"We have to innovate and We have to be productive" - A Strategic Initiative
Happened to come across this statement by Ellen Kullman, CEO Dupont in a chat published in Corporate Dossier, of The Economic Times, India dated 22 February 2013. This thought is logical and appropriate. New products are a reality and every business concern has to keep looking for opportunities to create new products based on customer revealed insights or marketing insights, technology insights and science insights.It is also true that new products are quickly imitated and competitors come into picture. Learning effect produces cost reductions and many times competitors come with low cost alternatives that captures both learning effect and as well as focused engineering effort to offer low cost products. So no company can rest satisfied with introducing a new product. It has to expand its market and reduce its cost throughout its life cycle. Ellen Kullman is practicing this philosophy "We have to innovate and We have to be productive" as a strategic imperative at Dupont.
To another question on balancing innovation and efficiency, she answered that companies have to try to be efficient. She gave a good logic for differentiation and efficiency. Differentiation is to be aimed at customer touch points and efficiency at customer non-contact points. While there are many who are pitting innovation against productivity and efficiency, Kullman gave a right perspective.
Innovation at Dupont
Dupont introduced 1742 new products in 2011 and filed 2047 patent applications. In its 2012 sustainability report, it announced that it will introduce 4000 new products in nutrition and agriculture sector alone by 2020.
Fixed cost and working capital productivity benefits were each about $400 million, surpassing their $300 million targets in year 2012
Commitment of CEO to Innovation and Productivity
"Science-powered innovation is critical to DuPont's success, and one R&D metric the company monitors is sales from new products. This year, DuPont is on track for 30 percent of sales, or about $9 billion, from products that were introduced within the past four years. Productivity also is core to DuPont's success, and the company is ahead of plan to deliver $400 million each in fixed cost and working capital productivity this year." Ellen Kullman at the Bank of America Merrill Lynch Global Industries Conference during 2011
Productivity Management - Books and Articles
Vital Three Organization Activities - Operations - Innovation (Engineering) - Industrial Engineering