Innovation: A Process For All!

The Future of Quality: Innovation
R. Dan Reid
September 2011

About AIAG

• Founded in 1982, Not-For-Profit
• OEMs, suppliers, service providers, academia and government
work collaboratively to reduce cost and complexity in the supply
chain
• Headquartered in Southfield, Michigan
• ~800 member organizations
• 32 full-time staff
• 3 Senior Executive OEM “loans”
• 650+ industry volunteers providing subject matter expertise
• Certified to ISO 9001:2008 by BSI
© AIAG 2011

AIAG – “Where The Work Gets Done”

AIAG is “the Catalyst for the Global Supply Chain”
AIAG has decades of experience providing
OEM endorsement
standards and guidelines…Why?
• Achieve Customer Satisfaction
• Develop and maintain “best practice”
• Reduce costs by reducing waste &
redundancy, minimizing errors, and
reducing time to market
• Improve Quality – internal and external
• Manage Reputation
• Mitigate Risk
• Improve Supply Chain Performance
• Facilitates global interoperability ensuring
that products manufactured in one country
can be sold and used in another

© AIAG 2011

AIAG Areas of Expertise
Quality Improvement Global Engineering & IT
• Management Systems, e.g. TS 16949; • Data Network Connectivity
We train the experts • CAD/CAE/PDM Interoperability
• Core Tools, Product & Process Quality • Engineering Visualization
Planning
• Product Reliability & Testing
• Supplier Development • Electronic Messaging:
• Reliability & Durability Security/Encryption/Integrity
• Warranty • IT Infrastructure Interoperability
• Lean • Metrology
• Training • Archiving & Retrieval
• Innovation

Corporate Responsibility Supply Chain Management
• Chemical Management and Reporting • Automatic Identification
• Global Working Conditions • Purchasing
• Greenhouse Gas and Energy Management • Logistics
• Healthcare Value • Material and Production Control
• Occupational Health and Safety • Customs and Export Compliance
• Supply Chain Transparency • Packaging & Container Management
(Conflict Minerals)

© AIAG 2011

Future of Auto Industry Quality

“The best way to predict the future is to invent it.” Alan Kay

The Future of Quality
Study provides a „reality check‟ of Midwest auto industry, June 20, 2011
• “A key finding of this research is that the automotive jobs growing in demand require
more complex skills and knowledge, with stronger credentials, than in the past,” said
IBRC director Jerry Conover. “Our study illuminates pathways to lead today’s workers
to those jobs, as well as to in-demand jobs in other industries.”

• According to the report, automakers face a variety of challenges imposed by global
competition, government mandates and consumer demands. Finding the best
balance of materials and technologies to meet these sometimes-conflicting demands
requires agility and new approaches to design and manufacturing.

• To help meet these challenges, autoworkers will increasingly need to emphasize
integrative systems approaches, critical thinking, problem-solving and communication
skills, together with a commitment to lifelong learning at all levels of the workforce.

“The ability to learn faster than your competitors may be
the only sustainable competitive advantage” Arie de Geus
http://www.kpcnews.com/index.php?option=com_content&view=article&id=9092:Study-provides-a-
%E2%80%98reality-check%E2%80%99-of-Midwest-auto-industry&catid=36:letters-to-the-
editor&Itemid=20

“A Leadership Prescription for the Future of Quality” by the Conference Board
• Quality professionals today must commit to strengthen and
build customer intelligence, improve operational excellence,
systems thinking, and speed to market, and build the next
generation of customer advocates. To address these
challenges, that are even more critical in a downturn,
practitioners need to better use established tools and
techniques.
• Globalization requires quality professionals to think in a more
innovative and collaborative way.

