A recent study by Aberdeen Group (www.aberdeen.com) indicates that electronics/components manufacturers who want innovations developed into profitable products must focus on boosting product lifecycle management (PLM) investments, adopting lean and open innovation, leveraging existing information assets for knowledge capture and reuse, and maximizing value out of their product intellectual property (IP).
The Aberdeen research of more than 230 enterprises, Product Innovation Agenda 2010, found that improving product development efficiency was a top strategy in establishing best practices for innovation and profitability. In its study, Aberdeen looked at product development strategies of five vertical industries and examined key themes for each industry.
In addition to high tech and electronics, the study focused on key strategic initiatives and challenges specific to aerospace and defense, automotive, consumer packaged goods, and machinery industries. The research identified how manufacturers in each industry can best implement product development strategies in order to bring new products to market ahead of their competitors.
To gain an understanding of how manufacturers successfully manage product innovation, development, design and engineering, respondents were benchmarked according to their performance across five key performance indicators and divided among three performance categories: Best-in-Class (top 20% of performers); Laggard organizations (bottom 30%) and the Industry Average (the remaining 50%). These measures included the percent of products meeting targets for product launch, product cost, product development budget, revenue and lifecycle costs.
Aberdeen Group found that high tech/electronics companies are more focused on protecting and improving the value of their product intellectual property (IP) than other industries. The challenge of protecting IP is reported twice as often by high tech manufacturers than other industries, say Aberdeen. The top product innovation growth area reported by high tech/electronics companies is the measurement of innovation performance with formal metrics, which is expected to grow from 28% today to 71% in 2010–a 154% growth rate. Increased formal metrics will help improve product development success rates, reduce costs, and more predictably deliver innovation as performance gains visibility.
To capitalize on promoting efficiency and shortening product development cycles, the Aberdeen study indicates that high tech/electronics manufacturers need to focus on:
- Boosting PLM investments;
- Adopting lean and open innovation;
- Leveraging existing information assets for knowledge capture and reuse;
- Maximizing value out of their product IP.
Michelle Boucher, research analyst/product innovation and engineering practice at Aberdeen Group, says, “Our research reveals that improving product profitability is on the top of the executive agenda for almost every industry; however, this is complicated, with every industry reporting top challenges that cut into profitability, such as shorter market windows and increasing customer cost pressures.”
Boucher adds, “To achieve their profitability goals while addressing the challenges, manufacturers across all industries need to adopt best-in-class product development practices that will enable them to promote product innovation, drive profitability, and lower product development costs.”
Leif Pedersen, vice president, industry marketing, Siemens PLM Software, observes, “The Aberdeen reports reveal that balancing product performance and streamlining product development processes represent significant challenges for manufacturers across all industries. Faced with burgeoning pressures to lower product development and lifecycle costs, manufacturers need to streamline and promote product development efficiencies across their organization and transform innovation into a formal repeatable process in order to drive growth and deliver innovative products to market ahead of the competition.” CS
