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Suggested Citation:"2 Building the Ecosystem for Making Value." National Academy of Engineering. 2012. Making Value: Integrating Manufacturing, Design, and Innovation to Thrive in the Changing Global Economy: Summary of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/13504.
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2

Building the Ecosystem for Making Value

Workshop discussions focused on the importance of making value by not only integrating innovation, design, manufacturing, and services but also aligning them to address the complete experiences of their customers. Such steps can improve economic growth, environmental sustainability, and quality of life in the United States and provide employment for workers with the appropriate skills.

However, when asked whether these practices are currently being implemented, participants indicated that while a few high-performing companies have adopted them, the vast majority have not. Rubinstein posited that the reason some companies are not performing well is that they haven’t adopted these practices.

What barriers in the United States may prevent the creation and delivery of value? Multiple participants cited the importance of four factors: human capital, business practices, government services, and infrastructure. They also noted that business, all levels of education, and all levels of government have important roles to play, both separately and in collaboration, in strengthening these four central pieces of the ecosystem for making value.

HUMAN CAPITAL

The fundamentals for success in an innovation economy, Carlson said, are the best team of people, a transformative product that addresses an important need, a flexible process for value creation, and a supporting ecosystem.

Having the best team requires supportive immigration and education systems, Carlson continued. Immigrants are essential for America’s

Suggested Citation:"2 Building the Ecosystem for Making Value." National Academy of Engineering. 2012. Making Value: Integrating Manufacturing, Design, and Innovation to Thrive in the Changing Global Economy: Summary of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/13504.
×

innovation leadership. “You take all of the foreign-born people out of Silicon Valley, it is just another pleasant place in California; it is not Silicon Valley.” This is the case all across America: 40 percent of Fortune 500 companies were founded by immigrants or their children. “The H1B visa is one of the most powerful forces we have in America. You can call it America’s genius card.” If Albert Einstein wanted to enter America today, he would have to get in line, Carlson said, and he might not get in.

In addition, more than half of the science and technology graduate students in US universities are from overseas, and in some schools the percentage is close to 100 percent. According to Carlson, the US government should give each of these students a green card upon graduation.

Carlson also discussed the glaring mismatch between the limitless opportunities in today’s world and the limitations of K–12 education in the United States. Good jobs are still being created in America, but many students do not have the skills needed to do those jobs. Despite substantial increases in funding for K–12 education, outcomes have improved little, Carlson said; in Detroit, for example, less than 25 percent of boys graduate from high school.

But Carlson also cited reasons for hope. Innovations bubbling up in the United States, such as the Khan Academy, have the potential to transform US education. American educators are learning from successful education systems how to build both excellence and a focus on innovation into school systems. Aspects of successful programs in the United States (Box 2-1) and in other countries, such as Finland and Singapore, can be emulated. As examples, Carlson cited the Institute of Design at Stanford University1 and the world’s first “innovation university” in Finland,2 where students study innovation in a project-based curriculum all four years (Figure 2-1).

He also described a program in Palo Alto called the Girls Middle

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1 The Hasso Plattner Institute of Design (called the “d.school”) is a hub for students in engineering, the arts, medicine, business, law, the humanities, social sciences, and education to collaborate and take classes together. Courses focus on project-based learning where students from very different backgrounds work together to develop innovative, human-centered solutions to real-world challenges. Online at dschool.stanford.edu/ .

2 Aalto University was created through the merger of the Helsinki School of Economics, the University of Art and Design Helsinki, and the Helsinki University of Technology. The University encourages multidisciplinary education and research with many project-based courses focused on design and product development in collaboration with Finnish companies. Online at www.aalto.fi/en/.

Suggested Citation:"2 Building the Ecosystem for Making Value." National Academy of Engineering. 2012. Making Value: Integrating Manufacturing, Design, and Innovation to Thrive in the Changing Global Economy: Summary of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/13504.
×

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FIGURE 2-1 Curt Carlson highlighted the Institute of Design at Stanford University and Aalto University, which both focus on project-based learning where students seek solutions to real-world challenges, as successful examples of educational programs for innovation.

