MANUFACTURING, SERVICES AND INNOVATION | IN FOCUS
tend to be micro businesses selling their services nationally. A high proportion of the leading design firms in areas such as industrial design, software development and architecture export their services around the world. In many cases the value rests in the know-
how and the intellectual property rather than in the manufacturing. A striking example is Dyson, the manufacturer of vacuum cleaners and hand dryers. While production largely takes place in Malaysia the company has a large and expanding base in Wiltshire that has spent years researching and designing innovative goods such as its digital motors that can power air at up to 430 mph.
SERVITISATION – OR MANU-SERVICING But innovation can be as effectively generated within the services sector as it can within manufacturing. Whether in construction techniques, methods of retailing and distribution, or in knowledge-based services, innovation makes operations work smarter rather than just harder. This has been shown to be the best route to growth, with illuminating examples across transport, retail and financial services.
Opposite: Aeroengine manufacturers are also service industries, offering a total care package
“ IN MANY CASES THE VALUE RESTS IN THE KNOW-HOW AND THE INTELLECTUAL PROPERTY RATHER THAN IN THE MANUFACTURING”
In one way the distinction between “services”
and “manufacturing” is as obsolete as some of the industrial activity that took place 50 years ago. Whether it is called “servitisation” or “ manu-servicing”, there has been a radical change in the way firms offer the products they make. Companies increasingly realise that firms do not necessarily want a particular product but would like the capability that the product brings. In other words, they want to buy the outcome rather than the equipment. For example, Rolls-Royce no longer simply sells aeroengines. It now offers a total care package, where customers buy the capability that the engines deliver – or “power by the hour”. Innovation at airports in terms of ground
operations, coordination with the different bodies involved and developments in technology have enabled runways that have been declared full to increase capacity year after year without building new runway space. Staying within aviation, the growth of low-cost carriers such as EasyJet and Ryanair is the result of business model innovation that has transformed the industry and led to cheaper airfares.
Financial services now offer a large
range of services online and via mobile phones thanks to advances in ICT. The rapid development of technologies such as near- field communication and smartcards means it will become increasingly easy to move money and pay for goods and services without cash or credit cards. Within retail, barcode scanners linked to ICT facilities have led to improvements in distribution. Shops are introducing new strategies to enable people to buy online and collect goods from public spaces such as railway stations. Innovation is constantly advancing and
offering new potential to change products and services. The UK is leading this change through more open and collaborative models of innovation with business focusing as much on intangible aspects of innovation such as design as on pure R&D. As the economy rebalances, it is critical that the UK innovation eco-system continues to drive growth, develops new markets and helps tackle the major global challenges of our time.
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