March, 2008

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Article Index

Manufacturer of the Year Winners
Article by: Justin Dorsey
Large: Beckman Coulter, Inc.
Dancing with the Stars: The Open Innovation Marketplace
Article by: Rod Greder
The popular television show, 'Dancing with the Stars', got me thinking about how we develop products. Most of our NPD projects are solo dances. Occasionally we might engage a dance partner on a specific project if we have no other choice. Often though, we suffer from (NIH) not-invented-here syndrome when (PFE) probably-found-elsewhere might be the most rewarding approach. A strong partner, or two, can help you solve problems that previously were not-figure-out-able.
Minnesota Economic Outlook
Article by: Dr. Ernest Goss
For the month of March 2008, reported April 1, 2008. For the fourth straight month, Minnesota's Business Conditions Index dipped below growth neutral to 44.8. While this reading was up slightly from February's even weaker 44.3, surveys over the past several months point to Minnesota's economy continuing to face an economic headwind.
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Manufacturer of the Year Winners
Large: Beckman Coulter, Inc.
Mid: Reviva, Inc.
Small: Interlock Structures International


In my "real" job, I work with investments. As I write this, we are in the midst of an incredibly unstable financial market. In my interviews with this year's awardees, I asked each of the winners what they thought of the economy. I was ready for doom and gloom responses, but none of them felt that way. In fact, each of them was experiencing up-turns in business. Am I reading too much into it when I wonder if their Lean journeys have given them a competitive advantage? In the case of Interlock, they said that they recently won a large contract which required the bidders to demonstrate Lean proficiency. Passion goes a long way in sales, and these winners are all justifiably passionate about their Lean stories. Maybe there's something to the notion of Lean being a substantive competitive advantage.



Who are these winners and why were they selected?

Beckman Coulter, Inc. is a large manufacturer of medical diagnostic machines, with corporate headquarters in California. It employs 10,000 people throughout all its facilities, with 850 employees here in Chaska, MN. In 2006, the Chaska division obtained corporate approval to use its facility as a test site for Lean manufacturing. Mike Elbert oversaw that initial project, and it has been notably successful. Since 2006, there has been a 60% increase in inventory turns, shop floor space has been reduced by 40%, production on existing lines has increased substantially and two additional lines have been added without any increase in the work force.

Beckman has now taken the Chaska Lean template and is applying it to each of its other facilities. Mike says that, "The folks in the 'instrument group' deserve special credit. They took lots of risks but found success by seeing it through to the end." He also says that the journey is ongoing. "Green is certainly a focus. We're already reducing packaging materials and Lean has given us a sensitivity to waste of all kinds that we just didn't have before." Regarding the Manufacturers Alliance, Mike noted, "We've sent our folks to the MA seminars on Lean Accounting and Lean Office practices - and the feedback on both has been tremendously positive."

Reviva, Inc. is in the dirty, grimy business of gas and diesel-engine remanufacturing. However, Reviva refuses to think of itself in greasy and grimy terms, so much so that 700 people toured its pristine facility last year to observe its secret of success. In a word, Lean. For Reviva, adopting Lean was a do-or-die decision. It has come through the process running on all eight cylinders. What is the old cliché about opportunity only knocking once? Well, as Reviva was re-inventing itself, the whole green movement was gaining momentum . How about this for a market opportunity: The California Air Resources Board is requiring by 1/1/09 that all diesel engines powering transport refrigeration units on semi and delivery trucks must be Tier 2 emissions compliant, not only those trucks registered in the state of California, but any truck entering California ! That's just one of many examples. Who would have thought that an engine remanufacturer would be on the forefront of the Green revolution?

One last note: while Reviva can rattle off a laundry list of metric improvements that evidence the cost savings of Lean, there are two additional metrics that It is particulary proud of . First, since its Lean implementation, Reviva has had virtually no staff turnover (compared to a 70% turnover before Lean) and second, it recently reached a record of no injury-related time-off for more than 24 months (compared to several each month before Lean)! The bottom line is that it is wonderful to see a traditional nuts and bolts manufacturer prosper. Congratulations!

Interlock Structures International is a manufacturer of trade show superstructures and customized retail fixtures. It is the winner in the small manufacturer category with 45 employees. Too small for Lean? No way. Eric Ramberg has assisted in its journey. And Eric sounds just like other tellers of successful Lean journeys when he says, "Our President, Brice Dimond, was instrumental in initiating our journey and in insisting that we not give up." In tangible terms, Interlock has experienced a 20% decrease in its production costs as well as a reduction in the floor space taken up by its work cells. When asked whether his shop floor folks resented or resisted the changes, Eric said it was just the opposite. "We have an open book culture here. Our employees know how the company is doing in all areas. So, maybe they're more attuned to the subtleties. Whatever the case may be, what I hear back from them is that they see this journey as one that makes their jobs 'more' rather than 'less' secure. And they're right."

