Re: Innovation, R D, and their impact on a company

Posted by wisbaker on April 28, 2016 at 19:07:34 from (173.26.84.185):

In Reply to: Innovation, R D, and their impact on a company posted by NY 986 on April 28, 2016 at 06:43:58:

Raw innovation is often the territory of smaller manufacturers, the concept of developing something new and bringing it to market before the competition was they way many smaller businesses stayed viable against larger competitors. The downside is when their innovation doesn't work it often means the end of the company.

General Motors was a company that tried innovation in the twenties and it didn't work (read about the copper cooled Chevy), it almost put them out of business, they went years without serious innovation but instead watched the competition and learned from their innovations and often when it was time for them to bring out their version they had improved the product and had a better one than the competitors.Sometimes they didn't,(think Corvair or GM mini-vans). Some of you GM lovers out there will scream about these statements. Picture the innovations GM introduced to the market in the 60's and 70's, the Corvair (a copy of a VW they got wrong, didn't use the right gaskets so they leaked oil a lot), the aluminium V-8 (Oldsmobile & Buick) The Early Pontiac Tempest with the "rope" drive shaft and a transaxle in the back, the Oldsmobile Toronado, the Pontiac OHC six cylinder engine, the Chevy Vega with the sleeveless aluminium engine and their crowning achievement of the 1970's the Oldsmobile Diesel. I'm counting 2 for 7 and one of those was only a success after they sold it to the British and they tweaked it a bit. The most significant achievement they ever made was the automatic transmission with a fluid coupling/torque converter and you could argue that was really an improvement of the Ford Model "T" transmission and if Henry was at all interested in innovation Ford would of been their first, instead he focused on screwing up Edsel's life, not spending any money on product development, keeping the union at bay, promoting anti-Jewish sentiments, running a newspaper to promote his off the wall ideas, fighting with his stock holders until he was able to buy them out and in the end running the company to the verge of bankruptcy.

SO GM got very good at developing other people's ideas and actually had a process to identify, purchase and then using their capital and management resources significantly grow the company this is how they got such products as Detroit Diesel, Allison, Terex, EMD/Electro Motive Division and NAA (North American Aviation). This is a process not to dissimilar from John Deere's.

Large companies become risk adverse and are often afraid of breaking new ground, they get complacent and want to rest on their laurels, examples are International Harvester, Ford Motor Company (1920's), Sears & Roebuck, Colt firearms (revolvers, they had a patent so they didn't compete, once their patent was up others jumped in the market with cartridge loaded revolvers)

Sometimes necessity is the mother of innovation. I think the only reason that Chrysler is still kind of around is the Minivan, it was a concept they were first to market with and others had to play catch-up. Eventually GM and Ford both came out with Minivans, Chrysler upped the ante with dual sliding doors and stow 'n go seating. Ford was late to the game and I don't really think GM came anywhere close. We could even argue Chrysler's current position is a result of no new innovations since the minivan or the K car.

Sometimes businesses end up mismanaged and or innovation takes up to much of the company's budget, they don't have the money to innovate and they wither and die with no new products. Andre Citroen was a French automaker, he developed a radically innovative car called the Traction Avant, unfortunately in the process of developing the car he bankrupted the company and lost control of it, the new owners made a tidy sum selling Traction Avants.

Innovation is good for a company if they continue to get hits instead of flops, although some of it is knowing when to quit, some of it is knowing your market, what your customers want or need and being able to develop, produce and deliver products that satisfy the needs and wants of the customer at a price that they can afford.

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