Chinese companies are opening up a new front in global competition based on reengineering R&D and innovation processes to make new product development dramatically faster and less costly. This new emphasis is unlikely to generate stunning technological breakthroughs, but it allows Chinese competitors to reduce the time it takes to bring innovative products and services to mainstream markets. It also represents a different way of deploying Chinese cost and volume advantages in global competition.
Chinese companies, including manufacturers such as Lenovo Group Ltd. and Guangzhou Pearl River Piano Group Co. Ltd. and Internet players such as Tencent Inc., are pioneering new ways of industrializing innovation. They are pushing the boundaries of simultaneous engineering, leveraging rapid “launch-test-improve” cycles and combining vertical hierarchy with horizontal flexibility to enhance the innovation process. For example, when Lenovo acquired IBM’s personal computer business in 2005, its new product development cycle was 12 to 18 months. Since then, Lenovo has managed to cut that cycle in half by applying simultaneous engineering across the entire innovation process. Other Chinese manufacturers, including Guangzhou Pearl River Piano Group, have applied a similar approach. Accelerated innovation and many of the processes and techniques it draws upon are not unique to Chinese companies, authors Peter J. Williamson and Eden Yin concede. What’s noteworthy, they say, is how Chinese companies have learned to accelerate innovation across a wide range of industries, using rapid scale-up, low cost and “good enough” quality. Even if the results don’t lead to breakthroughs, the innovations can powerfully disrupt incumbents’ profit models.
The authors describe three ways that non-Chinese companies can respond effectively. The first way is for companies that are beyond the start-up phase to reengineer their own innovation processes in accordance with the principles and techniques of accelerated innovation being pioneered in China. The second way is to tap into China’s existing accelerated capabilities by tasking their own R&D units in China to focus on time-sensitive projects and by hiring local staff with knowledge of how to speed up certain aspects of the new product development cycle while reducing costs. The third approach is to develop alliances with Chinese players in order to tap into accelerated innovation know-how.