I was deeply impressed by the quality of this year's winners. Congratulations to them - and congratulations to all of you members who so openly practice the idea of peer-to-peer sharing!
Justin Dorsey, Director of Sales & Marketing, Advanced Capital Group located at 50 South Sixth Street, #975 Minneapolis, MN 55402. call (612) 230-3009, email jdorsey@acgbiz.com, or visit www.acgbiz.com.

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Dancing with the Stars: The Open Innovation Marketplace
The popular television show, 'Dancing with the Stars', got me thinking about how we develop products. Most of our NPD projects are solo dances. Occasionally we might engage a dance partner on a specific project if we have no other choice. Often though, we suffer from (NIH) not-invented-here syndrome when (PFE) probably-found-elsewhere might be the most rewarding approach. A strong partner, or two, can help you solve problems that previously were not-figure-out-able.

Increased product complexity, dangerous patent mine-fields, and relentless compression of development times, not to mention the annual disappearing budget trick, are forcing companies to glance around the hall for attractive dance partners to teach them some new moves.

When companies like IBM and Procter & Gamble are reaching out and partnering to innovate, you know you might need to consider looking for a mate. P&G CEO A.G. Lafley created the Connect & Develop strategic initiative several years ago. Today, nearly 50% of P&G's products are the result of external collaboration.

The need to make collaborative innovation a core competency is an emerging competitive requirement. Crowd-sourcing and specifically prize-based innovation involves engaging an unrelated and diverse mass of people to help a company solve a development challenge. The InnoCentive Open Innovation community is designed to help you tap a virtual team of problem solvers. http://www.innocentive.com/

Challenges are posted by Seekers (corporations, individuals) who are looking for help with product development and other business, science and engineering problems. Seekers are progressive, innovation-driven companies that have tough R&D problems that need solutions. Seekers post these problems to the InnoCentive Open Innovation Marketplace™ as InnoCentive Challenges™. These solution-seeking organizations provide significant financial awards, typically between $5,000 and $100,000. Throughout the process, the Seeker's identity is hidden and protected.

Solvers are persons or organizations from 175 countries around the world who register with InnoCentive, review Challenges and submit solutions. Registered solvers number over 140,000 of the brightest minds on the planet. If a Solver's solution is selected, they have already contractually agreed to transfer their Intellectual Property to the Seeker in exchange for the financial award offered with no "long-tail" of royalties beyond the award. InnoCentive has successfully completed IP transfers for more than 99% of solutions from over 60 countries.

This approach can free up your internal product development staff to focus on evaluating and combining the distinctive submissions that come in and ensuring successful implementation of the best solutions. Costs and cycle times can be reduced and success rates increased for projects that may have otherwise died or been delayed. InnoCentive has shown a solve rate of over 35% for the 700-plus difficult challenges posted since 2001.

Still concerned about exposing your latest dance moves, or your two left feet, to the public? For larger organizations you might be able to use the Open Innovation Marketplace to engage solvers from other functions, business units and geographies within your own company. Differing worldviews, diverse know-how and divergent thinking styles are the key ingredients to make it work.

I am currently working with a company who is exploring creative ways to go outside the four walls of their existing business unit to get breakthrough innovation. InnoCentive and other crowd-sourcing models might be a very effective tool for their future product discovery and development efforts and for yours. Some very intriguing dance partners, radical new choreography and hip new breakout moves might be in your future.
Rod Greder, Ph.D. founded Breakthrough Forum, an innovation dialogue and accountability group, for product developers and marketers to tap the collective intelligence of their peers who have been there and done that. rgreder@improveproducts.com, (763)443-1531.

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Minnesota Economic Outlook
For the month of March 2008, reported April 1, 2008. For the fourth straight month, Minnesota's Business Conditions Index dipped below growth neutral to 44.8. While this reading was up slightly from February's even weaker 44.3, surveys over the past several months point to Minnesota's economy continuing to face an economic headwind.


Components of the overall index for March were new orders at 41.5, production at 42.6, delivery lead time at 57.4, inventories at 43.5, and employment at 43.6. "With more than 10 percent of the nation's ethanol plants and almost 10 percent of U.S. corn production, Minnesota has been and will continue to be a big beneficiary of the growth in corn-based ethanol production. On the other hand, the state's food-processing industry and computer- and electronic-equipment-manufacturing industry continue to experience pullbacks," said Goss.
Dr. Ernest Goss of Creighton University, used the same methodology as The National Association of Purchasing Management to compile this information. An index number greater than 50 percent indicates an expansionary economy, and an index under 50 percent forecast a sluggish economy, for the next three to six months.

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