Is off-highway industry culture constraining innovation?
Simon Mall – Senior Manager, Ricardo business strategy
In the early part of 2014 we set out to investigate the technology strategy of a wide range of players within the international off-highway sector. Our purpose in this study was to understand the machine and powertrain technologies that will have the biggest impact in the next five to 10 years. Armed with this information, our aim was both to validate our own Ricardo technology roadmap for the off-highway sector as well as providing, in a manner that would avoid revealing companyspecific information, feedback to those that had participated.
Those that had participated. Our first big surprise in this investigation was just how enthusiastic the international offhighway sector was to engage in the study: twenty-two respondents – ranging from senior engineers to executive VPs – from seventeen companies participated in the survey from across the globe, most from Original Equipment Manufacturers (OEMs) and suppliers.
The main factors that shaped the technology plans in the surveyed companies included: meeting legislative demands and in particular ensuring emissions requirements were achieved; maximizing machine efficiency and minimizing the machines’ total cost of ownership which included the initial capital cost of the equipment as well as the costs associated with operation and maintenance throughout its useful life.
Hybridization seen as important
Despite the distinct lack of hybrid machines in the market at present, this was seen as an important future technology area by almost all respondents. The rationale for the under representation was generally explained in terms of high development costs, currently unproven reliability, and a lack of market acceptance. As hybrid technologies mature and gain wider acceptance in other sectors such as passenger cars and motorsport, and as component costs decrease and durability increases, our own expectation at Ricardo is one of increasing hybridization and electrification in the off-highway sector in parallel with the ongoing development of traditional engine technologies to create ever-cleaner and more fuel efficient machines.
Organizational culture may be a potential brake on innovation
While the direct technological insights from the study were extremely valuable and have already led directly to requests for bespoke studies on themes of strategic interest from a number of OEMs, the influence of organizational culture on innovative capacity was an unexpected finding of the research. In short, it appears that a conservative engineering culture, perhaps encouraged by the very nature of applications where the consequential cost of failures can far exceed that associated with equipment repair or replacement, can act as a significant constraint upon the market implementation of further innovation.
There are of course some very notable exceptions to this, but the research team felt that a distinction should be drawn between the minimization of risk through rigorous engineering processes, and achieving the same end through constraining the new technology content of products. Suggestions for improvement included the removal of any internal barriers and departmental silos within organizations, and that OEMs and the supply chain work more closely together in a design innovation process that delivers the standards of robustness required of this very demanding market sector.
In summary, this study showed that cost reduction, combined with improvements in productivity, efficiency and fuel economy, currently offer the highest focus for technology investment. Aligning this with a culture of innovation and openness to change will provide a strong platform for companies to succeed in this varied and exciting industry
This view point featured in RQ Q3 2014 - click here to download the full publication.