convergence and disruption in manufacturing
TRANSCRIPT
CONVERGENCE ANDDISRUPTION INMANUFACTURINGHow Companies are winning market share
The pace and scale of change across high-tech manufacturing is a once-in-a-century transformation. The resulting convergence and disruption—affecting every corner of the manufacturing sector—is profoundly, permanently altering the industrial landscape. The old rules are changing: New competitors are emerging, consumer expectations are shifting, and market share is up for grabs.
EVOLVE OR RISK IRRELEVANCE There will be winners and losers. We’ll see fewer manufacturers, but those that win out will earn greater profits.
50%Since 2000,
of Fortune 500-listed companies have either gone bankrupt, been acquired, or ceased to exist.1
- National Academy of Engineering
Manufacturing can no longer be considered separate from the value chain, the system of research and development, product design, software development and integration, and lifecycle service activities performed to deliver a product or service to market.2
Manufacturing
Research& Development
SoftwareDevelopment& Integration Lifecycle
Service ActivitiesPerformed to
Deliver Productor Service
ProductDesign
New methods and collaborations, such as those within the burgeoning ‘maker movement’—which combines artisan craftsmanship with 3-D printing and other modern technology—are drawing the attention of consumers and manufacturers alike.3
- Rachel Barker and Amy Liu, the Brookings Institute
BLURRED LINES: IS THAT A VEHICLE OR
A MOBILE DEVICE?Manufacturers are no longer merely competing against one another: They are now competing in the data marketplace.
Apollo 11 had
145,000 LINES OF COMPUTER CODE.4
Modern cars have more than
100 MILLIONLINES OF
COMPUTER CODE.4
I originally joined the auto industry because it was the ultimate industrial product and the ultimate consumer product. Now the car has become the ultimate technology product.5
- Ford CEO Mark Fields
Apple fanboys and Samsung’s ‘Next Big Thing’ers would hoot with derisive laughter if The Wall Street Journal or Financial Times reported that GM or Ford planned to rewrite the rules of smartphone innovation. But when media coverage suggests Apple may redesign the automobile, even the most cynical car-lovers quiver with righteous curiosity. They should.6
- Michael Schrage, MIT Center for Digital Business
MANUFACTURING A BRAND EXPERIENCECustomers are no longer buying a widget; they're looking for experiences delivered through product-based services.
57%OF I.P. TRAFFIC WILL ORIGINATE WITH NON-PC DEVICES BY 2018. MACHINE-TO-MACHINE MODULES WILL HAVE IP TRAFFIC CAGR OF 84%.9
[Apple is] not in the business of selling phones. It’s in the business of enabling and creating services.7
- Horace Dediu, Asymco
Customer experience (CX) is increasingly being viewed by manufacturers as a necessary element of business-to-business (B2B) transactions, one that is enabled by the 3rd Platform, specifically social, mobile, cloud, and big data analytics.8
- IDC
ADAPT AND THRIVE
Those who are willing to adapt and proactively shape customer demand have the opportunity to set the future course — not only for their enterprise but for entire segments of the market.
SUCCESS WILL COME TO THOSE WHO CAPTURE THEIR CUSTOMERS' IMAGINATIONS AND BECOME INTEGRATED INTO THEIR DAILY LIVES.
They'll get there by focusing on manufacturing a distinct brand experience and building organizations that relentlessly pursue, project, and protect that experience.
- Booz Allen Hamilton
The changing nature of products is also disrupting value chains, forcing companies to rethink and retool nearly everything they do internally.10
- Michael E. Porter, James E. Heppelmann, Harvard Business Review
1 R “Ray” Wang, May 3, 2015, http://blog.softwareinsider.org/2014/02/18/research-summary-sneak-peaks-from-constellations-futurist-framework-and-2014-outlook-on-digital-disruption/2 http://www8.nationalacademies.org/onpinews/newsitem.aspx?RecordID=194833 http://www.brookings.edu/blogs/the-avenue/posts/2015/05/20-corporations-and-entrepreneurs-collaborate-barker-liu4 http://resources.infosecinstitute.com/information-security-vulnerabilities-automobiles/5 http://fortune.com/2015/04/24/mark-fields-ford-ceo/6 https://hbr.org/2015/02/what-happens-if-apple-starts-making-cars7 http://www.asymco.com/2013/09/11/s-is-for-service/8 https://www.idc.com/getdoc.jsp?containerId=prUS247474149 http://www.cisco.com/c/en/us/solutions/collateral/service-provider/visual-networking-index-vni/VNI_Hyperconnectivity_WP.html10 https://hbr.org/2014/11/how-smart-connected-products-are-transforming-competition
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