Rather than focusing on technological breakthroughs, Chinese companies are finding new ways to innovate that reduce lead times and speed up problem solving. Companies elsewhere should take notice.
Chinese companies are opening up a new front in global competition. It centers on what we call accelerated innovation — that is, reengineering research and development and innovation processes to make new product development dramatically faster and less costly. The 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.
Silicon Valley and other technology hotbeds may be able to match the speed of Chinese innovation in particular sectors such as electronics and Internet-based services. However, what’s distinctive about the strongest Chinese competitors is their capability to combine accelerated innovation with rapid scale-up to high volume at low cost, and to apply these techniques across a wide variety of traditional industries. We saw accelerated innovation being deployed in Chinese industries ranging from pharmaceuticals, telecommunications and information technology to medical and industrial equipment, consumer electronics and e-business. Although it may not impact companies that are consistently able to deliver breakthrough innovations, it presents real threats and opportunities to many mainstream competitors.
The Push to Accelerate Innovation
We spent three years researching the way Chinese companies are accelerating R&D and innovation thanks to the low cost and abundant supply of Chinese engineers. (See “About the Research.”) We found that Chinese companies are industrializing innovation to improve speed and cost by applying lessons from production lines, pushing the boundaries of simultaneous engineering to cut the lead times for new product development, rapidly incorporating user feedback into new designs to drive down the learning curve faster and restructuring their organizations to speed up problem solving. These developments have potentially huge implications for how companies should think about global competition and whether they need to rethink and reengineer their established innovation and product development processes.