“Executives do not wake up one morning with an
unexplained urge to collaborate. It is not their nature.”
Yves Doz and Gary Hamel

„No Boundaries‟ - ASQ‟s Future of Quality Study

• New Dimensions for Quality
– Creating marketplace innovations
– Innovation without quality is a non-starter
– Managing change at ever-faster rates
– Organizational cultures that learn

• From Process to Systems-Thinking and Systems Problem
Solving, e.g. sustainability

• “Change and innovation are as much attributes of quality
and how we manage quality as they are of the products,
processes and services that are produced and delivered”
A. V. Feingenbaum

• Next Generation Manufacturing principles define the critical elements for
competing in the new economy:
– Customer Focused Innovation – delivering services and products before your
customers know they’re needed;
– Systemic Continuous Improvement – establishing a culture that sets new
performance standards every day;
– Advanced Talent Management – the ability to harness the full power of the
modern manufacturing workforce;
– Global Engagement – taking advantage of the global market for goods and
services;
– Extended Enterprise Management – making supply changes that are strong and
profitable for everyone; and
– Sustainable Products and Process Development – reducing the organization’s
environmental footprint and improve operating performance.

“If you see a bandwagon, its too late” James Goldsmith
http://nistmep.blogs.govdelivery.com/2011/09/07/are-you-a-leader-or-a-
laggard/?utm_source=rss&utm_medium=rss&utm_campaign=are-you-a-leader-or-a-laggard

The Future of Quality - Innovation
The Crossroads Nation, DAVID BROOKS, NY Times, November 8, 2010

• Five hundred years ago, agriculture was the major
economic activity. One hundred years ago, it was
industrial production. Now, of course, we’re living in an
information age. Innovation and creativity are the
engines of economic growth.


2010 Georgia Manufacturing Survey done by Georgia Institute of Technology.

Innovation and Commercialization, 2010: McKinsey Global Survey results

• 84 percent of executives say innovation is extremely or very important to
their companies’ growth strategy

• The results also show that the approach companies use to generate good
ideas …has changed little since before the crisis, and not because
executives thought what they were doing worked perfectly

• Indeed, surveys over the past few years suggest that the core barriers to
successful innovation haven’t changed, and companies have made little
progress in surmounting them

• Most executives believe that innovation is complex and involves a certain
level of ambiguity. In fact, there is a general perception that a “process for
innovation” is an oxymoron.

Innovation – What is it?

What Innovation Is; How Companies Develop Operating Systems For Innovation;
A 2005 CSC White Paper European Office of Technology and Innovation

• Creativity, invention, design and innovation are often
confused
– Innovation is a holistic process involving the entire
organization of a commercial enterprise, whereas
invention is a discrete event, typically performed by
specialist individuals or very small teams

• Innovation requires multi-disciplinary teams and is a
complete lifecycle process

• Creativity and design are necessary, but insufficient


“Innovation is not an art, but a process that
receives inputs from monitoring and
analyzing an organization’s environment”

Natalia Scriabina


Business Process Product Design Continual
Invention Improvement
Innovation Innovation

Target: All Engineers R&D All

Formal: Yes Yes Maybe No

Skill: “Outsight” “Outsight” Creativity Lean

Frequency: As needed As needed Random Continual

Result: New value New Value; New Value; Incremental
~Patents ~Patents improvements
Examples: Reengineering Engineering Microwave; Automatic
payables process product design Heated seats stop for parts
achieving 50% to eliminate two tray in
improvement components station
in cycle time from the system

The Future of Quality: What's Next After Six Sigma?
Jessica Jenness, Isa Nahmens (March 23, 2006)
• The next step for quality professionals should be to broaden the scope to
systematic innovation.
– “We predict a scientific approach to problem solving will remain the foundation of our
profession” (Bisgaard & De Mast 2006)

• U.S. Council on Competitiveness, Dec. 2004
“Innovate America: Thriving in a World of Challenge and Change”
– Challenge to long-term global economic leadership
– Resolved: Innovation will be the single most important factor in determining America’s
success through the 21st century
– America’s Task: For the past 25 years, we have optimized our organizations for efficiency
and quality. Over the next quarter century, we must optimize our entire society for
innovation

• Quality improvement is about process and product innovation
• Innovation should be seen as an integral part of everyone’s task rather than
the responsibility of a separate department and a few specialists

“That Used To Be Us” by Thomas Friedman, NY Times columnist & author
• In the future, everyone will be an innovator!

