What 'Asset-Out Innovation' Actually Means

by Costas Papaikonomou

In the typical operational view on Sweating assets, the goal is to optimize production and cut cost out of the product without any (perceivable) change for the consumer. Which in practice always leads to iterative loss of product experience & quality.

A more productive and rewarding approach is to join a manufacturing team on a plant tour an ask “how might this kit create new features that add value for our customer without incremental cost”. Or push it even further, “Where would you love to add 5% cost in this product to make it better?”.

The response will initially shock and paralyze, as it’ll never have been asked before. Followed by a suggestion to spend it on quality control, which isn’t the point either. But eventually a creative engineering team will shift from a cost-saving attitude to the more rewarding value-adding mentality.

The shift in mind-set is profound. The operations team who develop, build and run lines that are optimized entirely around one product type will seldom realize there’s so much more they can do with the same machinery. Equally, marketers tend to assume that new lines are necessary to create their new product ideas and bake heavy CapEx into their business cases… partially because they’re not bothered learning how their products are actually made.

The culture you grow this way bridges a classic consumer-tech divide in many businesses, in simple ways;

  • Technical teams become skilled at translating features into benefits and vice versa, all the way through to manufacturing assets.
  • There is less intention to commission assets that are ‘singular’ execution optimized, and instead choose for embedding flexibility for future product variations.
  • Commercial teams start interpreting their assets as platforms, which are dynamic, can evolve over time and reflect those changes in portfolio principles and smart incremental innovation.

Sweating assets is often interpreted as a short term solution to resolve production cost issues.But if you make products with 20% less asset use, but have nothing to fill that spare capacity with, you’re not being very truthful to the goal, right?

WRONG. MOST EFFICIENCY GAINS LEAK AWAY AS ASSET
UNDER-UTILIZATION, NOT INCREASED MARGIN.

RIGHT! INSIGHT IN THE PLETHORA OF CAPABILITIES FOR NEW/STRETCHED FEATURES THAT CAN RUN OFF THE SAME KIT ALLOWS YOU TO CRAFT COUNTLESS NEW & PAINLESS PRODUCTS.

A manufacturing team with a value-add mindset can turn any production facility into a sustainable, progressive, incremental innovation power house, funding future success and keeping the pressure on the business to move forward. A commercial team that welcomes that creativity will have a far easier time implementing new ideas successfully.

‘Nuff said. Read a teaser on how we’ve been doing this for years at Happen here.

image credit: Happen Winkle
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Costas Papaikonomou, Founding Partner, HappenCostas Papaikonomou is Founding Partner of Happen, a global innovation agency based in London, Amsterdam, Toronto, New York, and Sydney.

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