If innovation isn’t really about technology, what is it about?

Discussions around creating change to deliver growth and increased profitability usually end up at talk of digital transformation.

However, one area that manufacturing has only just started to look at is how a radical rethink of your partners can deliver a step change in growth and efficiency.

When upgrading or buying new capability – a machine, production line, or a whole new facility – we tend to reach out to our incumbent OEM suppliers, and maybe several of their competitors, and run an evaluation process.

This typically yields a faster machine with new features, but in my experience rarely delivers a step change from the 20-year-old piece of equipment you are replacing.

Sticking to what you know

There are many advantages to this approach, such as maintaining your relationship with a strategic supplier, reducing the learning curve for machine operators/maintainers, and preserving your current level of factory standardisation.

Most importantly, you know how reliable the machine is likely to be, the quality of the follow-up support you’re likely to receive, and have confidence that costs will be kept within acceptable limits.

Marketing transformed

Let’s look at marketing as an example of a radical change (and growth) within an industry over just a few decades. Marketing in the digital age enables business to advertise on multiple social media platforms, all managed in one place by an additional service, and each post can be analysed and optimised.

Any resulting activity can be captured to drive e-commerce sales or acquire users’ contact information for further marketing/sales purposes. Leads are automatically warmed up through email sequences before they are fed into a CRM system, which leverages AI to dynamically prioritise which contacts should be pursued first.

Every piece of the functionality mentioned above didn’t exist 20 years ago. Yet, they’re now mature facets of industry, deployed in a wide range of businesses.

There is a competitive ecosystem around every single feature on that list. As the vendors around a feature innovate their products to differentiate themselves, a new product set is created, which in turn attracts competitors and matures.

Applying the model

This model is clearly applicable in a highly digital and global market, but can the same principles apply in hardware-based industries with much higher barriers to entry?

Well, the US government’s decision to encourage competition to launch vehicles into space is a great example of the system working in the ‘real world’.

The incumbent supplier was the United Launch Alliance, a joint venture between Lockheed Martin and Boeing, formed in 2006.

But, when the market was opened up, rather than competition being provided from other US (or international) defence prime contractors, the move encouraged an influx of private investment into new business concepts, often backed by some of the world’s highest profile technology leaders.

To cut a long story sort, Elon Musk’s SpaceX can now deliver per-launch costs of $83m, far lower than ULA’s average cost of $422m.

This innovation flows right through into the supply chain, even in the UK, and there are now more than 60 registered SMEs delivering high-end products and services into international space programs.

Choose your partner wisely

So, what does this all mean for manufacturing? The recent addition of Innovation Alley at the Smart Factory Expo and the co-located Hack & Pitch events run by the Digital Catapult are a great example of a shift in partnerships in action.

I would encourage you as manufacturers or as OEM suppliers to think seriously about whether the start-up ecosystem can add value to your core operations. When the major OEMs partner with smaller players, the results are truly impactful.

Go and look whether there is any niche capability that they can add to your next major project, rather than going to your incumbent supplier as a single source – and then looking at start-ups as an afterthought at a trade show!