State manufacturing centers – and managing intangibles

My friends over at the Brookings Institution released a new paper earlier this month on Accelerating Advanced Manufacturing with New Research Centers. As the full paper states:

To strengthen their manufacturing bases, states must go beyond simply attracting large manufacturers from other states and even beyond assisting manufacturers with training and early-stage financing. They need to support the development and diffusion of improved manufacturing technologies, ways of organizing work, and relationships between final goods producers (typically, assemblers) and their suppliers. To accomplish these goals states should establish advanced manufacturing centers, based in their metropolitan areas, to help manufacturers solve generic technical and management problems in one or more industries.

The authors argue that parts of such state level programs already exist in various forms in a number of states but nothing like the scale and scope needed. Nor are federal programs, such as the MEP programs large or broad enough.
I completely agree. But I would add a very important missing component. Such centers (as well as the MEP centers) need to explicitly include assistance in identifying and managing intangibles. As we pointed out a year ago in our Policy Brief–Intellectual Capital and Revitalizing Manufacturing, manufacturing is in the process of being transformed into a much more knowledge-intensive activity. This transformation will require attention to all the inputs to the production process — technology, worker skills, and cooperative/collaborative organizational structures — all of which are key intellectual capital and intangible assets.
Embracing the role of intellectual capital and intangible assets in manufacturing requires going beyond the narrow view of formal intellectual property. Scientific and creative property are valuable assets that include product development activities beyond the patent, new architectural and engineering designs, and social and organizational sciences research. Computerized information, including customized software and databases, are other important company assets that go beyond our definitions of intellectual property. Specific business models, organizational structures, and organizational capabilities are key elements of any company’s ultimate success. Worker skills and tacit knowledge–both general and firm-specific–are assets that managers describe as leaving the company every evening and returning every morning. Brand equity, reputation, and relationships with customers and suppliers are all important. All of these forms of intellectual capital need to be explicitly developed and managed by successful manufacturing companies.
Tools for managing intangible assets are only slowly emerging. The proposed state manufacturing centers are seen as a mechanism for developing and implementing new manufacturing technologies — similar to the role played by the Fraunhofer Institutes in Germany. Such centers should also play a role in the development and implementation of new tools for managing intangible assets.
But these centers will only play that role if it is explicitly included in their mandate and in their understanding of their mission. The concept of intellectual capital and intangible assets needs to be baked into their DNA (to mix clichés). Only then can they tackle their wider task of being an engine for revitalizing American manufacturing.

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