School,3 where seventh-grade girls go through a two-day “boot camp” to learn how to form a company. They write a business plan in teams of three to four, pitch their ideas to panels of venture capitalists from Silicon Valley, and receive awards of $100 or so to fund their ideas. They run their companies for a year, then pay back their venture capitalists with interest and split the remaining proceeds among the team members. They learn that innovation is a skill, and they master that skill, said Carlson. “Imagine if we had an education system that was teaching this from kindergarten through college through graduate school.”

Michael Molnar, chief manufacturing officer at the National Institute of Standards and Technology, emphasized the need for quick action to improve the education system in the United States, given the urgency

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3 The Girls’ Middle School (GMS) is a school for sixth to eighth grade girls that focuses on project-based learning and offers courses in entrepreneurial studies, engineering, and computer science in addition to subjects in math, science, and art. Online at www.girlsms.org/.

Suggested Citation:"2 Building the Ecosystem for Making Value." National Academy of Engineering. 2012. Making Value: Integrating Manufacturing, Design, and Innovation to Thrive in the Changing Global Economy: Summary of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/13504.
×

of the problem. Teamwork and learning by doing have always been important in education, he said; now, people need to learn entrepreneurship, and at all levels of education—grade school, high school, community colleges, universities, and lifelong learning. Students need to learn about effective teamwork, systems thinking, and integration across technologies and multiple disciplines. They need to learn how to conceive and create products that have value. Every year of college should have a course in product design and manufacturing that involves building a physical prototype, Molnar said.

Industry, educational institutions, and government all have roles to play in advancing workforce skills. Industry needs to take the lead in providing opportunities for experiential learning, said Molnar, not just for employees but also for high school students, college students, and the larger community. These should be year-round opportunities for people to come into a company and rotate through different roles, he said.

Several participants also suggested possible actions to teach Americans the skills needed to create products and services that have value. Matt Sakey, an expert in interactive learning, proposed lengthening the school year to allow more time for education. He also called for an end to the stigma against vocational education, which is hurting the US economy by discouraging students from pursuing these useful and needed skills.

Papalambros made the case for incentives in academia to encourage hands-on education. Universities introduce the fundamentals of physics, biology, chemistry, and other disciplines to students early in their undergraduate education, but many do not teach the fundamentals of innovation, design, or manufacturing at a comparably early stage. Furthermore, university faculty who teach design and manufacturing generally find it harder to get promoted, Papalambros said. Multiple participants suggested that one way to promote research and teaching in these types of fields would be to create a National Engineering Foundation to complement the National Science Foundation (NSF). They also proposed that NSF make integrated innovation, design, manufacturing, and services a priority, in part by creating prestigious fellowships and research grants to encourage research and curriculum development related to this area.

Rebecca Taylor pointed out that models of learning should change to embrace interactive and online learning. Children who have grown up immersed in an electronic world do not learn well from lecturing, she said, which means that the curriculum needs to become much more

Suggested Citation:"2 Building the Ecosystem for Making Value." National Academy of Engineering. 2012. Making Value: Integrating Manufacturing, Design, and Innovation to Thrive in the Changing Global Economy: Summary of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/13504.
×

BOX 2-1
Creating Human Capital:

Manufacturing, Design, and Innovation Education at Georgia Tech

Universities produce what Bud Peterson, president of the Georgia Institute of Technology, called “the most important facet of the innovation ecosystem”: the engineers, scientists, and other leaders who can maintain the nation’s preeminence in advanced manufacturing. This leadership can help overcome the advantage of low labor costs elsewhere in the world.

Georgia Tech and other institutions have been developing an initiative to inspire the next generation of manufacturers in the United States based on the Changing the Conversation campaign led by the National Academy of Engineering. With a grant from DARPA, Georgia Tech is offering manufacturing education programs for high school students around the country, encouraging them to use the latest technology to design and build items such as wind turbine blades, mobile ground and air robots, and electric cars. New technologies such as 3D printers are being used to attract a new generation of young people to manufacturing. Students from all over the United States and the world can connect through social networks to innovate, create, and design. “We are trying to change the perception of manufacturing from dumb, dirty, and dying to…creative, innovative, and exciting.”

interactive. Some universities are extending interactive learning to the online world, where hundreds of thousands of students can learn from a single course.

