Restoring American Competitiveness

Gary P. Pisano; Willy C.  Shih

Article | Harvard Business Review | July – August 2009

Restoring American Competitiveness

Abstract

For decades, U.S. companies have been outsourcing manufacturing in the belief that it held no competitive advantage. That's been a disaster, maintain Harvard professors Pisano and Shih, because today's low-value manufacturing operations hold the seeds of tomorrow's innovative new products. What those companies have been ceding is the country's industrial commons—that is, the collective operational capabilities that underpin new product and process development in the U.S. industrial sector. As a result, America has lost not only the ability to develop and manufacture high-tech products like televisions, memory chips, and laptops but also the expertise to produce emerging hot products like the Kindle e-reader, high-end servers, solar panels, and the batteries that will power the next generation of automobiles. To rebuild the commons and restore its wealth-generating machine will require government and industry in the U.S. to make two drastic changes: First, the government must change the way it supports basic and applied scientific research to promote the broad collaboration with business and academia needed to tackle society's big problems. Second, corporate management practices and governance structures must be overhauled so they no longer exaggerate the payoffs and discount the dangers of outsourcing production and cutting investments in R&D. Restoring the ability of enterprises to develop and manufacture high-tech products in America is the only way the country can hope to pay down its enormous deficits and raise its citizens' standard of living.

Keywords: Competitive Advantage; Value; Production; Innovation and Invention; Product Development; Government and Politics; Social Issues; Management Practices and Processes; Investment; Research and Development; Job Cuts and Outsourcing; Competency and Skills; Service Industry; United States;

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Citation:

Pisano, Gary P., and Willy C. Shih. "Restoring American Competitiveness." Harvard Business Review 87, nos. 7-8 (July–August 2009). (

Winner of McKinsey Award. First Place For the best articles published each year in the Harvard Business Review presented by McKinsey & Company

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Case | HBS Case Collection | May 2016 (Revised April 2018)

Building the Digital Manufacturing Enterprise of the Future at Siemens

Willy Shih

This case describes the motivation for and the development of Siemens' digital manufacturing enterprise vision, which became the foundation for its implementation of Industrie 4.0. While the effort started with a purely defensive move by Anton Huber, head of the Digital Factory Division, to protect his core programmable logic controller business from the migration of value to software from hardware, the scope expanded radically as the company completed the acquisition of UGS. It was then able to articulate a complete roadmap from computer-aided product inception and design through simulation and automation system design all the way to the factory floor. The initial implementation at the Electronics Works Amberg became widely cited as the prototype for Industrie 4.0.
The central question of the case is the importance of vertical integration to the delivery of the vision, in the face of pressure for open standards that will expose large parts of the system to competition and price pressure. How will Siemens earn a reasonable rate of return?

Keywords: big data; Internet of Things; internet of everything; Industrie 4.0; digital factory; digital enterprise; digital manufacturing; manufacturing; Production management; Production Planning; Computer software; Germany; German manufacturing; Machinery and Machining; Information Technology; Technology Platform; Technological Innovation; Production; Supply Chain; Life Cycle; Software; Technology Networks; Manufacturing Industry; Germany;

Citation:

Shih, Willy. "Building the Digital Manufacturing Enterprise of the Future at Siemens." Harvard Business School Case 616-060, May 2016. (Revised April 2018.) View Details

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Restoring American Competitiveness

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