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Marginal: Unconventional Innovation

One of the more astounding stats that I’ve come across is from the Specialty Equipment Manufact-urers Association (SEMA; www.sema.org), the organization consisting primarily of firms that provide automotive aftermarket accessories, and which is known for the phenomenal show that it holds each year in Las Vegas (this year November 1-4). The stat is this: the market SEMA represents is $29-billion a year.

One of the more astounding stats that I’ve come across is from the Specialty Equipment Manufact-urers Association (SEMA; www.sema.org), the organization consisting primarily of firms that provide automotive aftermarket accessories, and which is known for the phenomenal show that it holds each year in Las Vegas (this year November 1-4). The stat is this: the market SEMA represents is $29-billion a year. What this means is that there are a whole lot of people who buy cars and trucks—new or used—and then spend what might seem like an inordinate amount of money taking things off that had been carefully, painstakingly, and expensively engineered and built. . . and then replacing them with things deemed to be better. This is serious stuff. Although OEMs and traditional suppliers have glommed onto the SEMA phenomenon, for many of these organizations it is nothing more than a superficial exercise, not one deeply integrated into the way they develop and produce products.

This occurred to me while reading Democratizing Innovation by Eric von Hippel (The MIT Press; $29.95). This is a book that should be required reading for every person in every automotive company who is involved in product development, be they marketers or engineers, manufacturers or managers. It is that important. Yes, it deals with subjects ranging from open source software to surgical instruments. Things that would seem to be barely relevant to the business of developing cars and trucks and components. But von Hippel’s book talks more about the fact that there are two basic ways that products are developed. One is the traditional manufacturer-centric model. This is what conventional vehicle/component companies follow. They discern a need in the market—one that is as wide as possible—and then they work to fill it. For the most part, this works. It is sufficiently broad to meet the needs of many people. The other model, the one of more interest, is a user-centric model. This means that a user, someone with specific needs, develops something to fit those needs, even though that person is not a "professional" product developer. Because there are others of like mind, this newly developed product is shared and expanded by the community of interest. In some regards, developments of this user-centric nature are found at the SEMA show in considerable quantity. In conventional accounting, it would undoubtedly be exceedingly difficult to make a business case for these user-developed products—perhaps even impossible.

But that is the point: These are not conventional times. Name a company in the auto industry that thinks it can operate in a status quo manner, and you’ve named a company that is on its way to going out of business. In these times, it is vital to leverage every possible advantage in creating products that will catch the imagination, interest and investment of consumers. Everyone? No. But a sufficient number that can translate into profitability. The auto industry continues to be dominated not only by the mass-production mentality—all manner of talk of "lower volume models" notwithstanding—but also of a commoditized approach to its products. The flexibility provided by everything from computer-aided design and engineering tools to machining centers and associated equipment aren’t really used to achieve customization as much they are for accelerating product development and adding tweaks. That is not enough. Users know the difference. And users are the people that companies need in their corner.
 

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