Product Innovation Through Social Networking—Face to Face!

By Stephanie Neil | Published: December 12, 2011

Whether a company is producing cars or software programs,  a move  toward real-life social settings will generate cutting-edge creativity.

 

 

In this era of downsizing, with small businesses closing shop and large U.S. manufacturers shuttering factories to move production offshore, it was very refreshing for me to see the commitment a European company recently made to my home state of Massachusetts.

Last week, PLM provider Dassault Systemes showed off its new North American headquarters, a modern, energy-efficient building that rose from the remnants of a former HP manufacturing facility in Waltham, MA. Dassault has been constructing its 27-acre campus over the last year, recycling steel and other structural materials from the old site to build what it says is an environmentally friendly, state-of-the-art structure.

I took a tour of the building last week before the ribbon-cutting ceremony. I was impressed by the attention to detail—from white noise speakers mounted on the ceilings, to user-powered treadmills in the exercise room, to Dassault’s commitment to recycling nearly everything, including rainwater. But what was more intriguing to me was the evolution of the corporate culture and Dassault’s eye on innovation.

The new headquarters consolidates three offices, each of which was dedicated to one of the company’s product brands.  The Waltham location’s open office space, intended to limit barriers to communication, took some getting used to, I’m told.

“It has been an exercise in psychology,” said Al Bunshaft, managing director of Dassault’s Americas organization during a  briefing with press and analyst. “We went from 85% closed offices to 85% all open.”

In fact, even the offices, the conference rooms, and the private phone rooms feature glass walls, so there is quite literally a lot of visibility. At the same time, employees are encouraged to chat in the “living room,” a place for impromptu brainstorming sessions, or to visit the on-site gym to clear their heads—anytime of the day. They can also sit on the beautifully landscaped courtyard (complete with WiFi), to get some fresh air while getting some work done.

“The focus,” said Dassault CEO Bernard Charlès, “is on social innovation.” His theory is that coming to work should be comfortable and collaborative. “It is important to free our minds to be innovators,” he said.

What a nice concept. And I do believe he’s right. How many times are we pulled into a closed-doors meeting to talk about product strategy, only to emerge feeling exhausted and confused about what we actually accomplished?

Innovation and creativity don’t just happen. They must be inspired. They must be energized.  I don’t care if you are making widgets or making 3D software, as Dassault does. For people pressing a button on an assembly line or keys on the keyboard, unstructured socialization can lead to new ideas and profitable innovation. 

Dassault’s new location is just a few miles from some of the best math, science, and business schools in the country. It will be interesting to see how well the new social innovation platform that is the Waltham campus will attract this talent, and how that might impact one of Dassault’s biggest competitors, PTC, which happens to be located just a few miles away.

We shall see. Until then, tell me what you think about Dassault’s approach to innovation. Are they spot on or way off the mark?

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SAP, Oracle Give Cloud Computing Business Cred

By Chris Chiappinelli | Published: December 5, 2011

A new form of computing, already gaining popularity among the masses, now has business credibility with SAP’s $3.4 billion takeover of SuccessFactors. Cloud computing just got interesting.

 

Pundits love to declare inflection points. Stock analysts hurry to be the first to call the bottom of a bear market or the height of a bull run. Industry watchers throw darts at moving targets such as peak oil and housing bubbles. It’s inherently shaky ground.

Yet sometimes the evidence simplifies the task. This weekend we saw the evidence that cloud computing has reached its inflection point. SAP announced on Saturday that it will buy SuccessFactors for $3.4 billion, a hearty premium on the company’s most recent valuation. SuccessFactors sells software that covers various HR functions and delivers its products on a cloud computing model. Oracle made a similar move in October, announcing that it will buy cloud-based RightNow Technologies and its CRM-focused offerings for $1.43 billion.

The not-so-new concept of cloud computing already had street cred, with the likes of Salesforce.com, Google, and Apple helping to shift perceptions, and millions of consumers using the cloud to power their digital lives. But now, the titans have moved in. Now cloud computing has establishment cred. And establishment cred moves markets.

Forget what you’ve heard about the consumerization of IT powering the shift to cloud computing. That wave wasn’t going to wash cloud computing onto corporate shores, even if it did push the high-tide mark a bit. CFOs and CTOs needed a benediction from the IT establishment before they could fully incorporate cloud computing into their IT plans. SAP and Oracle just unsheathed their ceremonial sword and tapped it against cloud computing’s broad shoulders.

