex operations.'' Of the nearly 650 companies from North America and Europe in our study . . . those making significant investment [in innovation infrastructure] have generated far better business performance, with profit levels up to 70 percent or higher compared to other groups of companies studied. ''
Investments in the Indian manufacturing sector do not seem to match the rate of growth of sales. This study empirically determines factors explaining within-firm variation in investment growth in three industriesdauto components, chemicals and electronicsdusing panel data from 2002 to 2006. The results show that common firm-specific factors and some industry-specific factors, explain variation in investments within firms. Capital productivity is a significant factor in auto components and chemicals while capital intensity is significant for chemicals and electronics. Labour productivity is significant only for the electronics industry. The results suggest that there is a need to manage productivity improvements from the growth point of view and not only for efficiency improvements.
Over the past two years, senior managers at several automotive companies have begun to implement a new business model called a digital loyalty network (DLN). The model enables companies in any industry to continuously collect and monitor their customer, product and supply chain data and more precisely adjust engineering, production, distribution and sales/marketing activities to meet current and future demand. Moreover, they can use the same data to enhance their partnership with suppliers. For example, GM has put in place a number of components of a digital loyalty network, including the implementation of an integrated network connecting the company with suppliers, alliance partners, dealers and customers. GM has also adopted a new formula for managing the order‐to‐delivery process, has launched Web‐portals for customers and suppliers and continues to enhance and support its OnStar system, which allows drivers to communicate on the road with GM customer service representatives and vendors. Digital loyalty networks have three components: (1) Digital – the companies use sophisticated information technologies to manage information more effectively; (2) Loyalty – the system is designed to target, satisfy, and retain the most profitable customers and, in turn, use customer information and loyalty data to make the supply chain more efficient; (3) Networks – the information system links suppliers, producers and customers and is continuously updated. DLN companies use information technology resourcefully to increase the effectiveness of supply chain and customer relationship management initiatives. They develop a solid network of digitized information that ties together the value chain and creates loyalty and on both the front and back end of business operations. On the supply side, DLN companies continuously monitor customer value based on feedback about customer requirements, purchase history, and potential purchases and rely on digital technology to make certain their most valuable customers are kept satisfied. They do this by managing inventory through the supply chain so that the best customers are served first, and making certain short and long‐term capacity planning responds to these customer priorities. In addition to General Motors, Deloitte Research identified three other innovators in the automotive industry – Porsche, DaimlerChrysler and Renault/Nissan – that are developing certain aspects of a DLN.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.
hi@scite.ai
10624 S. Eastern Ave., Ste. A-614
Henderson, NV 89052, USA
Copyright © 2024 scite LLC. All rights reserved.
Made with 💙 for researchers
Part of the Research Solutions Family.