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

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Citation:

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

Case | HBS Case Collection | June 2020

Vanguard Retail Operations (A)

Willy C. Shih and Antonio Moreno

The first two cases in this series are set in the financial services industry, and explore whether it is better for back-office workers to be generalists who provide the flexibility of being able to handle the complete range of transactions that the company faces or specialists who focus on a subset of the overall transaction mix. The objective is to introduce the advantages of demand pooling in reducing the variability associated with the forecasting of highly variable workloads, while also demonstrating the benefits to worker learning and efficiency improvements that can come from specialization.

The case is set at the Retail Investor Group Operations of the Vanguard Group, the mutual funds and ETF giant. Karin Risi, the managing director, is faced with a back-office operation that hasn’t kept up with massive transaction growth, one that is struggling under the weight of mounting client phone call and transaction volumes, client complaints, and buckling employee morale. And worse, the press was taking notice. The (A) case details the complexity in the growing backlog and frames the question of whether they should pursue a specialist model. The (B) case, for distribution in class, details the impact of an initial segmentation of workload into eight categories and poses additional questions for class discussion and analysis.

Keywords: pooling; generalist model; specialist model; Operations; Service Operations; Management; Financial Services Industry; United States;

Citation:

Shih, Willy C., and Antonio Moreno. "Vanguard Retail Operations (A)." Harvard Business School Case 620-104, June 2020. View Details

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The ultimate solutions to the Covid-19 crisis may be big breakthroughs in building massive test and trace capacity and developing vaccines and drug remedies. But in the meantime, we should not ignore the potential cumulative impact of the many small things we already know how to do or might try that together could make a big dent in the current crisis. Big problems typically get tackled through a series of small solutions, each of which on its own may not seem particularly important but that together can have a huge impact. Creating and implementing a “small steps” strategy, however, will require strong leadership.

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Producing Prosperity: Why America Needs a Manufacturing Renaissance

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