• "Where change is happening quickly, who best sees the openings,
opportunity, and necessities of change? It's not always the CEO"

• Empowering innovation from every worker must become a priority … if
America is to retain (regain?) its superior international standing

• The future of work is already upon us... a world blindsided by the need for
creative production--and prescriptions on how to learn from those ahead of
the curve

• The principle driving forces behind the need for a more inventive worker is
"access to more automation, more software, more machines and more
people, and more talent of an above average quality"


• Forbes survey: Americans are pretty average when it comes to generating
new business ideas
– Roughly 51 percent them reported ever having had an idea for a new company

http://www.forbes.com/sites/scottshane/2011/08/22/americans-are-middling-at-generating-
business-ideas/?feed=rss_home


“Answering the 2011 CEO Challenge” The Conference Board, June 2011

• Results of The Conference Board survey show a clear
mandate to drive business growth as the primary
challenge followed by:
– Talent
– Cost Optimization
– Innovation
– Government Regulation
For quality practitioners, helping their leaders respond to the challenge
of “business growth” will mean being innovative, acting on changes to
the business model as it evolves, and having best practices “ready to
deliver” from an engaged workforce.


“Answering the 2011 CEO Challenge” The Conference Board, June 2011

• The results of the CEO survey show that training employees in a disciplined
process for innovation is not yet an identified strategy

Harvard Business Review Study

• Innovators excel at connecting the unconnected; they
engage in “associational thinking”

• Our study of over 5,000 entrepreneurs and executives
shows that almost anyone who consistently makes the
effort to think different can think different

• Innovators spend almost 50% more time trying to think
different compared to non-innovators

• Sixty to eighty percent of adults find the task of thinking
different uncomfortable and some even find it exhausting
– Because most adults have lost the skills they once had
– Most grew up in a world where thinking different was punished

http://blogs.hbr.org/cs/2011/09/begin_to_think_differently.html?utm_source=feedburner&utm_
medium=feed&utm_campaign=Feed%3A+harvardbusiness+%28HBR.org%29

Harvard Business Review Study
How to improve?
• Just do It
– Nike's slogan is not a bad starting place
– Do it by frequently forcing associations or connections across different
ideas when they don't naturally emerge

• Shake it up
– When associations don't come naturally, try forcing them to surface
unnaturally — by shaking things up randomly

• Repeat-Repeat-Repeat
– Researchers at Harvard Medical School found that if adults practice
associational thinking long enough, the task no longer exhausts but
energizes them

http://blogs.hbr.org/cs/2011/09/begin_to_think_differently.html?utm_source=feedburner&utm_
medium=feed&utm_campaign=Feed%3A+harvardbusiness+%28HBR.org%29

“We are what we repeatedly do.
Excellence then, is not an act, but a habit”

Aristotle

Innovation Principles
• Envisioning the ideal end result
– Pushing the limits of your thinking beyond what is believed possible

• Thinking in terms of functions
– Moving away from thinking in terms of components and hardware

• Leveraging resources
– Finding, manipulating and creating

• Resolving contradictions
– The key to all great innovation

• Applying separation principles
– A key to resolving contradictions

• Evolving systems
– Systems do not evolve randomly; they evolve based on the availability
of resources and pattern of evolution
© 2002-2011 Applied Innovation Alliance LLC

Psychological Inertia

• Psychological Inertia is essentially behavior, a
way of thinking based on “the way it’s always
been”

• Based on our beliefs, education, experiences

• Psychological Inertia is one of the initial and
most common barriers to innovative thinking

© 2002-2011 Applied Innovation Alliance LLC

Value Innovation – Henry Ford Way
• Innovation is the process of creating new value with a
minimum of waste
– “New value” - things that will benefit both your customer and your enterprise
– “Minimum waste” - intentionally delivering that value with the absolute
minimum of cost and quality loss
• All customers want eight basic values
– Use these as a starting point and find new definitions for each of them
– Innovation requires you to visualize your goal, “see the end from the beginning”

From “Rules of Innovation,” Bart Huthwaite, © 2007 by Bart Huthwaite, Sr.

