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MAKING VALUE
Integrating Manufacturing, Design, and Innovation
to Thrive in the Changing Global Economy
Summary of a Workshop
Kate S. Whitefoot and Steve Olson, Editors
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THE NATIONAL ACADEMIES PRESS 500 Fifth Street, NW Washington, DC 20001
NOTICE: This publication has been reviewed according to procedures approved by
the National Academy of Engineering report review process. Publication of signed
work signifies that it is judged a competent and useful contribution worthy of public
consideration, but it does not imply endorsement of conclusions or recommendations
by the National Academy of Engineering. The interpretations and conclusions in such
publications are those of the authors and do not purport to present the views of the
council, officers, or staff of the National Academy of Engineering.
This project was supported by a generous gift from Robert A. Pritzker and the Robert
Pritzker Family Foundation. Any opinions, finding, or conclusions expressed in this
publication are those of the workshop participants.
International Standard Book Number 13: 978-0-309-26448-8
International Standard Book Number 10: 0-309-26448-0
A PDF version of this report is available at www.nap.edu.
Copies of this report are available from the National Academies Press, 500 Fifth Street,
NW, Keck 360, Washington, DC 20001; (888) 624-8373 or (202) 334-3313; www.nap.
edu.
For more information about the National Academy of Engineering, visit the NAE home
page at www.nae.edu.
Copyright 2012 by the National Academies. All rights reserved.
Printed in the United States of America
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The National Academy of Sciences is a private, nonprofit, self-perpetuating society of
distinguished scholars engaged in scientific and engineering research, dedicated to the
furtherance of science and technology and to their use for the general welfare. Upon
the authority of the charter granted to it by the Congress in 1863, the Academy has a
mandate that requires it to advise the federal government on scientific and technical
matters. Dr. Ralph J. Cicerone is president of the National Academy of Sciences.
The National Academy of Engineering was established in 1964, under the charter of the
National Academy of Sciences, as a parallel organization of outstanding engineers. It is
autonomous in its administration and in the selection of its members, sharing with the
National Academy of Sciences the responsibility for advising the federal government.
The National Academy of Engineering also sponsors engineering programs aimed at
meeting national needs, encourages education and research, and recognizes the superior
achievements of engineers. Dr. Charles M. Vest is president of the National Academy
of Engineering.
The Institute of Medicine was established in 1970 by the National Academy of Sciences
to secure the services of eminent members of appropriate professions in the examina-
tion of policy matters pertaining to the health of the public. The Institute acts under the
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both Academies and the Institute of Medicine. Dr. Ralph J. Cicerone and Dr. Charles M.
Vest are chair and vice chair, respectively, of the National Research Council.
www.national-academies.org
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WORKSHOP STEERING COMMITTEE
LAWRENCE D. BURNS (Chair), Professor of Engineering Practice,
University of Michigan
CURTIS R. CARLSON, CEO, SRI International
NICHOLAS M. DONOFRIO, IBM Fellow Emeritus and (Retired)
Executive Vice President, Innovation and Technology, IBM
Corporation
ANITA GOEL, Chairman and Scientific Director, Nanobiosym;
Chairman and CEO, Nanosym Diagnostics
SUSAN R. HELPER, Chair, Economics Department, and AT&T
Professor of Economics, Case Western Reserve University
MICHAEL F. MOLNAR, Chief Manufacturing Officer, National
Institute of Standards and Technology (NIST)
PANOS Y. PAPALAMBROS, Executive Director, Interdisciplinary
and Professional Engineering, Donald C. Graham Professor of
Engineering, and Professor of Mechanical Engineering, University
of Michigan
JONATHAN J. RUBINSTEIN, Former Executive Chairman and
CEO, Palm, Inc.
JEFFREY SMITH, Professor of Economics, University of Michigan
CHAD SYVERSON, Professor of Economics, University of Chicago
Booth School of Business
REBECCA R. TAYLOR, Senior Vice President, National Center for
Manufacturing Sciences
Staff
KATE S. WHITEFOOT, Program Director and Senior Program
Officer
LANCE A. DAVIS, Executive Officer
PROCTOR P. REID, Director, Program Office
CAMERON H. FLETCHER, Senior Editor
PENELOPE J. GIBBS, Senior Program Associate
v
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Preface
M
anufacturing 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 manufac-
turing 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 technolo-
gies 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, put-
ting a premium on continual innovation and highly skilled workers. A
shift in manufacturing toward smaller runs and custom-designed prod-
ucts 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 innovation, design, and manufacturing, and also our ability to
integrate products and services.
The National Academy of Engineering normally conducts stud-
ies at the request of government and delivers its conclusions to the
requesting agency. In this case, the NAE has been sufficiently concerned
about the issues surrounding manufacturing--and sufficiently excited
by the prospect of dramatic change--to take action on its own. On June
1112, 2012, it hosted a workshop in Washington, DC, to discuss the
vii
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viiiPREFACE
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.1 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. Sec-
ond, 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.
