In a 2017 survey by EKS&H, a Denver-based consulting firm, 250 participants from 20 states representing the U.S. manufacturing industry found that, despite several challenges, 74 percent of small manufacturers and 69 percent of large manufacturers expected revenue growth.
The top priority for manufacturers in 2017 was cutting operational costs, but respondents from high-growth manufacturing sectors were more focused on research and development. Twelve percent of high-growth respondents planned to do more than cut costs -- they planned to reinvest more than 10 percent of their annual revenue into leveraging innovation and the development of new products and services to increase revenue in 2017.
According to The Wall Street Journal, top priorities for businesses owners and executives in 2018 are similar: increasing sales, reducing costs, attracting and retaining talent, and leveraging technology to reduce risk and boost their competitive advantage.
Despite the optimistic views, labor costs were expected to increase significantly, and cries of "the sky is falling" could be heard across the state as Colorado manufacturers are experiencing the impact of a workforce shortage (especially skilled workforce) considering a steady 2 percent unemployment rate. Many companies are struggling to keep up with the demand and stay competitive for delivering products and services on time and under budget, and there's no end in sight -- unless they let go of what's not working and let innovative Millennials save the day!
Like the words "like" and "awesome," the word "innovative" has been overused to the extent that we don't pay attention to it or it's unclear. Does it mean providing ideas out of the blue that lead to life-changing discoveries? Not necessarily.
What is innovation for a manufacturer?
Innovation isn't just making cool new devices, having a new idea or using a risky new process, but refers to the process of uncovering new ways to do things. Innovation is defined as the introduction of something new or different. Innovation in a manufacturing company can be borrowing a business model from the tech industry such as applying the principles of "Agile" or using an open-book management process. Innovation can also be a result of adapting to changes in the marketplace, such as using robotics and modern technologies or challenging employees to uncover new ways to do things more efficiently.
A PricewaterhouseCoopers (PwC) study found that from 2010 to 2013, the most innovative companies grew by 38 percent, while the least innovative grew only 10 percent. Their research has also found that it's not just a matter of throwing more money at the problem. In the last 12 years, PwC has found no statistical relationship between financial performance and the raw amount spent on research and development. Better-performing companies simply innovate more effectively, and a lot of their ability to innovate comes down to culture.
Simply put, your company culture is the feeling someone like myself gets when they walk the floor. Open, friendly, at ease or siloed, silent and stressed? At play are the spoken and unspoken rules of engagement within your company. Trust me, you won't find them in your policies and procedures manual, but your employees know them and play by them. Yes, those rules. The ones that put the "us" in "us" and "it's just how we do things here" (whether they work or not).
Creating a culture of innovation: What do Millennials have to do with it?
Because more than half of today's workforce are Millennials, a generation that thrives and is most productive within a culture that welcomes their input to efficient ways of doing things (and implements them). According to Gallup, Millennials care that they are earning a competitive wage but care even more about having an opportunity to make a difference and have their ideas heard (among other things). As a result, CEOs of manufacturing firms who want to attract and retain their best people ought to consider creating a culture of innovation -- not just pay it lip service -- that can boost your company's bottom line. Gallup found improving a firm's culture can reduce staff turnover from 10 percent to 30 percent. What impact could that make in your bottom line in a tight labor market?
Smart CEOs can start by establishing a process where innovative ideas and suggestions are heard, implemented and learned from, but it must "start at the top" so that trust is built over time. If the CEO and executive team "walk their talk" and are willing to change from "this is how we've always done it" to "this is how we do it now" Millennials, who really do share your business' core values will also feel invested in your business goals help you to develop and create a culture of innovation and improve your top and bottom line.
The good news? What Millennials want isn't so different than what you want!
In 2016, The Center for Sustainable Strategies conducted a research study on the intersection between "What Millennials Really Want" and 'What Employers Really Want" and the results were surprising. The results were published in an Insights Paper "Developing Millennial Talent Without Tearing Out Your Hair" identified specific opportunities for alignment between what Millennials really want from employers and identified Best Practices of companies who aren't experiencing workforce shortages or challenges (yes, they do exist and are right here in your own backyard). You can access the entire paper here.
Millennials can be the key to creating a culture of innovation in your company, but only if you are open at the top. Innovation is easier than you thought. Fear of change is the biggest obstacle to growth and developing a culture of innovation. Change doesn't have to be hard, or risky, or thoughtless. It does however start at the top.
When will you start? Attend NOCOM 2018 on April 12 in Loveland to hear from a panel of Millennials firsthand and other leaders in manufacturing sharing about innovation.
Christina Haxton, MA LMFT is the CEO and founder of The Center for Sustainable Strategies and Sustainable Leadership, Inc.