Wrong Premise

MIT hosted a conference on the loss of manufacturing in the US, a conference of a White House panel to understand what could be done. In the MIT report on the event they state:

AMP’s premise is that there exists a substantial “innovation gap,” as many forum participants called it, in which not enough of the country’s research discoveries move on to form the basis of viable businesses. Helping those innovations move into the marketplace could strengthen the nation’s manufacturing sector and reverse the sector’s long decline in employment.

Now one should explore that premise. Having headed R&D groups as well as having started a few companies the issue is not one of too few ideas becoming reality. That is the natural course of things. A viable business is based upon markets not good ideas or technology.

I am reminded of an early investment opportunity I rejected almost thirty years ago. The inventor had a great idea and he built a great prototype and he had a fantastic assembly line, yet he went bankrupt. His final comment to the Board was:


"If only there were customers I could have made millions of the units!"

Namely he was looking at the wrong thing, namely the good idea and his ability to execute on the manufacturing side. In surviving and growing companies they all have one thing in common, customers, and more customers. The challenge is in having the entrepreneur who finds that bridge between good technology and a customer demand.

That is why I always insist on having the customer first. That hopefully presents revenue but it also modifies the product so that it meets the need.

The article continues:

Indeed, as White House officials emphasized, the challenge of AMP is to identify and support new areas of manufacturing activity. Some of these areas may be in existing fields such as biotechnology, energy and robotics; others lie in evolving fields such as nanotechnology and advanced materials, where advances could create either specific products or new techniques that could apply to many industries.

Manufacturing is but one of several elements in the delivery of market demanded goods and services.  Manufacturing qua employing trained union labor is being pressed out of existence by the use of robots and other intelligent production means. Why use humans when the robot is cheaper. Yet the intelligence that goes into the robot is of substantial value. It is the next step on the evolutionary trail, not more manufacturing jobs.

They continue:

When it comes to commercializing research, one challenge for AMP is to figure out how best to help university scientists connect with manufacturers. “There is a discontinuity between academic research and industrial needs [that is] particularly pronounced in manufacturing,” said Andre Sharon, a mechanical engineering professor at Boston University. Speakers on one panel described a variety of emerging university-industry partnerships, from nanotechnology to stem-cell research, that aim to make applied research a more central part of their organizations.

Another set of challenges involves finding ways to help innovative small firms expand. Some of these concern funding: The credit crunch has made small-business loans harder to come by. But many speakers at AMP cited an additional problem: getting skilled technologists to stick with manufacturing firms and follow through with the often-arduous process of not just hitting on an innovation, but delivering it to customers.

“The big problem, and the one we really haven’t solved at all, is that while we’re quite good at supporting the efforts that lead to startups, we’re really very poor at supporting the research and education that would help startups to scale up,” said Suzanne Berger, the Raphael Dorman and Helen Starbuck Professor of Political Science at MIT, who is helping lead the Institute’s own study group on manufacturing, Production in the Innovation Economy (PIE). 

 University researchers connect to entrepreneurs NOT manufacturers. That is the food chain and shame on these folks for not understanding it. Or perhaps this is nothing but a political agenda. Yes MIT and Stanford and others are good at connecting with start ups, AKA then entrepreneur, yet they miss the manufacturer since that entity is well down the food chain. You do not manufacture until and unless there is a customer and it is the entrepreneur who starts that process.

As for scaling up, that is a normal Darwinian process well understood. If one makes progress with customers and generates cash then more cash will flow.