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 user 2005-10-10 at 10:33:00 am Views: 90
  • #13045

    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
    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