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OM in the News: A New Approach to New Products

September 21, 2016
FirstBuild's microfactory, on the campus of U. of Louisville, features work benches, tools, welding equipment, 3-D printers and metal-cutting machinery to turn ideas into initial prototypes

FirstBuild’s microfactory, on the campus of U. of Louisville, features work benches, tools, welding equipment, 3-D printers and metal-cutting machinery to turn ideas into initial prototypes

At FirstBuild’s HQ there’s a sign reminding all who do work at the appliance-development factory that “A prototype is worth a thousand meetings.” It’s an operating tenet for FirstBuild and other companies trying to change the way new products are created (see Chapter 5) by liberating the process from the confines of slow-moving, bureaucratic R&D departments. FirstBuild is set up to mine ideas for GE appliances from amateur inventors, students and appliance users and produce small batches of new products for sale to test their appeal with consumers.

Using a concept known as open innovation, reports The Wall Street Journal (Sept. 19, 2016), companies are learning how to quickly harvest loads of ideas for new products from business partners, suppliers, consumers and their own employees outside of their R&D staffs. At the same time, they’re shrinking the time needed to create prototypes to months from years. “It’s a totally different approach to developing a product,” says Airbus’ VP. “It’s disrupting ourselves in a positive way, challenging the tradition of keeping product development very much to ourselves.”

Open innovation got its start with Silicon Valley tech companies in the early 2000s. Companies trying it say they’ve concluded that the speed and knowledge needed to bring new products to market these days requires them to cast wide nets for know-how. Technology and the knowledge to deploy it are evolving too quickly in many industries for corporate engineering and product-development research staffs to keep up on their own.

Airbus plans to assemble a prototype of a cargo-hauling drone based on the winning design from an open competition this summer that yielded 425 proposals for the unmanned aircraft in 6 weeks. Eight entries came from Airbus employees, but the winner was a Russian engineer from Siberia working on his own. He was awarded $50,000 and will receive royalties if his drone reaches the market.

Classroom discussion questions:

  1. What is the value of open innovation to OM managers?
  2. How does this concept differ from the product development stages in Figure 5.3?

 

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