Producing Prosperity: Why America Needs a Manufacturing Renaissance

Gary P. Pisano; Willy  Shih

Book | 2012

Producing Prosperity: Why America Needs a Manufacturing Renaissance

Abstract

For years—even decades—in response to intensifying global competition, American companies decided to outsource their manufacturing operations in order to reduce costs. But we are now seeing the alarming long-term effect of those choices: in many cases, once manufacturing capabilities go away, so does much of the ability to innovate and compete. Manufacturing, it turns out, really matters in an innovation-driven economy. In Producing Prosperity, Harvard Business School professors Gary Pisano and Willy Shih show the disastrous consequences of years of poor sourcing decisions and underinvestment in manufacturing capabilities. They reveal how today's undervalued manufacturing operations often hold the seeds of tomorrow's innovative new products, arguing that companies must reinvest in new product and process development in the U.S. industrial sector. Only by reviving this "industrial commons" can the world's largest economy build the expertise and manufacturing muscle to regain competitive advantage. America needs a manufacturing renaissance—for restoring itself and for the global economy as a whole. This will require major changes. Pisano and Shih show how company-level choices are key to the sustained success of industries and economies, and they provide business leaders with a framework for understanding the links between manufacturing and innovation that will enable them to make better outsourcing decisions. They also detail how government must change its support of basic and applied scientific research and promote collaboration between business and academia. For executives, policymakers, academics, and innovators alike, Producing Prosperity provides the clearest and most compelling account yet of how the American economy lost its competitive edge—and how to get it back.

Keywords: competitive advantage; Job Cuts and Outsourcing; Production; Competitive Advantage; Transformation; Innovation and Invention; Manufacturing Industry; United States;

Format: Print

Purchase

Citation:

Pisano, Gary P., and Willy Shih. Producing Prosperity: Why America Needs a Manufacturing Renaissance. Boston, MA: Harvard Business Review Press, 2012.

This case looks at United Airlines when it is facing a decision on whether to shift its aircraft routing to more "out-and-back" routing in order to try to improve its on-time performance. As one of the world's largest airlines, United had a very large fleet and hub-and-spoke network that provided passengers with a wide range of destination choices, but as with any complex system unless everything ran perfectly all the time, it inevitably faced cascading delays and missed passenger connection problems. While out-and-back routing tended to isolate operational issues, more traditional linear routings tended to offer high equipment utilization. The case offers students an opportunity to examine the effects of variability on different routing strategies.

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

Cite View Details Educators Purchase

Faculty & Research

Producing Prosperity: Why America Needs a Manufacturing Renaissance

Abstract

Citation:

About the Authors

More from these Authors