BreakThrough Study Idea

Seeking to increase added value at SMEs through "creative productivity"Dr. Satoshi Nagashima

<Series 1(Total 4 series)>

2020.04.02

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Satoshi Nagashima (Managing Partner Japan, Roland Berger Ltd. *The present post : Global Innovation Officer)


Profits will improve significantly if the added value of products and services can be increased by improving productivity. This is possible even for SMEs--. The idea listed above is expressed by Satoshi Nagashima, Managing Partner Japan, Roland Berger Ltd.(*The present post : Global Innovation Officer), a global consulting, and President of a Japanese subsidiary. Nagashima is placing new focus on the idea of "increasing productivity" by cultivating the concept of "creative productivity", while also concentrating on collaborative projects with Japanese SMEs. In this four-part series, we introduce advice from Nagashima on how SMEs can increase productivity.


Two ways of improving productivity

"Productivity", which is a major issue at all companies, can be expressed as a fraction. The numerator is "new value created;" that is, the value of the created service or product. The denominator is "injected resources." For example, in the case of a manufacturing company, this would be labor costs, raw material costs, equipment costs, etc. According to Nagashima, there are two ways to increase "productivity" as defined here.

"Nowadays, upon hearing the phrase 'improve productivity,' many people think about using IT and standardizing work in order to do the same jobs more efficiently in a shorter amount of time. In terms of the formula, this is a reduction of the denominator. However, there are also ways to increase the value of the products and services we create; in other words, to raise the numerator."

Here, Nagashima raised the example of a full model change for an automobile. Of course, adding new functions and redesigning the automobile requires injecting a certain amount of resources. Nevertheless, profits will increase if customers purchase the new model at a higher price.

Increasing sales by implementing "creative productivity"

There are other ways to "increase productivity by raising the numerator."

"For example, consider the services provided by ultra-luxury hotels. Providing service based on a unified philosophy and holding training for staff will make it possible for a single staff member to provide services with superior quality in the same amount of time. Customers will perceive value in such services."

Nagashima also raised an example of providing products that meet individual needs through mass customization.

"It's true that it is easier to work towards increased productivity by reducing the denominator. However, through creative productivity consisting of increasing the numerator, if we can create innovative value which brings stimulation and new discoveries to customers, it is possible to double sales without significant change to the injected resources. This is the increase in "creative productivity" that is proposed by Roland Berger."

There are ways for even SMEs to implement "creative productivity"

There are limits to reducing the injection of resources, which is the denominator of the productivity formula. However, there is no limit to increasing new value created, which is the numerator in the formula, and such increases will directly result in increased sales. Even so, there are many SMEs which feel that they do not have time to create new value due to being overwhelmed with the daily work of fulfilling manufacturing orders based on technical drawings while maintaining quality, cost, and delivery schedules.

"Still, if you don't make a change at some point, your only option will be to continue the status quo. I hope that SMEs will make some time to consider creative productivity and achieve breakthroughs. In fact, it's not uncommon for the SMEs that I work with to achieve such breakthroughs."

So, how should SME manufacturing companies increase their "creative productivity"? In the second article of this series, we will introduce a step-by-step method.


Series Breaking your company's boundaries and confidently taking center stage in pursuit of "creative productivity"

Series 1 Seeking to increase added value at SMEs through "creative productivity"
Series 2 The "creative productivity" of corporations is enhanced by understanding your own company and meeting with people
Series 3 Creating value by reviewing and combining your own company's "strengths"
Series 4 Breaking your company's boundaries and confidently taking center stage in pursuit of "creative productivity"


Satoshi Nagashima
(Managing Partner Japan, Roland Berger Ltd. *The present post : Global Innovation Officer)

Completed the Doctoral Program at the Waseda University Faculty of Science and Engineering. PhD (Engineering). After working as an assistant at the Faculty of Science and Engineering of Waseda University, Nagashima joined Roland Berger Ltd., a global strategic consulting company based in Germany. He is involved in projects such as grand strategy for manufacturing, business roadmaps, change management, and on-site digital arming. Nagashima has also served as a member of the "Strategic Commission for the New Era of Automobiles", operated by the Ministry of Economy, Trade and Industry. He has also held positions such as a member of the Small and Medium Enterprise Policy Making Council, operated by the Small and Medium Enterprise Agency.

◇ Main Written Works
"AI On-Site Capability: Becoming Overwhelmingly Strong Through Japanese Innovation" (Nikkei Publishing Inc.) Published in 2017
"Japanese Industry 4.0" (Nikkei Publishing Inc.) Published in 2015

Coverage date January 30, 2020

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