19 December, 2012

Which is more valuable - the product or the process?

"Manufacturing the future: The next era of global growth and innovation" is the title of McKinsey's latest report.  The executive summary is worth a read, but I'm not sure it gave me many new insights.  However, and this is why I read their stuff, it contains some interesting statistics and charts.  Here's one example:


You need to think through the necessary generalisations implicit in this chart:
  • If you can invent something new in wood products (an industry marked by low R&D and low value density), can you scale it up enough to take the world by storm?
  • Is the real opportunity to create the technology to make that new wood product, and then sell it to the world's wood product makers? Northern Europe's mid-size machinery and chemical manufacturers (R&D intensive) have done well this way.
There's often more money (and easier money) in selling picks and shovels to gold miners than in gold mining itself. Of course, at a national level, it's good to have both types of business.

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