Are You Innovating Or Renovating?

POST DATE Nov 26, 2014

AUTHOR Udo Jahn

As you are reading this blog, many millions of dollars of equipment are be purchased by companies around the planet, much of it is in the manufacturing sector. The question that follows is, ‘Does the equipment being bought actual innovate their business or just renovate?’

Lets start with what is commonly seen in our homes when it comes to renovations.

Many people renovate their homes usually updating rooms to modernize the look and add space. The results are very nice and don’t usually substantially alter the home. When a business buys new equipment they’re usually purchasing equipment that updates or adds capacity (meaning more equipment) to their facility and since they are adding capacity or updating they’re only renovating their business. This renovation is driven by old equipment breaking down or the inability to meet the production demands of the customer. The new equipment doesn’t add new capabilities it’s just used to increase output, which doesn’t decrease cost.

When I see the constant renovation of businesses it seems many fail to understand that the way to be globally competitive isn’t through renovation but innovation instead. Innovation in terms of equipment is purchasing equipment that adds to your capability/increased output and decreases your costs. For example, a renovator will buy two pieces of equipment while an innovator will buy one piece of equipment that will produce over twice as many parts as the previous equipment and decrease the overall manufacturing cost for the same given part. The cost saving is achieved through decrease in overall labor/ real estate and, in some cases, increased quality.

An innovator will buy equipment that adds capability to also do other functions that could possibly make a finished part. A renovator will buy equipment that only does one function and further work is needed after the first piece of equipment is finished. The innovator thinks about how they save money by making complete parts that can be immediately sold while the renovator is making piles of incomplete parts that will need to be completed at a later time adding to costs.

The ability to be profitable in a very competitive global marketplace is essential to the very survival of any business.

There are innovators in every manufacturing sector that you can point out quickly. The renovators eventually cannot compete because they are not bringing down their costs and eventually go out of business.

Is your company a renovator or innovator? The answer is critical to your survival in this very competitive global marketplace.

Your thoughts?

Author: Udo Jahn

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