Of course, pundits being pundits, some will say the inflection predated these moves. They will say that SAP embraced cloud computing when it released its SaaS ERP product Business ByDesign last year. But Business ByDesign revenue is still a rounding error on SAP’s balance sheet. It was Walldorf’s way of testing the water, not a full-scale effort to alter its flow. Ditto for the cloud-based point solutions both SAP and Oracle have offered for things like sales-force automation and business reporting.

It took a $3.4 billion acquisition to confirm that cloud computing will loom ever larger in the world of business IT.

 

What about you: When do you think the inflection point came for cloud computing?

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Shamed Into Sustainability

By Chris Chiappinelli | Published: November 21, 2011

Summary: In an age of rampant free speech, manufacturers must realize that a poor record on sustainability can cost them customers, partners, and more.

 

Throughout the last century in America, it was often said that the free press was free to anyone who could afford a printing press. The insinuation was that it wasn’t really free at all; it cost a lot to reach the masses. The Constitution ensured that a person could say what he or she wished. But without money to bolster the appeal, the message died on the street-corner soapbox.

The Internet finally democratized free speech by reducing the cost required to send a message to the hinterlands. The Internet did not solve the riddle of finding an audience. That trick was left to Twitter, Change.org, YouTube, and other social media. A Twitter user today can broadcast a message to a rapt audience of people the user has never met and never will meet, hailing from all corners of the Earth. Those people retweet the note to their followers, and the message spreads like crabgrass. This and similar techniques on other networking sites can shame companies into line, whether that means fixing broken customer service (United Airlines, with help from YouTube), abandoning unpopular fees (Bank of America, via Change.org), or improving sustainability practices. Let’s take the example of someone compelled to target Apple for what that person considers shoddy environmental practices by its suppliers. That person could tweet (hint: these are all real Twitter messages):

Apple accused of bad environmental practices in China. #sustainability #CSR

A few weeks later, he or she might send another tweet touting the motivating power of the first tweet:

Apple launches environmental audit of Chinese suppliers #green #sustainability

And a couple of weeks hence, the whole thing might just come full circle:

Chinese environmental leaders praise Apple for their efforts. #green #sustainability

Of course, the Apple-shaming campaign and the ones noted above had help from traditional media outlets—the ones with the bucks to buy printing presses and transmission towers. And that’s just the point—the masses make the news these days; the media giants just amplify it.

You may think your supply chain won’t draw scrutiny; that it’s out of sight, out of mind. But the masses are everywhere. Review your own sustainability practices, and tighten up the loose ends. You never know when you might become a victim of free speech.

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Looking for Enterprise Apps? Try Your Automation Supplier

By Stephanie Neil | Published: November 14, 2011

As manufacturers request more ways to increase operational visibility and productivity, automation providers are moving beyond their controller roots to become enterprise integration experts and savvy software sellers.

It’s been really interesting for me to watch the evolution of the automation companies over the past decade. Back when I first began reporting on factory floor technology, the control solutions were based on proprietary programming languages and communication protocols, which kept customers locked in to a given brand. It also kept the control technology—be it a PLC, DCS, or SCADA system—closed off from most kinds of enterprise integration.

But then Microsoft .NET, industry standards, and open source software hit the scene, and manufacturers stood up and took notice. From that point on they clamored to connect the fragmented third-party systems that populated their production floors. And then they began asking for a way to securely share data between the enterprise network and the factory floor. With that gap bridged, they would be able to link important financial and customer information with MES systems, which had been kept in a demilitarized zone (DMZ) to protect the mission-critical production environment from viruses and hackers.

Fast forward to today. The automation companies have responded to their customers’ requests. They have rebuilt their control architectures using service-oriented architectures, adopted integration standards such as ISA-95, and, in some cases, have embraced the cloud as a delivery channel.

With such a dramatic shift in the offering, it’s no surprise that the automation companies are singing a very different song today than they did a decade ago. They’ve invested in manufacturing intelligence, simulation, business process management, and mobile technologies. Today, it’s all about the apps.

Indeed, in this new world, automation vendors look a lot like traditional enterprise software purveyors.  