BUSINESS PRACTICES

Every CEO acknowledges that the world is moving faster and that companies need to do a better job at innovation, said Carlson. But when he goes into an organization and asks people to describe their innovation systems, he usually gets blank looks. Businesses need to think about their work in a new, more fundamental way, one based on the principles of innovation. A critical approach, for example, is to identify a transfor-

Suggested Citation:"2 Building the Ecosystem for Making Value." National Academy of Engineering. 2012. Making Value: Integrating Manufacturing, Design, and Innovation to Thrive in the Changing Global Economy: Summary of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/13504.
×

Peterson also described a club called the Georgia Tech Makers Club, which has 50 volunteer undergraduate students who train other students and offer lessons in prototyping, manufacturing processes, advanced manufacturing approaches, and other topics related to manufacturing. More than 500 students are involved with the club every semester, and it is used in 35 classes.

Georgia Tech emphasizes innovation in both its curriculum and teaching approaches. For example, under a program called Adventure Products, teams of students prepare a three-minute video about an idea, make a three-minute presentation before a panel of judges, and then answer questions for three minutes. The first prize is $15,000, the second prize $10,000, and the third prize $5,000, each with a commitment from the technology licensing office to help the teams commercialize the products they develop. In 2011, more than 400 students and teams competed for prizes, and for each of the past three years, the first prize winner’s product was commercially available before the next year’s competition. “We are trying to inspire students to understand that innovation can and should be a critical part of their thought process and their educational program.”

Finally, Peterson described the need for partnerships to strengthen the manufacturing ecosystem. Just as business schools often partner with businesses and bring in “professors of practice,” Georgia Tech brings in professors of practice to show students the opportunities in business and manufacturing and the importance of innovation in the manufacturing ecosystem.

mative product that addresses a major need. At present, he said, very few companies have a process to connect important needs with new knowledge in a compelling, sustainable way.

Carlson also focused on the early stages of the product design cycle. Value creation starts at the beginning of this cycle, and that is where many mistakes are made. For example, innovators can spend a lot of time and money early in product design without identifying a worthwhile opportunity. In addition, information technology is speeding up and compressing the product development cycle, which means that product development needs to move much faster to get a product into the marketplace.

Companies need to develop a standardized process for continuous

Suggested Citation:"2 Building the Ecosystem for Making Value." National Academy of Engineering. 2012. Making Value: Integrating Manufacturing, Design, and Innovation to Thrive in the Changing Global Economy: Summary of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/13504.
×

value creation, Carlson proposed. One way to think about it is as a playbook for staff, he said. As an example, he described SRI’s process of value creation (Box 2-2). Companies need to have a family of shared concepts and language to talk about innovation, to create customer value, and to iterate quickly.

The United States has revamped its innovation system before, Carlson noted. Total quality management, as developed by Edward Deming and implemented initially in Japan, transformed production processes and is now used throughout the world. A similar revolution is needed today, Carlson said.

Taylor explained how a culture of risk aversion in many companies impedes innovation. Many untapped ideas and technologies await development, she said, because companies will not take on the risks of developing new innovations (see Box 2-3). She cited three major changes that are needed in organizational culture to promote innovation. First, accept failures as necessary steps in order to get to the next big success. Second, promote out-of-the-box thinking, so that companies do not devote all their efforts to doing what they have done in the past. Third, understand the complete experience customers have with your product from the moment they first want it to the moment they no longer need it. How many automotive CEOs have ever haggled over price at a dealership, Taylor asked.

GOVERNMENT SERVICES

There was considerable discussion about how federal, state, and local government services could be changed to enable innovation and entrepreneurship. Three major themes emerged: the speed of delivering government services, the consistency of government policies, and taxes and subsidies.

One area that would benefit from acceleration is the process of verifying regulatory compliance of products and manufacturing facilities, according to participants. Rubinstein noted that, when he worked on developing the iPod Nano at Apple, the production factory, which produced millions of units, was built in China in about seven months. Just getting the permits to build a factory in the United States would be impossible in that amount of time, he said, although he added that regulations in the United States do have advantages: Americans enjoy clean water and air. But the lengthy permitting processes make it impossible to innovate quickly.

