Deep knowledge and manufacturing

Earlier this week I was at an Aspen Institute event on “Manufacturing, Innovation & Workforce Training – What Works in Germany and the US”. In addition to all of the interesting comparisons, there was one statement that stood out. Dietmar Harhoff, Chairman of the Commission of Experts for Research and Innovation of the German Federal Government noted that what German manufacturing were selling was their “deep knowledge.” Patent policy doesn’t apply to this level of knowledge — thus a policy model for manufacturing may be different from what is needed in patent intensive sectors. Yesterday, at a US Chamber/NAM meeting on manufacturing, a similar point was made by Jamie Regg from GE Aviation. He noted that one of the factors they look at very carefully in picking a supplier is the skill and expertise (knowledge-base) of that company. [In an earlier posting I discussed how GE is an example of a company that is seeking to develop deep knowledge.]

Prof. Harhoff’s remark reinforces what I have said previously about German manufacturing: The use their knowledge and intangible capital for competitive success. And it is not just the knowledge of their workforce. It is relational capital as well. As the Economist noted in an article last year:

Mittelstand companies have long relied on the enviable network they already have at home. German universities work hand in glove with researchers at local firms. Suppliers cluster round big manufacturers. Owner-managers rub shoulders with workers.

Thus, I was pleased to hear an emphasis on supply chain relation and other forms of intangible capital at both of this week’s manufacturing conferences [although they didn't phrase it that way]. Now we need to translate that attention into policy.

Read more at The Intangible economy