When I spoke to Rockwell Chairman and CEO Keith Nosbusch last week about the company’s 2011 fiscal year results, he noted that there has been an uptick in sales in the automotive sector. Car manufacturers are increasingly turning to manufacturing intelligence software to increase productivity, he said.

Lucky for Rockwell, its production performance software, Pavilion8, includes predictive intelligence, and it also features FactoryTalk VantagePoint EMI in its MI product stable.

I heard an even stronger software story from Invensys Operations Management, which is building out what the vendor calls its enterprise control system strategy. The division has been successful in selling the InFusion Enterprise Control System, said Invensys Operations Management CEO Sudipta Bhattacharya, having sold more than 300,000 licenses within the last two years. InFusion is an architecture that serves as a platform for real-time process automation and enterprise integration to ERP. It is also a very valuable foundation on which to sell MES, simulation, and mobility applications—areas that Invensys has invested in over the years, as well.

We won’t see these automation companies abandon their roots. But, now that they are offering applications, and a new generation of workers is emerging, it’s not hard to imagine what will be next.

For example, I asked Bhattacharya if operators on the plant floor will soon  control a DCS via an iPhone or other smart device.

“We are now at a stage where there is a fascinating opportunity to learn and adopt from the world of consumer technology,” Bhattacharya said. “There is definitely a market for the iPhone or Android on the plant floor.”

The question is, when? Maybe in six months, maybe in two years. Five years from now, Bhattacharya bets, we will see the mass adoption of consumer devices in manufacturing.

(For help selecting enterprise software, visit TechMATCH Pro.)

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Lean Manufacturing: Not Worth Its Weight?

By Chris Chiappinelli | Published: November 7, 2011

A new study reveals some significant shortcomings in Lean manufacturing and other operational excellence practices, begging the question of whether Lean still works for manufacturing.

 

Is Lean manufacturing bankrupt?

In some circles, that question stirs a reaction similar to dropping a bank CEO into an Occupy Wall Street demonstration. Proponents of Lean manufacturing and related principles of operational excellence such as Six Sigma are often strident in their belief that the practices deliver significant business advantages. Some take on the sheen of religious fanatics when they promulgate Lean.

What if they’re wrong?

Yes, I’m poking a sacred cow. But you can’t always tell a sacred cow from a sick one unless you look closely. The business process consultants at AlixPartners recently did just that. They turned an empirical eye to the world of operational excellence and Lean manufacturing, polling senior executives on the effectiveness of such efforts. The opening statement of the resulting study might read like blasphemy to some:

Despite significant investments in “lean manufacturing,” “Six Sigma,” and other productivity programs, most large manufacturers failed to reach—or even come close to—their cost savings targets over the last 12 months.

Consider some of the study’s findings. Among the manufacturers AlixPartners surveyed, 47% had hoped to achieve savings in excess of 5% of their manufacturing costs by implementing Lean manufacturing and operational excellence practices. Only 31% actually achieved that mark. Thirty-six percent realized 3%-4% savings, while 19% reduced costs by 2% or less. Fourteen percent couldn’t quantify their results.

Not a rousing endorsement. “Still,” reads the AlixPartners’ report, “despite these poor or unknown returns on investment, more than 90% of executives surveyed considered their programs to be somewhat or very effective, indicating a substantial perception gap in this area.”

For companies in which the operational excellence program did not deliver the expected benefits, 23% of respondents said the culprit was an “inaccurate opportunity analysis.” Which makes me wonder if the original opportunity analyses were swayed by dogma. That is, have the backers of Lean manufacturing and operational excellence so colored our views that we can no longer tell a sacred cow from a sick one?

Apologists will say that the manufacturers who found little benefit in Lean manufacturing came up short not because the philosophy is flawed, but because their execution was. But if failure is such a common result of Lean manufacturing efforts, maybe there’s something wrong with the system. If it works swimmingly on a diagramed process flow but fails in real factories, maybe Lean manufacturing methods aren’t suited to real-world manufacturing. Maybe it’s a bridge too far to expect the principles honed in one industry to apply to all others. Maybe today’s manufacturing reality is too volatile, too fast, for Lean manufacturing to keep up.

What do you think?

 

(See the Canadian Business Journal for a good analysis of the AlixPartners’ findings.)

