How to survive the next (industrial) revolution
Welcome to Planet Lean during a new age of digitalization. Here’s some help for navigating the opportunities and uncertainties arising from this great wave of technological change.
The foundation of business strategy has long been the classic value chain. But the current rise of digital technology is enabling individuals to connect outside that chain and to deliver more efficient, effective products and services; this change will reduce the importance of economies of scale and conventional divisions of labor, while at the same time inter-company relationships will become more fluid and the cost of goods and services more volatile. Here are a few tools and techniques to ensure your company stands out in the new age of digitization.
What True Lean Enterprises Can Achieve
Rethink, design, innovate.
The platform is the value chain of the new economy.
1. Rethink your business model
Rethink your business model and build your strategy around platforms. There’s disruption everywhere; consider all these emerging fintechs for example. Time after time we see that an industry which sticks to old business models loses ground to those players which introduce new products and services at much lower prices, and which rethink their business models to take advantage of new platforms and their new opportunities. Indeed in the new digital economy, the platform represents what the value chain was in the old industrial system. The most successful of these new platforms matches customers with vendors, maintains an appealing and effective customer experience, and collects data and rents from users of the system. So users of a platform become, in effect, an ecosystem: a group of companies exchanging goods and services, their fates bound together.
2. Design for your customers
It doesn’t matter if you’re a small, agile fintech or a huge, traditional cash center; small or big, you need to design for your customers. The fact that the next industrial revolution is being driven by large-scale digital technology can make it easy to ignore the way human relationships might be affected. But the new infrastructure is a web of connections between people. Producers and consumers, in particular, are much more closely connected than they used to be, as smartphones, social media, sensors and data analytics empower producers to be thoroughly attuned to the needs, habits, and long-term interests of the people who buy their products and services. As a designer of a new platform – or a business leader participating in one – you have an unprecedented opportunity to build a customer-centric enterprise which connects with what people genuinely want and need from your company.
3. Innovate rapidly
Innovate rapidly and innovate openly. Many companies pursue disruptive innovation, but a steady stream of incremental innovations may be more profitable. A revolutionary approach may play into the hands of cash center operators under relentless cost and efficiency pressures, forced to re-engineer their processes, structures, and system configurations. However, smaller innovations will be easier to generate and, more important, easier to test in the market. With the tools of the (industrial) internet, you can prototype new products, profitably manufacture them in small batches, rapidly distribute them, and see how your customers respond before rolling them out worldwide.
Collect data to gain insights which keep improving as you advance
4. Learn more from your data
Learn more from your data. The exponential increase in real-time data – gathered from customers, equipment, and work processes – is giving companies new insights. Gathering and analyzing data are important, but they are only the first steps. It is critical to use the results of your analysis to identify significant patterns, and to gain insights that help you make the right choices and keep improving on the fly.
Look closely at the reasons people come to your company
5. Focus on purpose
Be it unloading vehicles, logging and preparing for processing, strapping and bundling banknotes or verifying and sorting banknotes: focus on purpose, not products, and put humanity before machines. To differentiate your company, you need to develop a clear purpose – a value proposition which is more effective than anyone else’s, and which applies to everything you do. This means looking in detail at the reasons people come to your company, the outcomes they expect, and the ways you can deliver.