What’s Reshaping Entire Industries?

There seem to be multiple forces at work, ones that are reshaping how organizations are adjusting to a rapidly changing world, to operate within.

So much focus has been on the disruptive forces at work, the ones that change the present market conditions and rapidly alter the way organizations are “seeing the world” and responding.

The forces also include the pace and competitive nature as organizations globalizing and getting increasingly vulnerable to ‘attack’ due to their size and reaction constraints, locked into their established positions. The bigger the organization, the tougher to be nimble, adaptive and responsive.

There are many well-established organizations suffering the ‘death of a thousand cuts (read start-ups) all intent on taking business away, offering up more ‘viable and attractive’ propositions that meet specific needs of a customer base, one that is increasingly fed up with the ‘one size fit all’ approach. The attraction of new low-cost, good enough products, that do the job that they simply need doing without all the ‘added on’ is stripping away parts of the premium offer built into the past business model of large global organizations.

Organizations are seemingly caught between sustaining their existing business models and approaches to market and those waking up increasingly to finding a different, more radical one as they sense real threat. Technology is driving the need to change. The pressure of ‘connectedness’ and the whole ‘network effect’ are forcing rapid rethinks of how to combat these different pressures.

As organizations grapple with everything being increasingly open in source software, in creative commons, in collaborations they need to find ways to combat the threats. The ones that turn even further into becoming highly defensive, closed in, applying the fortress mentality seem to be doomed. It is working through how to open up, how to collaborate more openly, how to share and how to engage.

The emergence of a new organizational design: highly connected and collaborative

Today the emergence of platforms and ecosystem thinking is offering a significant way to offset many of the forces of current destruction. So taking a thirty thousand view of the changes causing fundamental change was nicely summarized in a report, a specific report for the Oil & Gas Industry, written by the Kellogg Innovation Network (KIN) and Clareo called “The Oil & Gas Industry’s New Normal: Rethinking Innovation Priorities in the Age of Low Prices

In the report, they were suggesting five issues have emerged across the industry and in thinking about these I felt these can apply to all industries in some shape or form. Let me share these here as these do underscore how whole industries are being reshaped by these forces at work. They apply to all:

  1. Market forces are fundamentally reshaping the industry

As discussed in my opening views above, there are multiple forces at work here. Multi-dimensional and multi-sided and this is where platforms can come very much into play to counter these forces, to combine, scale and innovate through a collaborative force; built on an ecosystem of partners, many cross-industry or being enabled to connect more directly with customers, who share in wanting value.

2. The primary operating system of the industry ecosystem is under threat.

The whole focus on applying different operating systems, such as dual innovation (exploit and explore) to counter the need to extend the core and search for the future is one, thez need to be in parallel. Another is the culture of mixing in the intrapreneur and radically different startup ethos (think Silicon Valley) where more capital is being placed into venturing, as well as learning to work alongside promising start-ups is gaining ground. Equally the management of intelligence drawm from knowledge and data, is forcing organizations to increasingly look outside their own walls. To become part of different ecosystems is partlz shaping this need to change, to evolve your Ecosystem. All industries are required to be making change, forcing existing systems to radically alter their operating and business model thinking and challenges the whole value proposition that can be offered in a connected innovation ecosystem.

3. Players must speed up the “idea to adoption” process

The emphasis of speeding up innovation is becoming critical. The ability to sense and respond to ‘breaking’ market opportunities requires a de-layering of the established innovation process. Lean management principles, alongside agile and adaptive techniques are all becoming part of the organization need to redesign the innovation process. The ability to learn a common language (of innovation), to work on collaborative projects that build new value. to speed up, scale and scope opportunities differently, requires new skills and competencies. Cracking complexity requires a broader network of expertise. How do you absorb, translate and bring knowledge inside to speed up understanding and design solutions that offer increased value to customers often complex but varying needs?

