Manufacturing

Innovation:
Gaining the advantage in a fiercely competitive global economy

5th Manufacturing Innovation Conclave



ABSTRACT

Manufacturing industry has been significantly driving economic growth and raising the
standard of living for a long time now and is continuing to do so in the present scenario. For a
nation to develop, it is essential for structuring and shaping the manufacturing sector with the
right set of machinery, tools, materials and more.

Innovation in manufacturing sector is any transformation in the business, which generates

profits directly or indirectly. Innovation is a requisite for growth in any business. The Indian
manufacturing sector acknowledges the significance of continual innovation to keep pace
with the competition and flourish in a globalized ecosphere.

Based on a research across industries, it’s evident that a perfect correlation exists between
innovation and highly profitable businesses. It’s also been established that the most
innovative companies overall are emerging significantly faster than the least innovative ones.
Indian manufacturing sector has marked its presence in the global manufacturing sector and
particularly grown in industrial manufacturing, chemicals, automotive, engineering, and
mining & metals sector.

POTENTIAL GROWTH FOR INDIA BY 2025

Industrial
Manufacturing Chemicals AutomoMve Engineering Mining & Metals
Sector Size(Cr.) Sector Size(Cr.) Sector Size(Cr.) Sector Size(Cr.)
Sector Size (Cr.)

In 2014 INR 7,000 INR 1,168 INR 3,981 INR 2,772 INR 1,870

Potential in
INR 29,584 INR 3,681 INR 10,273 INR 6,463 INR 3,550
2025

CAGR – 14 % CAGR – 11 % CAGR – 9 % CAGR – 8 % CAGR – 6 %

Potential Growth of manufacturing sectors by 2025

India has the potentital to grow up to 1 trillion USD by 2025 and contribute significantly to
the 25~30% of the GDP with a promising 90 million employment opportunities by the same
period.

Manufacturing’s role in job creation shifts over time as manufacturing’s share of output falls
and as companies invest in technologies and process improvements that raise productivity.
Hiring patterns within manufacturing also change, with hiring skewed toward high-skill
production jobs, both high and low-skill service jobs, as hiring in production overall slows.
At the same time, growth in service-sector hiring accelerates, raising that sector’s share of
employment.
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With the manufacturing sector contributing to 25~30% of the GDP, India is expected to be at
par with the manufacturing industries from countries like China, Germany, Japan and the U.S.

Industrial production in India increased 2.10 percent in March of 2015 over the same month
in the previous year. Manufacturing recorded the highest increase of 2.2 percent and
electricity output rose 2 percent while mining edged up 0.9 percent.

Industrial Production in India averaged 6.53 percent from 1994 until 2015, reaching an all
time high of 20 percent in November of 2006 and a record low of -7.20 percent in February
of 2009 as per the Ministry of Statistics and Program Implementation (MOSPI).

In India, industrial production measures the output of businesses integrated in industrial
sector of the economy such as manufacturing, mining, and utilities.

‘INNOVATION’ KEY CATALYST FOR THE INDUSTRY GROWTH

The ability to find, create, and capitalize new product and service ideas sets highly successful
manufacturing companies apart, especially in complex, fast-moving global markets.
Innovation continues to transform how we live, what we consume, and how we do business.
It creates value for customers and society as a whole.

With respect to the manufacturing business, product and service offerings that serve customer
needs better, creating differentiated experiences for customers, competitive advantage, and
improved revenue and margins. Innovation can be sustaining to maintain a lead in an existing
market, or disruptive to create new markets or fundamentally change the elements of
competition.

Many aspects of the business, markets, and ecosystem impact a company’s ability to innovate
successfully. People, process, and technology both internal and external to the company must
all be engaged to work togetherfor successful innovation. Advances in technology and
lowered costs have made best practices in new product development practical for a wide
variety of manufacturers.
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The market in India is encouraging and providing new avenues for testing new products and
services. The diverse consumer base in India requires focused and customized solutions from
the market. The players who are able to develop innovative customized solutions for target
consumer segments tend to capture large market share. Thus the heterogeneity of Indian
consumer base acts as a facilitator for innovation in the manufacturing sector.

For example, let us consider the pharmaceutical sector where clinical trials are a key driver
for innovation and being the world’s second most populous country with a genetically diverse
population.

In the FMCG sector, introducing natural / herbal based products target consumers who show
resilience to traditional products due to the presence of chemicals, which are considered
harmful.

The manufacturing sector is concentrating on research & development (R&D), with its focus
on enhancing competitiveness.

Although lower than emerging market peers such as China, India’s share in global R&D
spending has been increasing.

Many innovations and technologies that are developed in manufacturing also can be used to
increase productivity in other sectors, multiplying the benefits beyond the manufacturing
sector.

CORE
TECHNOLOGY

COMMERCIAL- MARKET
IZATION NEEDS

HIGHLY DISTINCTIVE
PRODUCTS &
SERVICES

RESEARCH SEEDS FOR

PROJECTS R&D

PRODUCT
PLANNING

HBR’s Innovation Ambition Model gives a perspective of three stages - core business,
adjacent and transformational.

