Executive Summary
The success of Nypro can be attributed to its innovativeness, internal competition between teams, and customer focus. Its production strategy is built on strong customer alliances. Gordon Lankton’s internal market approach contributed greatly to Nypro’s earlier success and innovativeness.
The Novaplast technology presents the firm with an opportunity to grow its market share and remain competitive. However, the implementation of this technology in Nypro’s plants requires a careful assessment. This paper analyzes Nypro’s innovation model and evaluates the factors behind its success.
Introduction
Modern technology has transformed the business landscape by providing solutions to production and managerial challenges. For a multinational firm, improving productivity and human resource practices through technology requires huge financial investments and changes in the management structure.
In this regard, the way a firm reacts to technology depends on the impact of the innovation on its management structure and organizational culture. Nypro’s case underscores the role innovation plays in business growth. Its business strategy enabled team leaders to identify and implement innovations that improved the firm’s performance.
Innovative Critical Thinking
Innovation management helps guide an organization’s utilization of technology in a way that translates to good outcomes. It requires a careful analysis of the business environment in order to identify a business model for commercializing the innovation (Chesbrough, 2005). Due to rapid technological developments, firms often embrace continuous innovation to keep abreast with advances in the industry.
The open innovation model, as opposed to the traditional approach, allows companies to adapt new technologies developed by others. Under this model, a firm can license its technology to others, but retain the intellectual property rights. A firm can benefit from R&D by adopting the technology or licensing it to players in different markets (Glor, 2001). Nypro’s innovation model involves two strategies.
First, decisions made by senior managers are communicated to others (teams) who implement them. Second, innovators within the firm develop technologies independently and inform the managers. These internal venture groups identify new opportunities in the firm’s innovation process.
Besides the people within a firm, the adoption of technology by a firm depends on its target customers. Consumers adopt new products at different rates and thus, can influence the success of an innovation.
For instance, innovators and early adopters purchase new products at the first instance and even participate in product development, while the laggards first exhaust traditional alternatives before purchasing innovative products (Gorchels, 2011).
In Nypro’s case, Lankton believed that the “low-volume, high mix market” would adopt Nypro’s technology at a high rate, but the high-volume (battery liners) firms turned out to be its prime market (Christensen & Voorheis, 1998, p. 6).
Nypro’s Innovation Alliances and Changes
SWOT Analysis
Strengths
- ‘Free market’ model that inspires innovations leading to improved performance. This model coupled with Nypro’s strategy of recognizing and rewarding innovators fosters initiative and creativity within the firm
- Customer-focused design – Nypro involves customers in product development. This ensures that products meet customer needs and preferences
- Better plant coordination – Lankton coordinates all the activities in the firm, including information exchanges and technology absorption. This ensures that operations are integrated and harmonious
- Global focus – Nypro has several manufacturing plants spread in different countries. This strategy allows the firm to produce products suited for various markets
Weaknesses
- Slower technology adoption – Under the free market model, each plant adopts a new technology when it finds it convenient to do so. Thus, innovations cannot be adopted in a top-down fashion across all plants
- Limited flexibility – Nypro’s current equipment is less flexible, i.e., changes requested by a customer cannot be made after production has started
- Slower turnaround time – The current technologies at Nypro have a slower turnaround time leading to delays. However, the Novaplast technology will increase the rate of production
- Limited ability to prototype particular molds – Complex prototypes requested by customers take time to model
Opportunities
- Global markets – Nypro’s decentralized production gives it access to various markets globally
- A broad clientele – Nypro can expand its client base in the healthcare, automotive, telecommunications, and electronic industries. Currently, the firm serves over fifty corporations specializing in various industries (Christensen & Voorheis, 1998)
- Technology development – Nypro’s internal market model spurs innovation within the firm. Technologies such as Novaplast promise to improve product quality and reduce the cost of production leading to improved performance
Threats
- External competition – Competition in the molding industry is intense. Other industry players, such as Hoffer Plastics and Deswell, invest heavily in technology in a bid to topple Nypro from the market leadership position
- High customer demand – Nypro’s slower turnaround time means that products may not be made on time for the high volume market. Nypro risks losing its clients to rivals with better technology
- Loss of prototypes – Rival firms can copy and produce Nypro’s products in case of loss of patents
- Internal rivalry – The internal market model may stifle innovation if information sharing is not encouraged
PERT Analysis
Program
- The internal market model at Nypro facilitates information exchange between departments
- It involves regular information dissemination and continuous product improvement
Evaluation
- New technologies are evaluated by Lankton and the plant managers before adoption
Review
- Project teams and customers participate in product review
Technique
- Standardized practices, technology, and customer-involvement
Case Analysis Questions
Nypro’s success is largely attributable to its internal market model of innovation. The firm saw internal competition as a source of innovation and performance improvement. Nypro used a set of standardized questions to rank teams based on their performance statistics over time.
Based on demand trends, the firm shifted to the high-volume market to supply plastic parts to large corporations in need of molding services. Nypro employed the internal market model to revolutionize its production processes, differentiate its products, and ensure quality for its customers.
Under this model, the plants competed against one another in terms of reduced production costs and improved product quality. Because of the internal market model, new technologies were adopted in molding (production), visual factory design, MRP2 systems, and product quality (Christensen & Voorheis, 1998).
2. Lankton allowed plant managers to nurture competitive innovations in the firm. The managers and the project leaders had a role of generating and implementing innovations that are cost-effective and profitable.
Lankton ensured that the internal market remains competitive and robust through an interlinked management structure involving board directors. He also organized regular forums where the management met and disseminated information regarding new technologies. This facilitated the diffusion of new technologies within the company.
3. In the writer’s view, the Novaplast technology should be implemented in one plant, as a pilot project. The decision is based on the rationale that Nypro’s current customers may need products that need this machine.
Thus, customer orders can be used to assess the cost-effectiveness of this innovation over the other technologies. Alternatively, the machine can be used to make products that are currently on the order list. Costs related to shipment and logistics can then be evaluated to determine whether deploying the machines to other plants is cost-effective.
Conclusion
Nypro’s case shows how effective managerial strategies nurture innovation and business performance. In particular, the internal free market nurtured a thriving innovation process within the firm. Under this model, Nypro has been able to generate technologies that have enabled the firm to compete effectively in the industry.
References
Chesbrough, H. (2005). Open Innovation: The New Imperative for Creating and Profiting from Technology.Watertown, Massachusetts. Harvard Business Review Press.
Christensen, C. & Voorheis, R. (1998). Managing Innovation at Nypro, Inc. Harvard Business School, 9(67), 1-14.
Glor, E. (2001). Key Factors influencing Innovation in Government. The Innovation Journal, 6(2), 74-82.
Gorchels, L. (2011). The Product Manager’s Handbook: The Complete Product Management Resource. New York: McGraw-Hill.