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Manufacturing Transformation: From Product to Experience

Posted By Matthew Doan, June 02, 2015 at 11:55 AM, in Category: The Innovation Enterprise

Today’s pace and scale of change across the high-tech manufacturing is a once-in-a-century transformation. The resulting convergence and disruption, affecting every corner of the manufacturing sector, is profoundly and permanently altering the industrial landscape. 

Evolution is not new to business leaders, of course. History shows that those who remain loyal to their industry’s status quo are left behind. But this time it’s different. The boundaries that once separated industries are not simply blurring; they are gone. 

Industries once neatly segmented as automotive, industrial manufacturing, and consumer electronics are converging. No longer can any one of these industries function in insolation. They and their products are inextricably interdependent, changing both customer expectations and the competitive landscape.   

Twenty years ago, phones looked nothing like car dashboards. Now, their interfaces and functionalities are nearly identical. Ten years ago, computers didn't have Wi-Fi. Today, even thermostats are connected. Wearable technology was previously limited to a wrist watch and a pedometer, but cutting-edge athletic wear now has embedded sensors to track movement and health. Factories once required periodic floor inspections. Now plant managers are replacing clipboards with tablets and smartphones to view real-time production data from anywhere. 

High-tech manufacturing itself has evolved into an interconnected super-industry. And what the industry provides to customers, both individual consumers and businesses, has radically changed.  

Although manufacturing is still about building products, the interaction with users through those products is different and requires new ways of thinking about business. Customers are no longer buying a widget; they're looking for “experiences” delivered through product-based services. Products that were once standalone and mechanical are now enhanced with connectivity and embedded software, which redefines both their function and their potential. Today’s products don't simply respond to inputs. They anticipate customer needs.

This radical shift promises to unlock the full potential of products. High-tech manufacturing products may perform the same function as their traditional counterparts, but they now also provide a conduit for new revenue-generating services that completely change the competitive landscape.

Manufacturers are no longer merely competing against one another: They are now competing in the data marketplace. Finding opportunities to benefit from data is the easy part. Companies like Google, Amazon, and AT&T dream up applications to benefit from data, selling to advertisers, selling to the energy sector, selling new paid services and subscriptions. Gaining access to this data, however, requires a trusted relationship with customers who are willing to give up their data in exchange for a customized experience, discounted product, or other benefit.

To compete in this new landscape, manufacturers must embrace that their business is no longer about products; it’s about people. And success in this converging world requires a purposeful, deliberate, even obsessive focus on the customer experience.

High-tech manufacturing has to be about much more than designing, sourcing, and selling products. It must start with a fundamental definition of the brand and the value it brings to customers. That’s why Ford's CEO has begun to refer to his organization as a mobility company, not an auto manufacturer. Setting this vision, internally and externally, sends a message to customers about the relationship manufacturers intend to have with them—a relationship centered on authenticity and trust.

Not every organization will thrive as high-tech manufacturing evolves. Success will come to those who capture their customers' imaginations and become integrated into their daily lives. 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. 

Written by Matthew Doan

Twitter | LinkedIn Management Consultant with Booz Allen Hamilton. I partner with executives across the high-tech manufacturing space to help them manage risk and capture emerging business opportunities using strategy, cyber security, and analytics solutions.

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