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7
NOV 13

Wrong and don’t know it




It is interesting the way small mistakes propagate and underline the lack of understanding in our institutions. At the Pine Manufacturers Wood Processors conference mentioned elsewhere, an NZTE presentation trotted out the normal post-industrial fantasy you can see that in slide 1, the correct slide is the second one – spot the difference? The first substitutes manufacturing for production, the second correctly characterises the entire process as manufacturing – small but vital difference and it really matters to the mental models we use.

Here is what a real expert had to say on the difference:

“A smiling curve is an illustration of value-adding potentials of different components of the value chain in an IT-related manufacturing industry. The concept was first proposed by Stan Shih, the founder of Acer, an IT company headquartered in Taiwan, around 1992. According to Shih's observation, in the personal computer industry, both ends of the value chain command higher values added to the product than the middle part of the value chain. If this phenomenon is presented in a graph with a Y-axis for value-added and an X-axis for value chain (stage of production), the resulting curve appears like a "smile".

We see this error everywhere and it speaks to the problem in our institutions and their superficial understanding of the issues.
 

Original reference: Shih, S. (1992), Empowering Technology – Making Your Life Easier

The one I used has the following reference: Veugelers, R. Ed. (2013). Manufacturing Europe’s Future. Bruegel Blueprint Series. Volume XXI. Bruegel. Brussels. Belgium. P 27”


tags: nzte, manufacturing, production, value chain, exports, stan shih
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