In the band of activity at the lower left of the matrix are core innovation initiatives — efforts
to make incremental changes to existing products and incremental inroads into new markets.

To the opposite corner of the matrix are transformational initiatives, designed to create new
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offers — if not whole new businesses — to serve new markets and customer needs.
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In the middle are adjacent innovations, which can share characteristics with core and
transformational innovations. An adjacent innovation involves leveraging something the
company does well into a new space.

Innovation Ambition Matrix

The Innovation Ambition Matrix offers no inherent prescription. Its power lies in the two
exercises it facilitates:

1. First, it gives managers a framework for surveying all the initiatives the business has
under way: How many are being pursued in each realm, and how much investment is
going to each type of innovation?

2. Second, it gives managers a way to discuss the right overall ambition for the
company’s innovation portfolio.


PATH TO SUCCESSFUL INNOVATION

Innovation is the fundamental engine of long-term growth, and is crucial to enabling

economies to grow sustainably. Industrialized countries already enjoy the benefits of past
innovations that have sharply increased resource efficiency.

New and emerging technologies could allow them to go even further, while enabling
developing nations to “leapfrog” to highly productive, low-carbon economies and improved
living conditions.
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A well-defined strategy aligned to the company’s goals and careful planning fuel the success
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of innovation. Companies with an innovationedge will have a strong competitive advantage.

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Research and Development departments are no doubt the facilitators of innovation in

organizations, however manufacturing companies have to not only invest in R&D but also
Innovate business models, services, means to improve customer and supply chain.

Resources are the heart of any organization. The focus of the organizations should be to keep
the right people on board to innovate. Fostering a strong innovation culture that supports top
organization growth is crucial.

Companies seeking partners should have the appropriate ones to provide the knowledge
needed for example research institutions, to bridge the gap between academic research and
practical application to realize the benefits.

Reliable processes facilitate right KPIs at various levels and are a must for the organization
success. Financial aspects as well as other factors power Innovation success.

Availability of necessary incentives, infrastructure, stable and predictable policies, global
suppliers, advanced technology help promote sustainable business and thus lead to
transformational growth.


InnovaMon
InnovaMon for
for boosMng
sustaining revenues
business
InnovaMon
TO
enhance
value of
the
company

INNOVATION FOR VALUE

Improvement initiatives aligned with the Organization Strategy

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CONCLUSION

Innovation has been the key factor enabling transition of India into a global manufacturing
player. Indian manufacturing players in each sub-sector have innovated in wide areas of
business in order to serve the large as well as heterogeneous Indian consumer market.

The true measure of innovation success cannot only be seen through a financial lens. Leading
companies define measurements that go well beyond the traditional ROI. Some companies
are tracking patents, publications, and transfer of know-how to other business units.

Developing a stronginnovation cultureis vital for the entire business. With the industrial
manufacturing catering to global clients, with most major players looking around the world, it
has become increasingly important to foster culture across the affiliates.

While the innovations in Indian manufacturing sector have already begun to make significant
footprints in the global arena, it is set to attain many milestones further.

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About Breakthrough Management Group International, India

BMGI is a management consulting firm focusing on Innovation Strategy, Innovation,
Problem Solving and Business Transformation. Head quartered in the US, operating across
16 offices and more than 250 consultants worldwide, BMGI consults and leads organizational
and business process transformation to improve performance, increase efficiency and
effectiveness and reduce costs substantially.

BMGI partners with clients in bringing effective solutions to meet the inherent challenges of
their critical business activities. This translates into better decision-making processes and
actions that produce results, giving them a distinct business advantage in the marketplace.
Solving problems together ensures better solutions, better ownership and accountability from
your people, fewer change management challenges and terrific learning opportunity.

BMGI has developed a loyal clientele that exceeds 200 active clients from across industries
and delivered cumulative benefits to its clients worth several billion dollars with an ROI of
5:1 to 20:1. Some of the few major clients we have partnered with in their roadmap to
success are Reliance Industries, ITC, Vodafone, Asian Paints and L&T, Accenture, Bajaj
Auto, HUL, Marico, Oracle, Hitachi, Siemens, Philips, Unilever, Debeers, Avis Budget
Group, Grameenphone, TNT Express, Brandix, Hulamin, ThyssenKrupp Electrical Steel,
Arvind Textiles, ICICI Bank, Yes Bank, Motilal Oswal, Tata Chemicals, Cognizant and
Accenture.

BMGI Innovation consultants have been working with companies to design new approaches,
foster the growth and drive transformation. BMGI's Innovative Performance Excellence
approach has helped organizations excel at both through a combination of methodologies and
systems such as problem solving skills, enterprise process management, change leadership
and design and development of innovation capability.

Breakthrough Management Group International, India
905/906 Raheja Chambers, 213 Nariman Point, Mumbai 400021, INDIA

Website: www.bmgindia.com
Phone: +91 22 4002 0045 / 46
Email: info@bmgindia.com
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