For years, industrialized nations cranked out products, mined raw materials and delivered services to an eager populous. The math was simple; buy equipment, hire people, fire up the assembly line, distribute, sell and collect. Barriers to entry were high; switching costs prohibitive.
As the “global economy” came online, entrepreneurs leveraged raw material, land and labor costs to dis-intermediate existing, FDH (fat, dumb & happy) industries. Many of us remember steel, once a bastion of a great America. And cars. I recall those cute little Toyotas, Hondas and Datsuns that our parents bought to be “station cars” for their commute into the big city. The family car was the venerable station wagon, in my case, always a Pontiac.
As industries are dis-intermediated through traditional cost levers, companies have to get creative. There was a resurgence of steel manufacturing in the US over the past 20 years with “mini-mills” that could produce custom product faster than the overseas mega-mills. What were they dis-intermediating if labor and raw material costs were not lower? They were dis-intermediating customer satisfaction. The mega-mills had a long lead time given their size and the logistics of moving steel around the world took time and was expensive. Consumers of specialty steel had requirements changing more frequently than the mega-mills could accommodate, in quantities that were un-economical for them. In short, they were not agile.
Data plays a key role in agility; if you better understand the requirements of your users, then you can better serve the end customer. This is a lesson for all industries. Some industries, like Pharma, are becoming more “agile” by outsourcing many of their functions. This allows them to shift strategies without all the heavy lifting of shifting staff, plants and equipment. It incents the providers to be more agile and more creative in serving the Pharmas. In essence, they’ve created a keiretsu, a set of companies with interlocking business relationships and shareholdings. Those fans of economic history will know that the keiretsu replaced the zaibatsu, the traditional monopoly in Japan.
So how do you become an agile enterprise? I’ve reached out to some friends to help us understand how they are doing it; on April 10th, join me for the latest in our series of CIO Confidential webinars, where I’ll discuss with Brian Stowell, the CEO of CrownPoint cabinetry and Mark Bieler, the CIO of Daymon Worldwide how they are using agile techniques in two very different industries to achieve competitive advantage.