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A Manufacturing Democracy

By Stephanie Neil | Published: October 31, 2011

Using crowdsourcing and micro-factories, new community-oriented manufacturers are building innovative products of the people, by the people, for the people.

Not too long ago, Web 2.0 technology was largely ignored by manufacturers. They viewed social media tools as a passing fad that had no place in the enterprise. Executives couldn’t easily govern its use, and company secrets might slip out by way of a loose-lipped employee. Just a few years ago, however, we started to see signs that social media actually offered value—facilitating new ways of communicating and collaborating in real-time. Large companies, among them General Mills, were using wikis, blogs, even Facebook.

Now the social media tsunami has swept through sales, marketing, and customer service departments, with specific communities formed to facilitate outreach or gather feedback. In parallel, new product innovation emerged in the form of crowdsourcing. IBM’s InnovationJam,  Dell’s IdeaStorm, and Starbucks’ My Starbucks Idea are all great examples of how companies can tap into the collective intelligence of their customers.

Now the question is: Can social media transform the factory floor? Other innovative technologies already have: witness the digital manufacturing model that uses web services and collaboration technology to connect product design to the assembly line. But that model builds on the old paradigm of capital-intensive manufacturing and mass customization.

A truly transformational opportunity involves using social media to reconstitute the way we build and distribute products. One car maker, called Local Motors, has done just that. Using crowdsourcing and micro-factories, Local Motors lets its customers vote on product designs proposed in the development community. Concepts with the most votes are further developed through online collaboration with peers and the Local Motors team to choose the car’s body, engine, shocks, etc. Once the car is fully designed, the customer can buy it and build it. Local Motors opens a micro-factory in your area where you and the Local Motors team assemble your custom car over two three-day weekends.

Local Motors’ first open-source production vehicle is the Rally Fighter, a $50,000 off-road (street legal) racer that rolled off the micro-production line last year. More designs are in the works. For example, Local Motors’ Open Electric Vehicle project is now underway.  The co-create community is designing a reusable open source chassis that can be included in future electric vehicle production.  And, according to Siemens PLM Software, Local Motors is recommending designers use the company’s 3D CAD Solid Edge software with synchronous technology in the Open Electric Vehicle effort. In addition, the Defense Advanced Research Projects Agency (DARPA), together with Dassault Systemes and Local Motors, just delivered the first co-created military vehicle. And if you want to watch the birth of your own car, it’s as easy as joining a community.

Through the use of Web 2.0 technology, Local Motors is transforming the way we manufacture. This is the type of out-of-the-box thinking that could help save manufacturing in America. At the very least, it is sure to usher in a generation of social media thinkers who will bring new life to the factory floor.

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Manufacturers and Connected Products: A Dangerous Combo

By Chris Chiappinelli | Published: October 24, 2011

Manufacturers with no history of cybersecurity prowess are now launching products that connect to the Internet and the cloud. It’s time to define this new category of manufacturing, because it will soon cover a good portion of the industry.

 

Whether they like it or not, many manufacturers are now in the business of cybersecurity. Increasingly, their products are identified not just by serial numbers but by IP addresses. And as any home computer user knows, anything with an IP address must be secured, lest the cyber-prowlers break in. The world of cloud computing is a scary place, rife with dark alleys and unsavory actors. It’s a new world for most of these manufacturers, and it raises the stakes on their liability.

Sure, some of the nameplate brands in this new world of cloud-connected products have experience with cybersecurity: BlackBerry, Dell, Apple, to name just a few. These companies have the knowledge and infrastructure to support security efforts for connected products, since protection of digital information is in their DNA. (That doesn’t necessarily mean they’re good at it—see articles here and here—it just means they have a head start and need not fund entirely new security operations within their organizations.)

Other manufacturers with no cloud computing experience must now wade through a morass of cybersecurity and product protection concerns. Needless to say, this is not their core competency.

Take Sony. The maker of the popular PlayStation gaming console operates the PlayStation Network, which allows a gamer in Omaha to play Final Fantasy against a fellow gamer in San Diego. Earlier this year, the PlayStation Network suffered a mind-boggling cyber-attack that exposed the personal information of more than 70 million users, including, in some instances, their credit card details. Not two weeks ago, Sony endured another hacking attempt, though this one was more limited in scope.

The company no longer makes innovative, isolated electronics; it makes products that connect to the cloud, and that makes them vulnerable.