1907 Ford Model N Waste Seeker Tool
• Complexity
– Five different models; many different parts; multiple colors;
learning to drive is complicated for new auto user
• Precision
– Precision tolerances, especially with engine parts; hand fitting of parts is necessary
• Variability
– Different suppliers with quality; delivery variables between them; much hand fitting
and sorting; need for standards, common parts
• Sensitivity
– Low chassis clearance; difficult for country road driving
• Immaturity
– High learning curve with multiple models; too much experimentation going on all at once
• Danger
– Factory injuries too high; not enough driver protection
• High Skill
– Transmission shifting difficult to learn

Ford‟s Waste Eliminatation

From… …To
Complex Simple
Precise Adaptable
Variable Unchanging
Sensitive Robust
Immature Proven
Dangerous Safe
High Skill Low Skill

Creating Breakthroughs
Outsight is your ability to stretch your mind beyond the bounds of your present
experience to “borrow” new ideas from different places

Outsight

Hindsight Insight Foresight

Hindsight is the Foresight is the ability to
experience of the past Outsight imagine what might be

• An Insight happens when three other “sights” overlap
• Outsight is the toughest skill!
• Every innovation requires some degree of Outsight

Innovation

Every organization – not just businesses –
needs one core competence: innovation

-Peter Drucker

Innovation Management Titles

• Chief Innovation Officer

• Vice President, Product and Innovation

• Director, Process Innovation and Quality

• Manager, R&D Planning and Innovation

• Innovation Manager

Jane Keathley, ASQ Quality Management Division Innovation and Value Creation Technical Committee

Innovation Manager Skill Set

• Collaboration

• Strategy and planning

• Problem-solving

• Project management

• Risk management

• Performance data analysis

• Communication
Jane Keathley, ASQ Quality Management Division Innovation and Value Creation Technical Committee

The Future of Quality –
Managing Change

• Leaders are responsible for pulling up from your day-to-day
operations and looking beyond the horizon

• Based on the poll results, many leaders are more in reactive
mode than proactive

• Those who see challenges way into the future are shaping the
environment to which your competitors must react

• For the rest, build the discipline of looking into the future
regularly, and get your teams out of reactionary mode

http://smartblogs.com/leadership/2011/08/29/how-quickly-does-your-organization-react-
to-challenges/

Where are we going?

• Deming: Need an overall integrated plan

– What products and services will your
customers need five years from now?

– Where do you hope to be 5 years from now?

– How may you reach this goal? By what method?

Related AIAG Quality Classes

• Lean Design (two days)
• Value-Based Innovation (two days)
• Introduction to Structured Innovation for Leaders (½ day)
• Introduction to Business Process Innovation (1 day)
• Introduction to Structured Innovation Course for Engineers,
Scientists and related Managers (1 day)
• Innovation: The T.E.D.O.C.1 Methodology (2 days)
• Innovation Overview for Executives (1 day)
• The Role Of The Executive In Quality (half day)
• Management’s Role In Quality (two day)
• Train the Trainer Course – Management’s Role in Quality
(two day) 1
Target, Explore, Develop, Optimize, Commercialize
© AIAG 2011

“Do not go where the path may
lead, go instead where there is
no path and leave a trail.”

R. Emerson

AIAG

R. Dan Reid
Program Development Manager, Quality
AIAG
248-358-9774
dreid@aiag.org
www.aiag.org

Innovation: A Process For All!

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