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How American Manufacturers Can Tap Russian Innovation
Why Russia? The country’s science and education systems remain one of the world’s best.
Oct. 5, 2005 .
In our first article, we
asserted that the only way for American manufacturers to compete
successfully against lower-cost global competition is through product
innovation. We explained how the most successful product innovators
were superior at three core activities: in the way they define
innovation (i.e., their criteria for determining whether there is a
fundamental need for some new product concept or feature); in the way
they assess the demand for innovation (how much of the market has that
need and how much it would be worth to solve it); and in how they
determine the supply of innovation (how to make a new product concept
technically and economically feasible).
In this article, we examine the supply part of the product innovation
equation. After determining whether a customer segment would want a new
product, managers must answer two questions on the supply side: Can we
produce it — that is, do the technologies and manufacturing processes
exist to make the product possible? If so, where can we produce as
efficiently and inexpensively as possible? The answer to the second
question increasingly is countries like China and India, where labor
costs are a fraction of those in the U.S. and Europe. But the answer to
the first question can be even more important because if the
technologies and manufacturing processes don’t exist, the product can’t
be manufactured anywhere. Answering that question requires
understanding not where cheap labor exists but rather where deep
scientific, engineering and other technical expertise resides. A
growing number of companies are discovering that they reside in a
country not known for commercializing innovation: Russia.
Why Russia? The country’s science and education systems remain one of
the world’s best. Until recently, the Russian government had shut off
the country’s scientific, engineering and mathematical expertise to the
outside world. No longer. A number of companies have tapped into that
knowledge, Xerox, IBM, and Intel among them. They have used Russian
expertise to make new products considered impractical practical, and to
create breakthroughs in manufacturing processes that have generated
millions of dollars in benefits.
To be sure, Russia doesn’t roll off the lips of people thinking about
hotbeds of technology innovation. Innovation in Russia? Perhaps
innovation in espionage or stifling political dissent, Western skeptics
might say. But Russian product innovation? Nyet.
Think again. Russia has an estimated 1 million researchers and
scientists working in R&D centers, a number that is unmatched in
any other nation. Despite the country’s enormous financial problems,
its educational system remains one of the best in the world. And that
system lends itself to solving seemingly intractable manufacturing and
technology problems. The reason: Russian technical education is largely
cross-disciplinary. The ability to look for solutions to manufacturing
problems from other industries and disciplines is critical to solving
them. Lacking state of the art equipment and machinery, Russian
manufacturers and product developers have had to rely on “creativity”
— finding and adapting scientific and other proven approaches from
other industries.
Of course, until the demise of the Soviet Union, this knowledge hasn’t
been available to the Western world. But since the opening up of Russia
to outside investment, a number of U.S. manufacturers have trekked to
the country in search of answers to their thorniest product innovation
supply challenges. They include Boeing, IBM, Intel, Xerox and Motorola,
all icons of U.S. industrial strength and product innovation.
Take the example of Xerox. One of the company’s most profitable
businesses is toner cartridges (as it is for Hewlett-Packard, Epson and
other makers of computer printers). The $15 billion company was looking
to solve a major production bottleneck in its plants that produce toner
cartridge: the speed with which cartridges were filled. It found an
idea from a Russian engineer to vibrate toner particles with a
resonance frequency, which accelerated the flow of toner powder into
cartridge. This manufacturing process breakthrough enabled the company
to produce toner cartridges eight times faster than before. These
scenarios have been playing out in dozens of companies.
But tapping Russian expertise to make Western innovations feasible is
not easy. The barriers of language and bureaucracy are enormous for
many American manufacturers. But the biggest barrier is finding
specific expertise among Russia’s 2,000 research centers and 1 million
scientists.
But as companies like Xerox, IBM, Intel and others have demonstrated,
Russian scientific and engineering expertise can be tapped — and for
substantial financial gain. In a world in which American manufacturers
must bring great new products to market to survive and thrive, turning
to Russia to solve the “supply” of innovation will become increasingly
important.
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