Suggested Citation:"2 Building the Ecosystem for Making Value." National Academy of Engineering. 2012. Making Value: Integrating Manufacturing, Design, and Innovation to Thrive in the Changing Global Economy: Summary of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/13504.
×

BOX 2-2
SRI’s Value Creation Process

SRI uses a method to develop a quantitative value proposition that it refers to as NABC: identify an important customer need, meet that need with a unique and compelling approach, and provide superior benefits when compared with the competition.

In its work with executives, SRI asks them to write down a value proposition, get input from colleagues, listen to prospective customers and partners, and then iterate the proposition based on this process (Figure B2-2.1). SRI has thus been able to create and spin off two or three companies a year. For example, it incubated the Siri company (eventually acquired by Apple) for four years before spinning it off.

“The things I just talked about seem easy but they are not,” said Carlson. “They are really hard to do. I have done hundreds of these value propositions. I have never gotten one right the first time, the 10th time, the 30th time, the 50th time. It takes lots of iterations, [and] you want to go as fast as you can.”

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FIGURE B2-2.1 SRI International developed a method for innovation that emphasizes understanding important needs, developing a compelling value proposition, and getting rapid feedback from colleagues and partners.

Suggested Citation:"2 Building the Ecosystem for Making Value." National Academy of Engineering. 2012. Making Value: Integrating Manufacturing, Design, and Innovation to Thrive in the Changing Global Economy: Summary of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/13504.
×

Dordick talked about the need to speed up regulatory compliance procedures in the context of pharmaceuticals (Figure 2-2). Pharmaceutical companies are required to do some tests that may not be predictive, such as preclinical tests on animals that end up not predicting safety for humans. Shortening the regulatory process will become even more important with the emergence of personalized medicine. To transform the pharmaceutical industry from producing large volumes of a relatively small number of products to small volumes of a large number of products, regulatory approaches have to be dramatically shortened, Dordick said.

Dordick agreed with Rubinstein that regulations for health and safety are not a bad thing. But he contended that by leveraging information and developments in biotechnology, the same or better level of safety can be achieved in less time. “We can and should have a much greater level of discussion about what kind of changes are needed [for drug approval], and the public has to be involved in this.”

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FIGURE 2-2 John Dordick explained how personalized medicine could transform the pharmaceutical industry, but in order to do so, regulatory procedures for drug approval have to be dramatically shortened.

Suggested Citation:"2 Building the Ecosystem for Making Value." National Academy of Engineering. 2012. Making Value: Integrating Manufacturing, Design, and Innovation to Thrive in the Changing Global Economy: Summary of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/13504.
×

Carlson suggested that the time efficiency of government services could be improved by increasing transparency and tracking performance metrics. As an example, he cited the city of St. Petersburg, Florida, which publishes tracking metrics associated with city services on the web. “How long does it take to repair a sidewalk? It is on the web: it used to be a year and a half, it is now down to a couple of weeks.”

In addition to the speed of government services, participants cited the need for consistent policies to support and enhance value creation. The 50 states have many different regulations, which makes it very difficult for manufacturers, Taylor explained. A company can go through the complete permitting process to build a facility in Kentucky, and then have to start from square one when it wants to build a similar facility in Nevada.

In addition, programs like R&D credits that are implemented one year and discontinued the next are of no use to a company that is looking at doing something for the next 10 to 20 years. “Unless [a policy] is there and in place for a reasonable length of time, we might as well not do it,” said Carlson. “It just adds more confusion.”

A number of participants also pointed to the importance of supporting entrepreneurship by focusing on new businesses instead of only small businesses, most of which have fewer than 10 employees and are not likely to grow substantially. Policies need to focus instead on new companies that can scale, Carlson said, since new companies have created most of the jobs in America over the last 20 years.4

Syverson explained that understanding the interactions of the many types of policies can improve the consistency and clarity of those that affect US ability to make value. There should be some thought and coordination by the government about how policies interact with one another, he said. As it is, piecemeal policymaking pulls innovation, manufacturing, and entrepreneurship in different directions. “When you add it up you have no idea what you are getting when they all interact.”

