Manufacturing Innovation

Innovation is a key to growing manufacturing in Australia and much of recent government efforts have focused on establishing the macro-economic settings which will support business innovation (Commonwealth of Australia 2012). There is a recognition that the application of knowledge and inventions to create innovation in today’s economy is challenging as Australian manufacturing lags well behind the OECD average for bringing innovations to market.  But there are businesses which have successfully innovated. There is one such business with a Logistics venture the latest of several business innovations. In each case the business has built a theory of business suitable for the new market and to do this it ignored key elements of the existing core business and leveraged specific strengths to make the innovation successful. Surprisingly, this has been executed in a culture focussed on short term profitability and a sense of urgency. And yet it is this culture of short constant reviews and getting it mostly right – but now which accommodates the mistakes that are a reality when bringing an innovation to life. So while Governments build the macro-economic structure and “portfolios of Innovation Hubs” to support innovation in Australian manufacturing, business leaders should invest in building the culture, people and processes to execute innovation. This business has provided one example among many successes worthy of contemplation.

Much of the execution of the Logistics vision was supported by two key inherent cultural aspects: Short Interval Control (short regular planning sessions) and 80% right but on-time (acceptance of mistakes).  Yet these processes needed people willing to embrace change and the owner fostered this through bringing his own vast and diverse network into the business to create different thinking and ensuring senior managers changed over time.

Throughout it's history each business unit has an individual business theory built to suit their own market and goals. In each case the leader of the new business has been able to achieve this through the freedom to ignore the existing model and use the strengths were suitable and had the intellect to discover a new business theory to support the new innovation.

These characteristics have enabled it to be innovative in its business model and as a result grow at greater than 10% p.a. for 40 years. This growth has occurred because as demonstrated by the Logistics venture,  this business has many facets in place to enable innovation through its culture, processes and people. By contrast Australian manufacturing rates poorly when compared the rest of the world in terms of innovation enablers.  To address this, the non-Government members of the Prime Ministers Manufacturing Taskforce devised forty-one recommendations to establish the macro-economic and regulatory framework to set the foundation for the growth of manufacturing. However growth of manufacturing through innovation will not develop unless manufacturing businesses can commercialise innovation and this business provides just one example of a path to unearthing internally generated business innovation.

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