Soon enough, many more manufacturers will confront this new world of cybersecurity challenges. Carmakers may be next. Automobiles are more communicative than ever these days, and that chattiness—through Bluetooth transmissions, GPS calls, and services such as OnStar—makes them vulnerable to digital intrusion. Check out Businessweek’s recent article on researchers who successfully hacked a car and gained control of functions such as braking.

Or consider something even more intimate: a medical device that lives in your body—a pacemaker or artificial limb, for instance—and connects to the cloud to report its status and the status of its patient. The Food and Drug Administration recently issued guidelines to such manufacturers to help them secure the devices they sell. On the organization’s FAQ page, one finds the question, “Why is FDA concerned about security of networks?” Its answer:

FDA is concerned about the security of networks because vulnerable OTS software can allow an attacker to get unauthorized access to a network or medical device and reduce the safety and effectiveness of devices that connect to those networks.

This new world of connected-product development demands adjustments by manufacturers. They must develop new competencies in cloud security or partner with trusted parties with the needed expertise. They must create a new sort of disaster-recovery plan that defines effective responses to cyber-attacks and the loss of customer information—and even the potential for customer harm. They must adjust their concept of liability, too. Warranty management must be understood in the context of all possible threats against a connected product and its owner.

This emerging world also demands that we categorize manufacturers in new ways. Discrete and process labels were easy to understand, and “hybrid” captured those companies that combined elements of the two. Now we have what we might call “connected manufacturing.” This combines the traditional skill set of the manufacturer with new competencies born of the cloud.

You may not be a connected manufacturer today, but five years from now you might be. Consider the ramifications now and plan for a future in which you manage product lifecycles further into the field than ever before.

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An Outage Obstructs Enterprise Mobility

By Stephanie Neil | Published: October 17, 2011

Last week, BlackBerry users, including myself, got a taste of what it’s like to work without their smartphones. This server outage was a nuisance for individuals, but a real productivity problem for large enterprises.

 

It didn’t occur to me that I was one of the many victims of the BlackBerry blackout last week when my e-mail messages stopped streaming onto the device’s display screen.  My immediate reaction was to take out the battery and reboot. Nothing. Hmmm. In need of professional advice, I turned to my desktop and sent an e-mail to my company’s corporate help desk. It was then I was told that the Research In Motion server outages that were impacting users in Europe, the Middle East, and Africa, had spread to the North American continent.

OK, no big deal, I thought. It will be fixed soon enough, I mused, as I moved from my desk to the conference room for a meeting, cradling my BlackBerry like a wounded bird, while thinking: “You’ll be back to normal soon enough, my little friend.”

That was at about 10 a.m. By 4 p.m., I was no longer mollycoddling my little friend. Instead, the smartphone that was no longer so smart–it was now just a phone–was on the receiving end of my evil eye, which would periodically shoot invisible daggers its way. I have to get on the train soon, I thought, and I don’t want to be completely unconnected while traveling the Northeast corridor. Of course, I have my notebook computer with the Wi-Fi connection, but it’s just not the same.

It was then I realized how completely BlackBerry-dependent I am.

Listening to other people moan and groan about the lack of service clued me in that I was not alone.  The fact is, most companies are now considered a mobile enterprise. People work productively when they have information sitting literally in the palm of their hand. Take that tool away, and productivity suffers.

Or, if you happen to be a company that has standardized on BlackBerry smartphones, last week’s outage could have brought your business to its knees. According to a Wall Street Journal article, some companies are now evaluating a backup plan for their BlackBerrys. Meanwhile, other corporations are reconsidering their choice of smartphones altogether. All this, as RIM struggles to win back the trust of its 70 million customers.

One way RIM is trying to do that is by offering free applications to individual users, and one month of free tech support for its enterprise customers.

 For CIOs that know it is not that easy or cost-effective to just switch plans and distribute new handsets to every employee, the RIM offer is a good start. But now when it comes to managing enterprise mobility, IT departments have yet another thing to worry about. On IT’s current to-do list: application deployment and management, security, and governance.  But reliability has always been a given, right? Not anymore.

It is not just the device manufacturers or makers of mobile OS and apps that pose a risk; carriers could experience bandwidth issues in the wireless spectrum that would cause service disruptions. This latest incident serves as another reminder that it is time to start forming a backup plan in the event of a wide-scale wireless infrastructure outage. Because, as we BlackBerry users know, it does happen.