The government should seek to create a competitive ecosystem in all policy areas where it has an influence, according to the participants in one breakout session. The United States would not necessarily have to have the lowest tax rate or the highest subsidies, but by seeking to be

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4 See Haltiwanger, J.C., R. S. Jarmin, and J. Miranda. 2011. “Who creates jobs? Small vs. large vs. young.” NBER Working Paper No. 16300, which shows that companies less than 10 years old accounted for the majority of job creation from 1975-2005, and that once company age is controlled for, there is no systematic relationship between company size and job growth.

Suggested Citation:"2 Building the Ecosystem for Making Value." National Academy of Engineering. 2012. Making Value: Integrating Manufacturing, Design, and Innovation to Thrive in the Changing Global Economy: Summary of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/13504.
×

BOX 2-3
Different Collaborative Models for Innovation in Large and Small Companies

Dawn White, founder, president, and CTO of Accio Energy, said that she has experience as both an “intra-preneur” and an entrepreneur. As an intra-preneur at Ford, she likened the experience to blowing up a balloon in a vat of concrete with a tank of compressed air. Plenty of resources are available, she explained, but there is little room for innovation, so good ideas tend not to get passed up the ladder toward implementation. Companies are skilled at process leadership and successful launches, she said, but they tend to avoid execution risk.

In contrast, being an entrepreneur is like blowing up a balloon in outer space. There is no resistance, but not much oxygen either. Because of that lack of resources, start-up companies rely on their local ecosystems much more to develop successful innovation and commercialization models.

A classic innovation and commercialization model draws on venture capital to test the technical and market potential of an innovation. Venture capitalists also help small companies build teams to launch a product, thus managing execution risk. This model tends to work best in places like Silicon Valley, where the ecosystem of people, processes, and financing is well developed. But it is not as good in other parts of the country, such as Southeast Michigan, where White’s company is located, because that type of ecosystem doesn’t exist.

An alternative model is the collaboration or acquisition model.

competitive in each, the net effect of government would be to advance rather than impede business.

INFRASTRUCTURE FOR INFORMATION AND TECHNOLOGY DEVELOPMENT

A major barrier to the creation of value is a lack of infrastructure to support advanced information collection and analysis, according to participants, who called for opportunities to leverage information in

Suggested Citation:"2 Building the Ecosystem for Making Value." National Academy of Engineering. 2012. Making Value: Integrating Manufacturing, Design, and Innovation to Thrive in the Changing Global Economy: Summary of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/13504.
×

Collaborating with larger companies can reduce technical or market risks to acceptable levels by leveraging existing capabilities in product development, manufacturing technology, and distribution. This is the model White has adopted, because her company is located near many large automotive companies with some of the “world’s best people for scaling up manufacturing technology and doing it at very low cost.” Furthermore, many underused people, plants, and equipment are in the region. “We focused our technology and business model around something we can do right where we are.” Such collaborations can be essential in crossing the chasm from a good idea to a good product.

White described several programs designed to help build collaborations between large companies and start-ups. Siemens has a program to bring in small companies that will be ready to enter the market with a product in several years. A team of people helps organize a project with one of Siemens’ business units. “They can assess you, you can assess them, and they can see if some of these technologies will fit.” In Michigan, General Electric has opened a facility to develop advanced manufacturing technologies and is pursuing collaborations with small companies interested in using these technologies.

White also has collaborated with the National Center for Manufacturing Sciences while working with four companies on different products and markets. “In every one of them, we had productive collaborations between large companies and small companies. Sometimes I was on the large company end, sometimes on the small. But everybody benefited and moved technologies forward.”

industries ranging from electronics to automobiles to pharmaceuticals (Figure 2-3).

Papalambros cited the importance of gathering information about products and their use to improve performance, but noted that the lack of privacy standards is a concern that prevents some companies from pursuing these opportunities. In an era when vast amounts of information are available, he said, privacy is clearly an issue that needs to be considered.

