Finding Gold in the Closet at the Detroit Economic Club

February 25, 2008 · Posted in economics, innovation, strategy · Comment 

Today when I attended the presentation by Gary Shapiro to the Detroit Economic Club I uncovered opportunities that were being overlooked. Mr. Shapiro, president of the Consumer Electronic Association, encouraged Detroit to embrace free trade agreements and use innovation to meet the challenges of increasing competition. He was absolutely correct, however as so many others beating that drum, he failed to explain how to innovate. Many of the attendees left feeling even more pressure.

Oddly enough, everyone of the people I spoke to were using the same failing approach to competition and every single one was overlooking huge profits from using resources they already own. Profits from things they currently considered expenses.

Two companies I spoke with were trying to improve efficiency in hopes of lowering prices. The first was a tool and die company that was implementing 6 Sigma to find ways to improve process efficiencies. This is a good thing. I was one of the founders of using statistical process control (SPC) in the USA back in the 1980s. If the company was typical they could expect 10-30% improvements. This would make many managers very happy. But they were actually wasting their time and energy. They had 4 very expensive machines sitting idle. They were probably losing $400,000 per year in missed revenue. More importantly if they just made $1 more from those machines it would be INFINITE improvement in efficiency. They are currently getting zero efficiency. The machines are collecting dust and wasting space. Any money they make from those machines is infinite increase in efficiency.

Read more