The workshop opened with presentations on the changing nature
of manufacturing, design, and innovation; the future of work; building
the ecosystem for manufacturing, design, and innovation; and manu-
facturing for sustainability. The remainder of the workshop consisted
largely of two extended breakout sessions, followed by reports of the
breakout deliberations to the entire group. During the first breakout
session, workshop participants split into six groups to discuss the fol-
lowing topics:
· The relationship between making things and making value
· Productivity, innovation, and business practices
· The role of geography in creating and capturing value
· Enabling the workforce for the future of manufacturing, design,
and innovation
· Building the institutional structure for manufacturing, design,
and innovation
· Opportunities for making value
The next morning, workshop participants divided into three groups
to discuss the concept at the heart of the workshop: making value
through the integration of manufacturing, design, and innovation, to
which the workshop participants added a fourth critical factor: services
associated with manufacturing, design, and innovation.
This summary of the workshop, written by Kate S. Whitefoot and
Steve Olson, captures the main themes that emerged from more than
14 hours of presentation and discussion sessions. Given the overlap of
the issues and topics discussed between sessions, this summary is orga-
nized topically rather than chronologically to provide a more readable
account of the workshop. The views conveyed in the report are those
of individual workshop participants and should not be seen as conclu-
1 The steering committee's role was limited to planning and convening the workshop.
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PREFACE ix
sions or recommendations of the planning committee or the National
Academy of Engineering.
The National Academy of Engineering plans to initiate specific
actions to extend this dialogue and strengthen the extremely important
US innovation-generating machine. Other organizations should do like-
wise. Together, we can inaugurate a new era of advanced innovation,
design, manufacturing, and service to make value in the United States.
Charles M. Vest, President
National Academy of Engineering
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Acknowledgments
T
his summary has been reviewed in draft form by individuals
chosen for their diverse perspectives and technical expertise, in
accordance with procedures approved by the National Acad-
emies. The purpose of the independent review is to provide candid and
critical comments to assist the NAE in making its published report as
sound as possible and to ensure that the report meets institutional stan-
dards for objectivity, evidence, and responsiveness to the study charge.
The review comments and draft manuscript remain confidential to pro-
tect the integrity of the deliberative process. We thank the following
individuals for their review of this report:
Alice Agogino, University of California, Berkeley
Gary Cowger, GLC Ventures, LLC
Joseph A. Heim, University of Washington
Christopher Johnson, GE Global Research
Stephanie Shipp, IDA Science and Technology Policy Institute
Although the reviewers listed above provided many constructive
comments and suggestions, they were not asked to endorse the views
expressed in the report, nor did they see the final draft of the report
before its release. The review of this report was overseen by Julia M.
Phillips, Director, Nuclear Weapons S&T Programs, Sandia National
Laboratory. Appointed by NAE, she was responsible for making certain
that an independent examination of this report was carried out in accor-
dance with institutional procedures and that all review comments were
carefully considered. Responsibility for the final content of this report
rests entirely with the authors and NAE.
xi
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xiiACKNOWLEDGMENTS
In addition to the reviewers, many other individuals assisted in the
development of this workshop summary. Penelope J. Gibbs prepared
the layouts; Greg Pearson, NAE senior program officer, coordinated
the review; and Gina Adam, Christine Mirzayan Science & Technology
Policy Graduate Fellow, assisted with the response to review. Additional
thanks are due to Clair Woolley and Jim Gormley for their generous
help with the production of this workshop summary.
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Contents
1MAKING VALUE THROUGH INTEGRATED
INNOVATION, DESIGN, MANUFACTURING, AND
SERVICE1
The Opportunity, 1
Technology and the Transformation of Work, 4
What Is Value? And How Do We Make It?, 8
Does Integration Require Colocation?, 16
2 BUILDING THE ECOSYSTEM FOR MAKING VALUE 18
Human Capital, 18
Business Practices, 22
Government Services, 24
Infrastructure for Information and Technology Development, 28
Leapfrogging to the Next Generation, 31
APPENDIXES
A Workshop Agenda 35
B Biographical Information 39
xiii
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xivCONTENTS
BOXES: INDUSTRY-SPECIFIC EXAMPLES AND RELEVANT
DISCUSSIONS
1-1 Spotlight on Biomanufacturing: Opportunities and Needs for
Value Creation, 2
1-2 The Past, Present, and Future of Manufacturing Work, 6
1-3 Making Value in America, 10
1-4 Spotlight on Electronics: Linking Design and Production, 14
2-1 Creating Human Capital: Manufacturing, Design, and
Innovation Education at Georgia Tech, 22
2-2 SRI's Value Creation Process, 25
2-3 Different Collaborative Models for Innovation in Large and
Small Companies, 28
2-4 Manufacturing for Sustainability, 32