Many of the ways to make value involve leveraging information. “Information itself is changing,” Sakey observed, and the ways it is dis-

Suggested Citation:"2 Building the Ecosystem for Making Value." National Academy of Engineering. 2012. Making Value: Integrating Manufacturing, Design, and Innovation to Thrive in the Changing Global Economy: Summary of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/13504.
×

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FIGURE 2-3 Several participants pointed out that many future opportunities to make value involve leveraging information in industries ranging from electronics to automobiles to pharmaceuticals.

tributed, analyzed, understood, and protected all have to change as well. Information needs to be audited, assessed, and validated by impartial and trusted individuals, and it needs to be more transparent, so that databases, websites, and tools are available for the use of manufacturers and organizations from other sectors.

Throughout the workshop participants emphasized the importance of an infrastructure to support technology development, and identified issues associated with the development of research ideas to commercialization.

Dordick discussed the challenges of negotiating intellectual property (IP) rights in collaborations between companies and universities. There is such a tremendous concern about developing the next big thing that nobody wants to talk to each other, he said; as a result, new inventions that come out of universities often are not transferred to companies. “IP and other things stand in the way.” Companies, especially pharmaceutical companies, need to find a way to collaborate with universities, because such collaborations will benefit everyone.

Multiple participants cited the need for investments to support

Suggested Citation:"2 Building the Ecosystem for Making Value." National Academy of Engineering. 2012. Making Value: Integrating Manufacturing, Design, and Innovation to Thrive in the Changing Global Economy: Summary of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/13504.
×

research and development in certain high-priority fields. Stephanie Shipp, a researcher at the Science and Technology Policy Institute, added that a long-term vision is needed to identify these priorities. How can the critical elements of infrastructure be identified? What phases of innovation—from research to commercialization—should receive public funding? One option Shipp suggested is investing in “platform technologies” such as energy storage or biomanufacturing to avoid “picking winners and losers” from specific technologies in these fields. As an alternative, another participant suggested focusing on challenges, such as environmental sustainability (Box 2-4), energy independence, and improved health, instead of technological solutions. As Shipp said, “What is our Sputnik moment for the next 10, 20, 30, 50 years?”

LEAPFROGGING TO THE NEXT GENERATION

Several participants pointed out that the United States is unlikely to regain the manufacturing of particular products that now are made elsewhere. But it has a prime opportunity, through an emphasis on value creation, to leapfrog to leadership in the next generation of integrated innovation, design, manufacturing, and services. We have to look to where things are going, Rubinstein said, and make sure that we have the capabilities and the skills in this country to deliver the next generation of products and services.

Taylor suggested that the United States may have a competitive advantage in the integration of innovation, design, manufacturing, and services because of its relative strength in taking a systems perspective. US science and technology have spurred invention for decades, and successful US companies have leveraged these inventions to create new systems that meet customer needs and wants. For example, companies such as Apple and Procter & Gamble excel in creating innovative products by combining existing technologies in new ways with effective and appealing designs. The task ahead, Taylor suggested, is to build on these strengths and promote an integrated approach to value creation.

Today’s world presents immense opportunities, Carlson said. “But it is a new game, and we need to get serious about playing the game to win here in America if we want to keep America the great country that we know it is.”

Suggested Citation:"2 Building the Ecosystem for Making Value." National Academy of Engineering. 2012. Making Value: Integrating Manufacturing, Design, and Innovation to Thrive in the Changing Global Economy: Summary of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/13504.
×

BOX 2-4
Manufacturing for Sustainability

Sustainability is the next great opportunity for motivating students to pursue science, technology, engineering, and mathematics education, said Jay Golden, director of the Center for Sustainability and Commerce at Duke University. Furthermore, sustainability has a direct link to manufacturing, since many sustainability issues involve the design and making of things.

Golden cited six drivers of sustainability issues. The first is the growth in world population, from 7 billion people today to a projection of more than 9 billion in the year 2050 and more than 10 billion by 2100. Approximately 37 percent of the world’s population lives in China and India, and by 2021 India will overtake China as the most populous country in the world.

