Monday, January 27, 2014

America’s Real Manufacturing Advantage
A new wave of software innovation is about to transform industry
by Helmuth Ludwig and Eric Spiegel

To continue our discussion on the changing dynamics in manufacturing as a way to enhance competitive separation, this article offers a comprehensive summary of the potential for changing the face of manufacturing
…We are hopeful about the future of manufacturing in the U.S. for a more fundamental reason. It is the economy best positioned to seize on deeper changes that can lead to a real, sustainable manufacturing renaissance, one based on software technology and its profound effect on the entire manufacturing value chain.
…..Competitive advantage in the 21st century will be influenced by factors such as cheap energy and wage rates—but it will be decided by the ability of countries and regions to enable advanced design and manufacturing
Some of the key software enhancements are:
Product design: Increasingly powerful visualization and simulation software is enabling manufacturers to speed and improve product design, testing, and optimization
Production planning: Automation design technology makes it possible to digitally design entire factories or individual pieces of equipment, and then simulate and optimize against a range of production scenarios for cost, speed, productivity, utilization, energy usage, and quality.
Engineering: Modern production may have hundreds of interrelated automation components. New software makes it possible for engineers to program and coordinate all automation tasks from a single portal, optimizing workflows and improving productivity.
Execution: Manufacturing execution systems monitor production performance in real time, enabling short-term control of manufacturing output and long-term optimization of production-unit configuration.
Service: Mobile devices, powerful networking, and “big data” analytics are enabling technology-based services opportunities such as remote monitoring and advanced predictive failure analysis that will reduce costs and improve utilization and productivity

Monday, January 20, 2014

A Strategist’s Guide to Digital Fabrication
Rapid advances in manufacturing technology point the way toward a decentralized, more customer-centric “maker” culture. Here are the changes to consider before this innovation takes hold.
by Tom Igoe and Catarina Mota

This is clearly one of the major disruptive forces in the manufacturing world. It has the potential to:
Dramatically reduce the time and cost for complex prototyping that will enable heavy manufactures to  participate in the process of “fail cheaply and quickly” to dramatically  reduce  new product cycle times
Significantly reduce the power of scale in maintaining competitive separation as the technology develops
Change the balance of global production with a further reduction of dependency on labor
It is a must to read this article.

“How many do you want?” This question is central to most manufacturing business models. Ten units of a comb — or an automobile component, a book, a toy, or any industrially produced item — typically cost a lot more per unit to produce than 10,000 would. The price per unit goes down even more if you make 100,000, and much more if you make 10 million. But what happens to conventional manufacturing business models, or to the very concept of economies of scale, when millions of manufactured items are made, sold, and distributed one unit at a time? We’re about to find out.
The rapidly evolving field of digital fabrication, which was barely known to most business strategists as recently as early 2010, is beginning to do to manufacturing what the Internet has done to information-based goods and services.....
....The first step in building this new manufacturing business model is to take stock of the new fabrication tools. Digital fabrication devices fall into two categories. The first is programmable subtractive tools, which carve shapes from raw materials. These include laser cutters (which cut flat sheets of wood, acrylic, metal, cardboard, and other light materials), computer numerical control (CNC) routers and milling machines (which use drills to produce three-dimensional shapes), and cutters that use plasma or water jets to shape material. The second category is additive tools, which are primarily computer-controlled 3-D printers that build objects layer by layer, in a process known as fused deposition modeling. They work with a wide variety of materials: thermoplastics, ceramics, resins, glass, and powdered metals.... 
....Additive technologies have been following a path comparable to that of Moore’s Law; the capabilities of the devices are growing and the cost is decreasing exponentially. In 2001, the cheapest 3-D printer was priced at $45,000; by 2005, the cost had dropped to $22,900, and now you can buy a professional 3-D printer for less than $10,000, an open source personal version for less than $4,000, and a desktop do-it-yourself kit for less than $1,500. .. 
....To be sure, digital fabrication tools have limits. Currently, they are best suited to production runs of 1,000 items or less.... 
...the most common applications of the technology are the production of functional models, prototype components and patterns (used for tooling or to test fit and assembly), and visual aids. All of these are areas where production runs of one unit are often necessary. Nonetheless, even these early forms of digital fabrication could become highly disruptive to conventional manufacturing practices.

Monday, January 13, 2014

The End of Competitive Advantage
Rita Gunther McGrath
Harvard Business Press,
Copyright 2013
Chapter 1, Location 62 on my iPad

I had an epiphany as I started to read Rita McGrath's new blockbuster—The End of Competitive Advantage. In our Kellogg class on Driving Organic Growth through Innovation we start discussing the five major internal barriers that lead to growth stagnation (listed below); remember the Market Driven Growth process was developed in real time as these barriers were uncovered with the aid of Professors McGrath and MacMillan. Although the specific language may vary, these internal barriers were validated broadly via numerous studies over the years. I have been searching for a single underlying core reason why these occur. I believe I found it in this fabulous book. It is the drive to develop sustainable competitive positions:

“The assumption of sustainable advantage creates a bias toward stability that can be deadly…rather than stability being the normal state of things and change being the abnormal thing, it is actually the other way around. Stability, not change, is the state that is most dangerous in highly dynamic competitive environments….the presumption of stability creates all the wrong reflexes.”...(...and I believe is the underpinning of most if not all of the dynamics that lead to these internal barriers)
The internal barriers are:

Congealed leadership mindset –Leaders who control resources must be passionate and fully committed to change, even if the change takes the organization in a different direction from what made them successful in the past. We find that success breeds inertia – it is difficult to argue with success and to change when things seem to be going well (the impact of the concept of sustainable advantages is clear)

Pipeline driven by siloed organizations – Companies are generally organized to drive operating efficiencies with the center of gravity being the critical core competency of the company: manufacturing, technology, brand management, major accounts, etc .They are not organized around meeting customer needs. If the structure cannot adapt to meeting targeted market needs by cutting across the silos, the potential opportunities tend to be incremental at best (often the group with the biggest business dominates the resources in the environment of maintaining a sustainable competitive positions)

Decision paralysis – Growth is about momentum. A responsive and transparent decision process must be in place to resource the critical programs to win with a high sense of urgency. These decisions cover the entire portfolio—businesses must be in a position to fund critical growth projects while still meeting their short term financial objectives.  Projects that do not meet the business goals must be stopped to create budgetary headroom (It is tough to stop projects if your only focus is maintaining the status quo)

Fear of failure –One of the most insidious obstacles to growth is the fear of failure. Most organizations we worked with have a culture which penalizes sins of commission more than sins of omission – you could get along all right by doing your job and meeting your numbers, but heaven help you if you tried to do something new and failed.  Igniting the growth engine requires systemic innovation, which tends to involve higher degrees of uncertainty than most organizations are generally used to dealing with. If the organization up through leadership does not understand how to manage uncertainty, the organization will not succeed. Our mantra is “manage the cost, not the rate of failure (I am not sure whether this is the cause or outcome of focusing on the current state)

Right tools, metrics and skills—You get what you measure and your people can only perform as well as their skills will allow them. The growth journey requires changing tools, skill sets and metrics along the path. Ignoring these issues more often than not leads to sub-optimal performance. Successful growth companies must be ambidextrous being able to deploy the appropriate tools, metrics and skills at the right time. (with companies focus mainly on maintain sustainable competitive advantages, tend to focus on developing/rewarding human resources that are great at optimizing existing capabilities and not undergoing change)

Wednesday, January 08, 2014

Delight the weird

This very simple parable highlights the importance of segmentation. Your goal to create competitive SEPARATION not just advantage—what really makes a difference to the target customer’s buying decision. And you B to B guys, don’t think this doesn't apply to you---IT DOES.

Everyone who eats at your restaurant expects a good cup of coffee, and it's difficult to wow them, because, of course, your competition is working to do the same thing.
But of course, it's not everyone who wants a cup of coffee. Some want a cup of tea, or a cup of herbal tea, and those folks are used to being ignored, or handed an old Lipton tea bag, or something boring.
 What if you had thirty varieties for them to choose from?
Everyone who stays at your hotel expects the same sort of service, and it's difficult to wow them, because, of course, your competition is working to do the same thing.
But of course, it's not everyone. Some people travel with their dogs, and they're used to being disrespected. What if you gave those people a choice of a dozen dog toys, three dog beds and a special dog run out back?
When you delight the weird, the overlooked and the outliers, they are significantly more likely to talk about you and recommend you.

Friday, January 03, 2014

Big data: The next frontier for innovation, competition, and productivity
May 2011 | byJames Manyika, Michael Chui, Brad Brown, Jacques Bughin, Richard Dobbs, Charles Roxburgh, Angela Hung Byers

This phenomenon is huge and essential to understand how this could impact your business.!!!

The research offers seven key insights:
1. Data have swept into every industry and business function and are now an important factor of production, alongside labor and capital. We estimate that, by 2009, nearly all sectors in the US economy had at least an average of 200 terabytes of stored data (twice the size of US retailer Wal-Mart's data warehouse in 1999) per company with more than 1,000 employees.
2. There are five broad ways in which using big data can create value.
        a. First, big data can unlock significant value by making information transparent and usable at much higher frequency
        b Leading companies are using data collection and analysis to conduct controlled experiments to make better management decisions; others are using data for basic low-frequency forecasting to high-frequency nowcasting to adjust their business levers just in time
       c.big data allows ever-narrower segmentation of customers and therefore much more precisely tailored products or services
      d. sophisticated analytics can substantially improve decision-making.
      e.  big data can be used to improve the development of the next generation of products and services. For instance, manufacturers are using data obtained from sensors embedded in products to create innovative after-sales service offerings such as proactive maintenance (preventive measures that take place before a failure occurs or is even noticed)
3. The use of big data will become a key basis of competition and growth for individual firms.
4. The use of big data will underpin new waves of productivity growth and consumer surplus
5. While the use of big data will matter across sectors, some sectors are set for greater gains
6. There will be a shortage of talent necessary for organizations to take advantage of big data
7. Several issues will have to be addressed to capture the full potential of big data. Policies related to privacy, security, intellectual property, and even liability will need to be addressed in a big data world