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Steve Jobs on Sustaining the Future

By Chris Chiappinelli | Published: October 10, 2011

A business is only as strong as its next idea. Apple’s Steve Jobs reminded us that business sustainability depends on a company’s ability to project its worth far into the future.

 

The sustainability of any endeavor hinges on a clear vision of its future state.

I considered that premise this morning against the backdrop of the Wall Street protests that have enlivened downtown Manhattan for the past few weeks. My inspiration came from an NPR interview featuring Amy Kremer, the chairman of the Tea Party Express group. Whatever your political affiliation, Kremer’s point seems unassailable: Raising one’s voice in protest is healthy, but in order to create a sustainable movement, a group must coalesce around a vision of the future.

We can apply this maxim to manufacturers, too. The vision we’re talking about here does not involve forecasting next year’s sales or predicting the share price 90 days out. It is this: Imagine the world in 10 or 20 years. Then define the role your company will play in that world. Sustainability lives on that far horizon.

Consider Apple, which might have lost its rudder with the passing of founder Steve Jobs. But for all that Jobs accomplished in creating beloved products, he did more for Apple by laying out a vision of its future. He sensed the importance of the cloud and developed the iCloud. He anticipated the convergence of the Internet and TV and launched Apple TV. Now, even as his co-workers, family, and fans mourn his loss, his long-term plans fill the pipeline in Cupertino. These are the seeds of sustainability.

Apple did not ensure sustainability, for instance, by linking its future to the wildly popular iPod. No doubt, Steve Jobs foresaw a day when the iPod’s capabilities would migrate to other Apple devices and make the original obsolete. Some people speculate that Apple will soon sunset some versions of the iPod. Steve Jobs envisioned the future state, and developed new products with it in mind.

Too often, manufacturers think of the future in terms of SKUs. Sustainability isn’t found in a SKU. It comes from meeting needs—those present and those imagined. And that foresight needn’t reside in a lone visionary like Steve Jobs. Strong business leaders are important, of course, but so are the ideas that percolate among the rank and file. Try crowdsourcing your company’s future state. You may be surprised at what your employees have already imagined.

In today’s volatile markets, the investors you have today may not be the investors you have tomorrow, let alone 10 years down the road. But your customers will surely be there. Figure out where you will fit into their lives then, and you will sustain your place in the future.

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The Big Data Dilemma

By Stephanie Neil | Published: October 3, 2011

As more unstructured data circulates through an organization, how to integrate it into the enterprise to create more value should be at the top of a CIOs to-do list.

Some days it feels like I’m riding a wave of information that is building into a full-blown tsunami. The data bombardment starts first thing in the morning with news gathering on the Internet and answering e-mails in the inbox. Then there is a mash of spreadsheets, dashboards, and word documents to work through as I Google, text, tweet, and network online.

Obviously, I’m not alone. Most people in the workplace are doing the same thing. That results in a whole lot of unstructured data being passed inside and outside the enterprise that may directly impact a product brand or company. That can be a gold mine of information—if it is captured, stored, and, most important, integrated into the enterprise.

There are a couple of problems, however. First, this data is, as I mentioned, unstructured, which means it does not follow a pre-defined data model, making it ambiguous to traditional computer programs. Second, there’s a whole lot of it. Industry analysts call it “big data,” which refers to data sets that are too large to work with using traditional database management tools. There are tools out there such as Salesforce.com’s Radian6, which can monitor social networking conversations, or RollStream, which is basically a B2B social network for the supply chain. But there is still a lot of work to do as an industry to create a unified enterprise integration model for big data.

The task of managing all that information may be daunting, but according to a report from McKinsey & Company, leveraging big data can lead to higher organizational efficiency and more product innovation.

Last year, in an effort to help bring order to the increasing complexity of enterprise data, IBM, Informatica, and Software AG all acquired companies that specialize in master data management. But to take advantage of new ways to integrate unstructured data, companies will also need to invest in storage technology, computing power, and updated business intelligence platforms that are capable of analyzing the new data sources.

It’s a lot for CIOs to have to think about. However, if they want their companies to remain competitive, they’ll need to find ways to capture, manage, and govern all of this unstructured data.

So get on board, and ride the digital data wave before it turns into a disaster.

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