Is your company innovative?

July 26, 2001
Involve the entire organization in product development.

Chuck Heine
Engine Systems Group
Dana Corp.

Edited by Amy Higgins

Building on an innovation developed for internal combustion engines, Dana can now seal the entire fuel cell in this design for a low-emission vehicle.

After many prototypes, Dana's sensor gasket became a reality.

Most companies claim to encourage innovation, but how many really have the mindset and culture to foster it on a daily basis? Since the mid-80s, companies have embraced lean techniques such as continuous improvement, Six Sigma, and so on. These tools and techniques have shown that consistently high-quality products and services start with processes that are "in place" and "under control."

But, there is a difference between lean thinking and innovative thinking — innovation requires a different mindset and culture. While both are important, lean thinking ensures survival today and into the future, and innovative thinking ensures there is a future.

Dana Corp. is one company striving to create an innovative environment. In fact, the company's strategy to create new product technologies, develop new processes to boost speed to market, and harness information technology to improve supply chain management involves 10 exacting steps.

1. Don't narrowly define your business.
Management must maintain a balance between staying focused on businesses they are good at and stifling engineers' creativity. It's important to let engineers think in broader bandwidth.

For example, one of Dana's product lines is cylinder head gaskets for internal combustion engines. But, if our engineers thought only in terms of cylinder head gaskets, there would be no growth. Instead, they consider sealing the entire internal-combustion engine, and then take it even further by looking at oil containment in the engine system. Because of this, Dana engineers are designing oil separation, heat shield, windage tray, and intelligent lubrication products. An even broader look at engine sealing has led to developing components for fuel-cell technology. In fact, Dana can now seal an entire fuel cell.

2. Experiment and prototype often.
Seeing and touching a prototype encourages innovation. As an idea becomes more "real," the possibilities for improvement become real, too. And, the more revolutionary the idea, the greater the need to prototype. For instance, Dana engineers had an idea to help engine customers better manage fuel economy and emissions: Provide temperature, pressure, and fluid-flow data right from where the action is — the gasket. Embedded sensors transmit instant information to the engine-management system yet maintain seal integrity. Before this concept became a reality, however, it took many prototypes to get it right.

Engineers experiment heavily on the product side but we do not experiment enough on the business side. Many new business methods are scrapped out of fear or nontested assumptions. Experiment often and figure out ways to scale down big ideas and test them quickly and inexpensively.

3. Develop high-energy teams with diversity.
Too homogenous a group means everyone is thinking in the same way. Just as cross-functional teams lead to better decisions, teams comprised of different demographic characteristics are more creative. Even if team members are similar physically, their backgrounds, training, and disciplines can be different. Culturally and functionally different groups have a big advantage.

4. Provide time to innovate.
3M was groundbreaking in this area, encouraging every employee to spend 15% of the workday thinking about new products, processes, or other new-fangled ideas.

If people spend their days fighting fires and are constantly bogged down in the details of day-to-day activity, they can't think about the future. Some organizations recognize this and have dedicated advanced engineering departments to look at the big picture. Others hold special meetings just to think about new products and business opportunities. While it's important for organizations to be lean, they must also allow time for brainstorming and encourage employees to think outside the box of their daily jobs.

5. Recognize points of diminishing returns.
The mantra of continuous improvement has taught us to strive for perfection. However, one must ask, for example, if after reducing a cycle time from 6 hr to 6 min, is it worth expending more effort in cutting time even further? Or is time better spent refocusing those resources and creating a more valuable product or a revenue-producing service for the customer? In other words, if the return is no longer substantial, managers must know when to refocus the team and move on to the next big project.

6. Develop a process to harness ideas and innovation.
Developing one blockbuster new product after another is not just good luck. Some companies clearly are better at it than others. These companies have made a process out of it. To classify a creative environment one might ask, do employees feel free to express their new business and product ideas? Are they able to quickly experiment or model an idea themselves to determine if it has merit? Is there a way to share ideas with others who can add input or use the idea to build on one of their own concepts?

In an innovative culture, generating ideas is part of the job. There are processes in place to ensure everyone in the organization generates ideas, and to capture good ideas until the time is right to make them reality.

At Dana, one of the ways we incubate new ideas is by asking each person to generate two per month. Many times ideas come from going to conferences and talking to new customers and then the company uses advanced product quality planning (APQP) processes to transform good ideas into viable products.

Customers are an important part of the creative process. Dana holds "Technology Roundtable" forums for engineers and senior management to explore and make decisions on new developments. Discussions center on customers' values, such as designing for the environment, improving speed to market, and cutting noise, vibration, and harshness (NVH).

Another way to spark new thinking is moving people from one area of an organization to another. For instance, a Dana engineer transferred from the driveshaft to piston ring business and ended up finding a new application for an idea he had been working on, leading to a new patented product.

7. Cancel failing ideas early.
There is no shame in coming up with an idea that doesn't work, but an inability to identify it early and stop investing resources in it can be deadly. Many of us are taught to stay on a problem until it's solved. Innovative companies are seen as innovative partly because they know when to stop investing in no or low-potential ideas. They can't afford to salvage ideas that aren't working because they're too busy testing new ones and taking highpotential ones to market.

Canceling failing projects can be especially tricky when the idea comes from senior management. When top officials have a pet project, resources are devoted to it and sometimes, a lot of effort is wasted. It's important to realize that not every "bright idea" actually becomes a business success, no matter where it comes from.

8. Let people know it is their job to innovate.
Some engineers think their job is to "maintain," or to keep whatever project they are assigned to going. It is everyone's job to innovate and that message must constantly be reinforced.

In my business, for example, we have to generate 7% internal growth/year. Yet, the engine market is only growing at about 2 or 3% a year. How do we get to 7%? We can try to take business away from our competition, but that is costly and will end up being low margin. Instead, we grow our business by developing new and better products. We keep this target in front of us so we are constantly reminded of our goal.

Developing new products that take us into the future involves training ourselves to think ahead. Everyone should pay attention to what their market is doing and keep an eye on their product's life cycle.

9. Reward creativity.
I want to make someone in Dana a millionaire. It hasn't happened yet, but as we work to build an innovative culture, wouldn't it be fantastic to reward someone whose idea was a home run for the company by enriching them personally as well? When a person or team comes up with a truly innovative business process or product, they should be significantly rewarded. If we want people to think like entrepreneurs, then we need to reward them as such.

Recognition is important, too. At Dana, our patent holders are recognized in the Patent Hall of Fame at our Technical Resource Park. We've been doing this for years, and today the walls are covered with hundreds of patents, a physical reminder of the culture of innovation we work to instill.

10. Have a portfolio of new products and businesses.
Senior managers often focus on financials but they need to devote just as much time to new product development, ensuring a steady stream of new ideas in the pipeline. Too many senior managers leave product development to advanced engineering managers when new products should be defining the strategy of the entire company.

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