It is interesting to study the cycle of dominant competitive strategies followed by corporates over the decades globally. Each era has had its own topic of focus. As organizations mastered the dominant theme, the focus shifted to other areas once considered less important or difficult to achieve, for competitive advantages and overall improvement of the ecosystem. The following are such themes in a chronological order in the past century. Using them to predict the future can be interesting as explained later.
- Product based – Henry Ford pioneered mass production with his famous assembly line for the Model T automobile in the early decades of this century in the USA. Since the car was a radically new product from horse driven carts and hand crafted premium products, the attention was on maximizing manufacturing capacity to tap the demand. Most countries have been through this phase where the customers have been ready to wait for weeks and/or in long queues to get a new product, sometimes sub-standard, primarily due to manufacturing constraints. This was the era where the dominant competitive strategy was primarily based on the product. That is not to say that quality or cost control were not important. They were secondary priorities.
“You can have it in any color you want, as long as it is black”, Henry Ford on Model T
- The shift to Quality – Post World War II, when Japan was rebuilding, corporate houses such as Toyota pioneered holistic quality processes covering not just the product but manufacturing processes and systems too. Employees on the shop floor were empowered to stop the assembly line if a defective product was noticed. Proven innovative and visual concepts from poke-yoke for fool proofing to andon, kanban and kaizen were adopted beyond the shores of Japan for proactive quality assurance.
“As much as 95% of quality related problems in the factory can be solved with seven fundamental quantitative tools”, Kaoru Ishikawa
- Customer delight/engagement – Once quality of products and services became a basic expectation, the human element came in shifting the focus to end consumers. What is the point in designing and making good products if the customers do not appreciate them? Pioneers like Apple started coming up with products/features that customers would not have thought of if asked in an opinion poll. The experience of engaging with clients became the measure of corporate quality. Scores such as Net Promoter Score (NPS) in the B2B scenario came up to understand how delighted customers were.
“Get closer than ever to your customers. So close that you tell them what they need well before they realize it themselves.” – Steve Jobs
In some organizations, employees also got included within the ‘customer’ to keep them motivated.
“Clients do not come first. Employees come first. If you take care of youremployees, they will take care of the clients”, Richard Branson
- Cost advantages – China’s economic reforms starting in the 1980s made it the manufacturing hub of the world with cost advantages. Economies of scale with cheap labor made China the shop floor of the world for products from steel to textiles, toys and consumer goods. Large product houses from shoes to automobiles and aviation started evaluating and shifting their manufacturing base to China. With automation becoming affordable combined with wage inflation, the shift is again returning in developed economies to advanced manufacturing back to the home countries.
- The Services era with IT – Towards the end of the 20th century, computers were becoming an integral part of the day-to-day operation of enterprises, from standalone spread sheets to multi-user applications. The Y2K syndrome was an unforeseen show stopper that gave a start to the IT industry that was leveraged by India, followed by outsourcing of business processes, analytics and associated areas as an industry. Once the Y2K issue was overcome, the focus of large firms shifted to enterprise level IT applications from the ERPs to CRMs, PLMs and more giving the services economy a big boost and focus from senior management from both demand and supply perspectives. These applications backed by services for creation, support and management became a critical part of businesses.
- Technology – Technology today is beyond enterprise IT applications and is embedded in the entire ecosystem – from humans to products, processes, equipment and data. It is ubiquitous and offers a level play field. Talent from any corner of the world is getting tapped. No single company, region or country plays a dominant role. Historically developed countries and organizations with deep pockets will be early adopters of emerging technologies. But that does not prevent new entrants to catch up.
What can happen in future? Crystal ball gazing is always fraught with risk and uncertainty. The following are some trends that can happen based on what we see today. Automation, autonomous decision making, creating insights out of data using analytics etc are already happening. What more can happen in future?
- A repeat of the past – The phases we saw before can repeat again. Customers will be willing to buy a product early in the game, even if it is not defect free. But the defect may not be physical or visually seen. It can be a software bug or a security vulnerability! Given the complexity of the products with embedded software, it may not be feasible to test all possible scenarios of usage before releasing it. Tesla’s aggressive production schedule for Model 3 brings the focus back to high capacity utilization.
- Artificial Intelligence at the edge – AI/machine learning for autonomous decision making without human intervention is becoming affordable with each passing day. Heavy computing will not be required for AI. Context specific learning and decision making will happen at the edge, locally in near-real time with reaching out to a central remote controller.
- Agriculture adopting these practices – Humans need food to survive. Any amount of technology cannot substitute this. Among manufacturing, services and agriculture, the 3 legs of the economic stool, agriculture has been neglected most in the adoption of technology and this trend will reverse.
- Inclusive growth for the masses – Technology taken until the last mile results in financial inclusion bridging the gap between the economically advanced and weaker sections at the bottom of the pyramid. Mobility helps in reducing information asymmetry. Payment banks and Unified Payment Interface introduced in India encourage saving habits and offer cashless peer-to-peer transactions.
- No product ownership – Wide adoption of ‘connected products’ with location and product performance tracking all the time will lead to an as-a-service economy. Asset intensive products from consumer durables to automobiles and farm equipment will not be owned by end users but used on a contractual basis. The self-driving cab pilot launched in Singapore last week is expected to eventually reduce vehicle traffic on the road due to consolidation of transportation needs of citizens.
Note: All opinions and points of view expressed above are my own and do not represent that of any other organization or individual.
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