Disruption's coming down the track, whatever you think

One of my American manufacturing clients is definitely old school. Their manufacturing plant hasn't changed much over the last 30 or 40 years. But this hasn't mattered much because their customers like their products and want to keep buying from a solid, dependable family firm they've come to trust.

Having a strong reputation like this in your marketplace is a good thing, of course. But it can also hold you back because it’s like a comfort blanket that makes you complacent, and when you're complacent you can be sure trouble is just around the corner.  You feel like everything's hunky dory ... until it isn't.

Now the CEO of this company was smart enough to know that as a business they could keep doing the same things for another two or three years without any real problem. But at some point after that, he was worried that if they didn't change their business model, they would suddenly reach a cliff edge they couldn't avoid going over. 

This gentleman's grandfather, who set up the business, and then his father after him, didn't have to worry about any of this because the speed of change was manageable. All they had to do was look up from what they were doing now and then to keep things on track. Now that's not enough. You have to be on your game the whole time. Always changing. Never finished. The moment you stop, you're done.

The grandson was smart enough to know this and to want to do something about it.

Of course, as a business leader, you have to take a view on how fast your sector's changing and by how much. And that's not always easy. What are you facing? Gradual evolution? Or paradigm shift?

Maybe you don't think that much is going to be happening all that soon in your industry. By default, many CEOs take the view that by and large, most claims for disruptive new tech are overhyped. They often are, so there's some sense in sitting on the fence until you get a clearer picture of which side of that fence you need to be on.

But at some point, you have to call it. If we take a look at the IIoT, while I'm 99% sure this is going to lead to a major disruption of manufacturing, your appetite for risk, the nature of your business, who you speak to, your experience and background, where your business sits in the market, and your own knowledge, may give you a perspective that I don't have. 

Talk to me in a year or two and you'll be able to make a whole stack of omelets from the egg on my face.

All the same, when you look around at how every sector is being turned on its head by technology, I'd say the sensible approach is to assume your industry will be heavily disrupted by a paradigm shift in the not too distant future.

Three years, for instance, is plenty of time for an upstart to enter your sector and rip it to shreds ... right now they could be well under everyone's radar.

I'd also say as a general observation that if you think your business won't be impacted to a significant degree by a major shift in your industry over the next three to five years, then you're being overly optimistic.

But even if you don't think there’s going to be a paradigm shift, what if you reacted as though you do? Wouldn't that involve taking steps that will put you ahead of the game? Perhaps you should take a lesson from Steve Jobs at Apple who was always looking to self-disrupt.

I know that if you're a risk-averse business leader who doesn't like change and would rather sit on your hands and see what happens, this is just some kind of 'thought experiment', and you’ll choose to hunker down rather than seize the opportunity. I get it. But I reckon you'll do so at your peril because if you aren’t prepared for the big changes that are coming to manufacturing, you're in real danger of being swept aside.

For me, the IIoT is one of the best ways to prepare for change. If, for example, you're not using it to servitize your products so that your customers can access them without having to pay a prohibitive upfront price, how are you going to compete against competitors that offer this? The answer's simple, you aren't.

But if you are up for making changes, you can't just dicker around. This isn't the time for piecemeal initiatives that take you forward a tiny bit. Yes, by all means, pilot new initiatives, but then make improvements fast and roll them out faster.

If your digital transformation doesn't deliver a major business transformation, you've got nothing more on your hands than an IT project.