Profiting From Innovation
“Everything that can be invented has been invented”
Many business owners are blind to the potential pitfalls and challenges presented by technology change. We constantly read and hear from the media that we must improve productivity and technology or run the risk of “losing ground” to other nations. Usually the “other” nations referred to are low wage countries employing semi-skilled workers. In the past these countries have included Japan and Korea. Today the focus is on Mexico and China.
What ensues are all kinds of arguments and many opinions from industry spokesmen, labour leaders, politicians and the like, which are faithfully reported in the media.
There are those that realize that because the wage cost difference between, say Mexico and the United States is so great, that improving worker productivity, in itself, is irrelevant. The real issue, according to this group, is improving technology. More often than not we read or hear, “business has been very slow to adapt to new technology. We have to adapt.” Most business people tend to ignore such criticism.
As small business people in the lifting industry, we often say to ourselves: This is all fine, but I can’t worry about the big picture. I’m too busy running my business and making a living. My business is small and specialized. It is not directly affected by that, “big picture stuff.”
Then came the reports of plant closures, loss of jobs, production moving to another country. One day it happens to a company in your area, then to one of your customers. One day you have a choice of buying materials from domestic suppliers or an importer. Next, your sole domestic supplier offers you a choice of their domestic or imported product. Some days you don’t have a choice. Are we close enough to home yet?
IT DOES REALLY MATTER
A company that sits back, oblivious or slow to change can expect to lose out to other companies that embrace change, and those that change sooner rather than later. The same thing happens to nations, except being much larger they have more opportunity to turn it around, catch up and come back to win. Small companies don’t have the same luxury of time and deficit financing.
What is often perceived as national issue is really a day to day issue for just about every modern business, including small “low-tech” companies. Most successful retail stores, large or small, use EDI (Electronics Data Interchange) and modems, every time they “pass” your credit card through their automatic reader. Do you use EDI and computer modems in your business? Of course you have a computer, don’t you? You would probably laugh if and when one of your suppliers or costumers didn’t have a fax machine. Don’t laugh too hard if you don’t have plain paper to fax, minimum 9600 baud, complete with timer and broadcast features.
Welcome to the new world of technology-based competition. It is not necessary to develop new and innovative technology yourself to take advantage of it. The heart and soul of technology –based competition is modern markets is adaption of new and innovative technology, and the resulting product and process improvements to your products and manufacturing process. You can adapt new and innovative technology to improve the products you manufacture and/or improve the process by which you manufacture them. This process goes beyond simply buying a fax machine to improve your sales and administration productivity. The manufacturer of the fax machine already adapted new computer chips to make a better product, displacing the telex and TWX machines of old.
Being in the sling and rigging business often requires the capacity to manage a growing organization, and at the same time being competitive at producing products of the higher quality, and usually faster than the competition down the street, across town, in another state, province, or country. Adapting new and innovative technology may not be as exciting or provide the same financial opportunity as developing it, but adaption is the only ingredient on which todays success or failure of companies depends. No matter how we describe it, “product and process improvements commercialization” of new and innovative technology is the basis for day-to-day competition in established businesses, and it is primary factor in the overall success of companies, industries, and nations.
The basis of product and process improvements commercialization efforts is the drive for continuous improvement. Improvement must be driven or championed. It doesn’t just happen on its own.
AT WHAT COST?
In rapidly changing technologies, failures to invest in future products or process improvements provides openings for existing competitors or new companies to undermine your company’s market position. So while there is an investment cost associated with adapting new and innovative technologies to improve your products and processes, there is also a cost associated with not investing, particularly early in the game. The cost of not investing can be significantly higher, and in fact fatal to your business. The cost of investing early is often a bargain because of introductory pricing.
After an innovation becomes successful the costs usually rise proportionately, assuming the opportunity to invest still exist. Quite often there is no second chance. Business that are “first” in the market place, or “first” with a product or service, have distinct advantage over businesses that are second or third, or last. By not being first a company is faced with catching up, the additional costs associated with having to catch up, such as better products or lower price. Sometimes the catch up costs are prohibitive, or a company never catches up, and many in fact, loose completely. The loss can be anything from an order, an entire product line, a manufacturing process, even the company itself. So the true cost of not investing in new and innovative technologies can be very significant and much more than the cost of investing early. It is the investment cost plus the loss of profits while you play catch up. When you invest early in the game you at least have control as to whether you continue the investment. Late or non-investors don’t share the same degree of control. So if in doubt, the best advice may be to invest for no other reason than not to be left out or behind.
Today more than ever, this phenomenon can be observed in the lifting and rigging industry, which in the past has been considered to be a conservative, low tech industry by many. Just think about recent product and process improvements related but not limited to: socketing of wire rope using resins in place of molten zinc, grade 100 alloy chain, the proliferation and increasing popularity of synthetic roundslings, light weight, accurate electronic load cells and radio remote controls cranes scales. Today all of these are within the scope of the average business. They are no longer the realms of big companies.
There are new products and processes being introduced with increasing regularity even in the lifting, rigging and load securement industries. The challenge of owners and managers is to be alert to opportunities and have the courage to adapt early so as to maximize profits. As fast as the opportunities appear, they can also disappear.
Beware of those that preach. “The more things change the more they stay the same.” Appearances can be deceiving. While the car of today is still four wheels and basic transportation to some: front wheel drive, air conditioning, the CD disk player, electronic dash, ABS brakes and air bags, are just a few things that makes today’s car very different from your first car.
So before being quick to ridicule new and innovative products, just think about rotary phones, biplanes, BBQ’s that use charcoal, ditto machines, a phonograph, mechanical typewrites and adding machines, etc. you can profit from innovation without being a genius. You need only adapt new and innovative technology to your existing business.
Failure to do so can make the difference between successes and failure, profits and loss. The choice is yours to make.
