Standing still is not an option for manufacturers

Many manufacturers struggle to maintain their competitive positions in regional and global markets that are changing faster than ever.

Developing an innovative mindset will assist businesses in achieving significant returns and stay ahead of the competition, according to Adam Hartung, who served as the featured speaker for two recent Lunch & Learn discussions presented by the Wisconsin Manufacturing Extension Partnership, one at the Country Springs Hotel in Pewaukee and the other at the Bridgewood Resort Hotel in Neenah.

“If you grow your business 15 to 20 percent (annually), you will generate enough capital to grow the business yourself. You don’t become reliant on banks,” Hartung said. “People want to invest in your business when you’re growing 15 to 20 percent a year.”

Hartung is managing partner of Spark Partners, a strategy and transformation consultancy. He previously spent eight years as a partner in the consulting arm of Computer Sciences Corp., where he led its efforts in intellectual capital development and e-business. Hartung also has been a strategist with The Boston Consulting Group, and an executive with PepsiCo and DuPont in the areas of strategic planning and business development.

Instead of focusing on innovation, industrial companies often continue to focus on their core businesses, even if they risk becoming less relevant, or, worse yet, irrelevant, Hartung said. Doing the same thing over and over, even if it’s faster and leaner than before, isn’t an effective strategy if the returns aren’t there, he said.

The more effective strategy, Hartung contends, is about understanding trends and “creating the disruption” that leads to new approaches and market-leading innovation. He’s detailed the strategy in his book, “Create Marketplace Disruption: How to Stay Ahead of the Competition.”
He pointed to retailer Sears as a company that has become less relevant over the years due to a lack of innovation.
“Sears is no longer relevant,” he said. “All of us remember shopping at Sears. We remember Kenmore appliances and Die Hard batteries and Craftsman Tools. But we all think of now is the nostalgia. It was a time past. When it comes to retail today we think of Kohl’s, Walmart, Target and Amazon. You don’t think about Sears. Sears, just 15 years ago was a Down Jones Industrial company. Today, Sears has lost relevance. Nobody cares what they do anymore.”
Companies have to be relevant to be successful, Hartung said.
At DuPont, Hartung built a new division from scratch to more than $600 million revenue in less than three years, opening subsidiaries on every populated continent and implementing new product development across both Europe and Asia. During his tenure at Pepsi, he led the initiative to start Pizza Hut home delivery and also played a lead role in the Kentucky Fried Chicken acquisition.

He’s also helped redefine the strategy of some of the world’s other leading companies, including: General Dynamics, Honeywell, Kraft and 3M.

Hartung led a detailed discussion of the downfall of Rochester, N.Y.-based Eastman Kodak Co., which at one time used cutting-edge innovation to grow its photographic imagining and equipment business. However, its slowness in transitioning to digital technology led to a massive decline in business and an eventual bankruptcy filing.

“This was one of the most successful businesses of the entire last century,” Hartung said. “What happened at Kodak is they defined themselves as being in the film business. What had made them successful, they kept doing more of.”

Eastman Kodak’s failure to develop digital technology it owned led to its eventual decline in the marketplace, he said.
“Kodak was killed because it was overwhelmed by status quo,” Hartung said. “Its focus on its historical successful business killed the company.”
Hartung also pointed to the recent downfall of another iconic company – Hostess Brands.

“The thing that killed Hostess was selling Twinkies and Wonder Bread. We don’t buy Twinkies and Wonder Bread anymore. We buy granola bars. We believe we can get better, healthier-tasting products than a Twinkie. When you go to the bread aisle, it’s not about white bread. There are a lot of alternatives. It wasn’t that Twinkies became a bad product. The world shifted and (Hostess) didn’t shift with it because they were fixated on their core.”

Investing in what you know isn’t sound business advice, Hartung said.

“That is the dumbest investment advice of all time,” he said.

He pointed to Apple, creator of products such as the iPod, iTunes, the Mac laptop and desktop computers, and the OS X operating system as a company that has remained focused on innovation.

“Apple is company that doesn’t have a core,” Hartung said. “It’s a company that invests in trends. It goes where the market’s going to go. It invests in where the next big thing is going to be.”

Hartung will be a presenter at the upcoming Manufacturing Matters! Conference on Feb. 28 at the Hyatt Regency in downtown Milwaukee. Registration to his session entitled “Major trends that will affect your business & how to thrive on change” remains open but is filling fast. Register by clicking here.

Rich Rovito is the industry reporter for Wisconsin Manufacturing Extension Partnership (WMEP).

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