4. Companies are simplifying, moving away from the traditional high cost, complex system

Industries have created many barriers to entry but some of these have become their own barriers to growth. The structuring of multiple ‘stand alone’ manufacturing plants, built on past geographical considerations can be redesigned to reduce complexity. Car manufacturers have built ranges of cars, brands etc on common platforms so the supply chain can be simplified and costs reduced. The communicating and many infrastructure costs are continuing to fall by re-locating, outsourcing, shedding non-core activities to others, automating the process are all activities underway. There is a constant drive to simplify, standardise and streamline within organizations. The ability to partner within ecosystems, to utilize platforms structured to allow an easier flow (tracking, communicating, data exchanges, cloud computing) are getting the organization increasingly moving and investing outside of their own building to plug into the networks forming all around them that deliver better propositions than ‘going it alone’.

5. Maximizing asset productivity is critical

Irrespective, the present organization design is still governed in its build to extract productivity, efficiency and effectiveness out of the existing assets. Much as we wish to see a different model that is more inclusive of all the stakeholders, it still is highly geared towards shareholder return. These might be different in ‘returns’ and increasingly we are seeing value attribution more on scale and dynamism (Facebook, Amazon) than just financial return in dividend and bottom-line profit most traditional industries are locked into this financial orientation. This will continue to alter as data, intelligence, participation in ecosystems of value and platforms to facilitate growth and learning and asset realization shifts into more intangible, away from the older tangible bricks and mortar.  Organizations will be designing more for the fluid, adaptive and agile needs to be responsive to the constant and rapid changing needs. It is placing more of your assets into flows and less into stocks.

A new emerging form of organizational design

These were the five factors identified by KLN / Clareo that I think we all can see are emerging, these are universal in challenging the existing organizational structures and operating models.  The very nature of the organization is changing, this is becoming deeply disruptive to the inner workings of the firm itself and it will require platforms and ecosystems as part of the future management, that will allow for this internal change to form into new states of collaborative organizational design.

We are seeing platforms changing the dependencies previously sought by the one organization into ones that create, manage and seek out transactional value, dependent and reliant on many, at a real scale unimaginable in the one ‘stand-alone’ organization. It is transforming into a connection of enterprises that continue to build around a vastness of scale that aligns both to partners and customers alike, to engage and continue to adapt to the new competitive landscapes that are emerging.

The old linear way of conducting business of each to their own, is being shredded. The future form is based on value creation networks. The thinking of “just me” has become replaced with”the collective power of us”. Transaction facilitation becomes incredibly valuable and the positioning of orchestrators within the platform and ecosystem design is the most valuable position. We will need to re-equip ourselves to move ideas into market in different ways, those ideas to be of lasting value, with the need to understand and build on complexity. The skill is to break this down in the new design, for the parts to give the value each participant wants, from extracting their value from specific platform approaches and within an ecosystem that is broad and deep, highly collaborative and open. That is a very different world than the ones most organizations recently have been operating within.

In summary

The ability to capture value quickly, offers a very different way to globalize, through technology becoming central, based on connected collaboration and scale. This is both for the small organizations of today, looking to be the new emerging giants and the incumbents looking to leverage on what they have, with what they can potentially scale and extend. Value will be in the intelligence found and translated into new market opportunity. It is the ability to form networks and relationships, by working on platforms and within multiple ecosystems we will see the emergence of the new winners of business.

There are so many forces at work in fundamentally reshaping our industries today, breaking down ‘imposed’ borders and searching for more fluid ones that adapt and shape to the opportunity seen, becoming a highly adaptive ecosystem in design, reliant on platforms to deliver in scale, complexity and required experience to facilitate the job needed to be completed.

 

 

 

 

 

 

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3 thoughts on “What’s Reshaping Entire Industries?

  1. Pingback: Industry is lagging but catching up in its choices of platform offerings | Ecosystems4innovators

  2. Pingback: Creating the Industrial Ecosystem | Paul4innovating's Innovation Views

  3. Pingback: The Emerging World of Connected Industrial Ecosystems | Ecosystems 4 innovators

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