The second driving force is the rapid urbanization of the world’s population. In 2010 the world’s urban population surpassed the rural population, and by 2050 it is projected to be twice as large as the rural population. Over the next two generations, said Golden, the equivalent of a thousand great cities with populations of more than five million will be built—an average of 20 each year.

The third driver is the expansion of the middle class—from less than one-third of the world’s population to more than one-half. As incomes grow, people will consume more and place greater demands on the world’s resources.

The extraction of resources is the fourth driver. The consumption of biomass, minerals, metals, and fossil fuels are all projected to rise in future decades. One consequence of this projected increase, according to Golden, is a rapid rise in international land acquisitions by foreign parties. “The equivalent of half of Western Europe has been acquired in Africa alone since 2000.”

Suggested Citation:"2 Building the Ecosystem for Making Value." National Academy of Engineering. 2012. Making Value: Integrating Manufacturing, Design, and Innovation to Thrive in the Changing Global Economy: Summary of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/13504.
×

The fifth driver consists of governmental laws and regulations to promote sustainability. For example, US Executive Order 13514 requires that 95 percent of all applicable new contract actions for products and services advance sustainable acquisition. Similar provisions are appearing in countries around the world to quantify and reduce resource impacts.

Finally, the private sector realizes that it needs to address sustainability issues as part of the issues associated with the goods and services it sells.

Sustainability Indexes

A variety of efforts are under way to measure and report on the sustainability of products, Golden said. For example, Nike has led the development of a Materials Sustainability Index that encompasses about 40,000 different materials. International teams of researchers have done technical reviews of quantification methods to evaluate the sustainability of products throughout the supply chain. Innovators and designers can use this information to build sustainability into products throughout their life cycle. This information also can be used to evaluate suppliers of products no matter where they are located. “It is a common language, a common set of metrics and indicators, which everybody has to aspire to,” said Golden.

Much more can be done to develop and disseminate information. Golden called for the establishment of a National Sustainability Computation Center to support industry. Such a center could gather, analyze, and distribute data through a variety of public sector and private sector networks while also supporting education and outreach. It could address such issues as food security, ecosystem services, employment, shelter, energy, water scarcity, and national security.

Suggested Citation:"2 Building the Ecosystem for Making Value." National Academy of Engineering. 2012. Making Value: Integrating Manufacturing, Design, and Innovation to Thrive in the Changing Global Economy: Summary of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/13504.
×

