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”

OEM endorsement AIAG has decades of experience providing

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 • Management Systems, e.g. TS 16949;

We train the experts

• Core Tools, Product & Process Quality

Planning

• Supplier Development

• Reliability & Durability

• Warranty

• Lean

• Training

• Innovation

Corporate Responsibility • Chemical Management and Reporting

• Global Working Conditions

• Greenhouse Gas and Energy Management

• Healthcare Value

• Occupational Health and Safety

• Supply Chain Transparency

(Conflict Minerals)

Supply Chain Management • Automatic Identification

• Purchasing

• Logistics

• Material and Production Control

• Customs and Export Compliance

• Packaging & Container Management

© AIAG 2011

Global Engineering & IT • Data Network Connectivity

• CAD/CAE/PDM Interoperability

• Engineering Visualization

• Product Reliability & Testing

• Electronic Messaging:

Security/Encryption/Integrity

• IT Infrastructure Interoperability

• Metrology

• Archiving & Retrieval

Future of Auto Industry Quality

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

The Future of Quality

• “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.

Study provides a „reality check‟ of Midwest auto industry, June 20, 2011

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

“The ability to learn faster than your competitors may be the only sustainable competitive advantage” Arie de Geus

The Future of Quality

• 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.

“A Leadership Prescription for the Future of Quality” by the Conference Board

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

Yves Doz and Gary Hamel

The Future of Quality

• 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

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

The Future of Quality

• 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.

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

“If you see a bandwagon, its too late” James Goldsmith

The Future of Quality - Innovation

• 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.

The Crossroads Nation, DAVID BROOKS, NY Times, November 8, 2010

The Future of Quality - Innovation

2010 Georgia Manufacturing Survey done by Georgia Institute of Technology.

The Future of Quality - Innovation

• 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 and Commercialization, 2010: McKinsey Global Survey results

Innovation – What is it?

• 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

What Innovation Is; How Companies Develop Operating Systems For Innovation;

A 2005 CSC White Paper European Office of Technology and Innovation

Innovation – What is it?

“Innovation is not an art, but a process that receives inputs from monitoring and

analyzing an organization’s environment”

Natalia Scriabina

Innovation – What is it?

Business Process Innovation

Product Design Innovation

Invention Continual

Improvement

Target:

Formal:

Skill:

Frequency:

Result:

Examples: Automatic stop for parts

tray in station

As needed As needed Random Continual

All Engineers R & D All

Microwave; Heated seats

Engineering product design

to eliminate two components

from the system

Reengineering payables process

achieving 50% improvement in cycle time

New value New Value; New Value; Incremental ~Patents ~Patents improvements

Yes Yes Maybe No

“Outsight” “Outsight” Creativity Lean

The Future of Quality - Innovation

• 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

The Future of Quality: What's Next After Six Sigma?

Jessica Jenness, Isa Nahmens (March 23, 2006)

The Future of Quality - Innovation

• 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"

“That Used To Be Us” by Thomas Friedman, NY Times columnist & author

The Future of Quality - Innovation

• 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

The Future of Quality

• 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

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

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.

The Future of Quality - Innovation

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

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

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

Ford‟s Waste Eliminatation

From…

Complex

Precise

Variable

Sensitive

Immature

Dangerous

High Skill

…To

Simple

Adaptable

Unchanging

Robust

Proven

Safe

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

Creating Breakthroughs

Hindsight Foresight Insight

Outsight

Outsight

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

Foresight is the ability to imagine what might be

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

Hindsight is the experience of the past

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

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/

• 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?

Where are we going?

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)

© AIAG 2011 1 Target, Explore, Develop, Optimize, Commercialize

“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