Managing Manufacturing Innovation: Four Types of Problems and Matching Innovation Processes

To stay competitive, manufacturing companies in high-wage countries need to improve the performance of their manufacturing system. The starting point of such improvement may be a problem such as high costs, low utilization rate, or lack of qualified labour, and the solution to it may be referred to as a manufacturing innovation. The problem can take different forms ranging from being simple and easy to solve to being complex and maybe even chaotic and thereby more difficult to solve. Hence, the nature of the problem controls how the innovation process should be managed to solve the problem effectively. In this paper, we investigate how to manage different kinds of problems in the context of manufacturing innovation. We among others conclude, that simple problems which e.g. can be solved by buying a solution from a supplier should be managed by using a linear innovation process like the stage-gate process, whereas a complex problem such as making a new factory layout requires an agile innovation process like design thinking.