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Suggested Citation:"2 Building the Ecosystem for Making Value." National Academy of Engineering. 2012. Making Value: Integrating Manufacturing, Design, and Innovation to Thrive in the Changing Global Economy: Summary of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/13504.
×
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Suggested Citation:"2 Building the Ecosystem for Making Value." National Academy of Engineering. 2012. Making Value: Integrating Manufacturing, Design, and Innovation to Thrive in the Changing Global Economy: Summary of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/13504.
×
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Suggested Citation:"2 Building the Ecosystem for Making Value." National Academy of Engineering. 2012. Making Value: Integrating Manufacturing, Design, and Innovation to Thrive in the Changing Global Economy: Summary of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/13504.
×
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Suggested Citation:"2 Building the Ecosystem for Making Value." National Academy of Engineering. 2012. Making Value: Integrating Manufacturing, Design, and Innovation to Thrive in the Changing Global Economy: Summary of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/13504.
×
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Suggested Citation:"2 Building the Ecosystem for Making Value." National Academy of Engineering. 2012. Making Value: Integrating Manufacturing, Design, and Innovation to Thrive in the Changing Global Economy: Summary of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/13504.
×
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Suggested Citation:"2 Building the Ecosystem for Making Value." National Academy of Engineering. 2012. Making Value: Integrating Manufacturing, Design, and Innovation to Thrive in the Changing Global Economy: Summary of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/13504.
×
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Suggested Citation:"2 Building the Ecosystem for Making Value." National Academy of Engineering. 2012. Making Value: Integrating Manufacturing, Design, and Innovation to Thrive in the Changing Global Economy: Summary of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/13504.
×
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Suggested Citation:"2 Building the Ecosystem for Making Value." National Academy of Engineering. 2012. Making Value: Integrating Manufacturing, Design, and Innovation to Thrive in the Changing Global Economy: Summary of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/13504.
×
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Suggested Citation:"2 Building the Ecosystem for Making Value." National Academy of Engineering. 2012. Making Value: Integrating Manufacturing, Design, and Innovation to Thrive in the Changing Global Economy: Summary of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/13504.
×
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Suggested Citation:"2 Building the Ecosystem for Making Value." National Academy of Engineering. 2012. Making Value: Integrating Manufacturing, Design, and Innovation to Thrive in the Changing Global Economy: Summary of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/13504.
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Suggested Citation:"2 Building the Ecosystem for Making Value." National Academy of Engineering. 2012. Making Value: Integrating Manufacturing, Design, and Innovation to Thrive in the Changing Global Economy: Summary of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/13504.
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Page 28
Suggested Citation:"2 Building the Ecosystem for Making Value." National Academy of Engineering. 2012. Making Value: Integrating Manufacturing, Design, and Innovation to Thrive in the Changing Global Economy: Summary of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/13504.
×
Page 29
Suggested Citation:"2 Building the Ecosystem for Making Value." National Academy of Engineering. 2012. Making Value: Integrating Manufacturing, Design, and Innovation to Thrive in the Changing Global Economy: Summary of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/13504.
×
Page 30
Suggested Citation:"2 Building the Ecosystem for Making Value." National Academy of Engineering. 2012. Making Value: Integrating Manufacturing, Design, and Innovation to Thrive in the Changing Global Economy: Summary of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/13504.
×
Page 31
Suggested Citation:"2 Building the Ecosystem for Making Value." National Academy of Engineering. 2012. Making Value: Integrating Manufacturing, Design, and Innovation to Thrive in the Changing Global Economy: Summary of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/13504.
×
Page 32
Suggested Citation:"2 Building the Ecosystem for Making Value." National Academy of Engineering. 2012. Making Value: Integrating Manufacturing, Design, and Innovation to Thrive in the Changing Global Economy: Summary of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/13504.
×
Page 33
Suggested Citation:"2 Building the Ecosystem for Making Value." National Academy of Engineering. 2012. Making Value: Integrating Manufacturing, Design, and Innovation to Thrive in the Changing Global Economy: Summary of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/13504.
×
Page 34
Next: Appendix A: Workshop Agenda »
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Manufacturing is in a period of dramatic transformation. But in the United States, public and political dialogue is simplistically focused almost entirely on the movement of certain manufacturing jobs overseas to low-wage countries. The true picture is much more complicated, and also more positive, than this dialogue implies.

After years of despair, many observers of US manufacturing are now more optimistic. A recent uptick in manufacturing employment and output in the United States is one factor they cite, but the main reasons for optimism are much more fundamental. Manufacturing is changing in ways that may favor American ingenuity. Rapidly advancing technologies in areas such as biomanufacturing, robotics, smart sensors, cloud-based computing, and nanotechnology have transformed not only the factory floor but also the way products are invented and designed, putting a premium on continual innovation and highly skilled workers. A shift in manufacturing toward smaller runs and custom-designed products is favoring agile and adaptable workplaces, business models, and employees, all of which have become a specialty in the United States. Future manufacturing will involve a global supply web, but the United States has a potentially great advantage because of our tight connections among innovations, design, and manufacturing and also our ability to integrate products and services.

The National Academy of Engineering has been concerned about the issues surrounding manufacturing and is excited by the prospect of dramatic change. On June 11-12, 2012, it hosted a workshop in Washington, DC, to discuss the new world of manufacturing and how to position the United States to thrive in this world. The workshop steering committee focused on two particular goals. First, presenters and participants were to examine not just manufacturing but the broad array of activities that are inherently associated with manufacturing, including innovation and design. Second, the committee wanted to focus not just on making things but on making value, since value is the quality that will underlie high-paying jobs in America's future. Making Value: Integrating Manufacturing, Design, and Innovation to Thrive in the Changing Global Economy summarizes the workshop and the topics discussed by participants.

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