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Fragility, Anti-Fragility
and Innovation
Bill Wadewade-partners.com
We’ve Been Discovered !
Complete Surprise: The Black Swan
What is the opposite of “Fragile”?
What is the opposite of “Fragile”?
an·ti·frag·ile: something that benefits from stress, harm, chaos, events, disorder,
unforeseen consequences, uncertainty, time
Astronaut Atrophy
Tourist Trophy Hunt
Air Travel
Mithridates VI
Human systems are antifragile.
Humans are antifragile.
Removing stress doesn’t make us stronger.
Removing skin from the game.
Making everything bigger.
Stifling freedom of everything.
Risk Forecasting
Trains Will Haul Bulk Power Plant Fuel
Trains Will Haul Bulk Power Plant Fuel
OOOPS !
• OEM Component Integration
• OEM Vocational Standardization
• Design for Recycle- ability
• Supplier System Partnership
• Death of Diagnose and Repair… Severe Technician Shortage
Major Structural Trends (Threats?) In the Ag Equipment, Parts and
Service Markets
Anti-Fragile Strategies… John Deere to Titan to Ralph’s Farm Supply
• Size alone is not a strategy… nor is a footprint
• Fee follows function… discounts become discriminate
• Information is the ultimate pop code ‘A’• VIN tyranny splinters• War declared by European (and Domestic) OEMs• Tuángòu explodes• Net conquers gross… and CASH conquers all!
Innovation…All that distinguishes leaders from followers… S. Jobs
Offense or Defense…
What does this really mean to you?
Is Your ‘Model’ Sustainable… Machines, Markets, Distribution
• Facing the ‘Great Moderation’
• Define the ‘New Normal’
• Indefinite Warranty
• Permanent World Maps ?
• Guessing the Future…Economic Cycles– Market has called 9 of the last 5 downturns
Innovation
The only net creator of new wealth.
Innovation is all that foiled Malthus.
Global warming next ?
Innovation
The only net creator of new wealth.•Something newly tried.
•New combinations.
•Creating a portfolio of options to achieve substantial, profitable and sustainable growth.
•Other activity is caretaking, improvement at the margin or rearranging the deck chairs.
Fortification vs Exploration
• Tension between defending existing dominance and creating new growth paths
• Chance favors the prepared mind… or company
Innovation… How to?
• Be absolutely clear about the mission to everyone.
• Create just enough structure.
• Match people and horizons.
Innovation… How to?
• Think businesses… beyond product or technology.
• Innovate on behalf of your customers … not your existing position.
• Diverge early… converge late.
Things I’ve Noticed• Iterate and communicate
• Don’t try to predict… buy options
• Runway…. electric cars vs. newspapers
Business Innovation Radar• Creation of radical
new value for customers
• In the beginning, all you have is data and intuition
• Almost never just product
Create Insight, Avoid Reflection
• Industry mirrors ?
• Best Practices Kill!
• Which industry orthodoxy can be challenged?
• We only see things for which we are looking.
• Mission Focus: Target Definition
• Mission Clarity: Organization Understanding
Periphery Is Your Preferred Frontier
• It is where to look first, but not exclusively
• Avoid the Success Trap
• Chaos vs. Structure
• The better we are at ‘this’, the tougher it is to try ‘that’
• Define ‘Factors of Merit’… Speak multiple languages in multiple worlds.
Perspective is everything10 Ways to Slice It….
Offering-Creating new product or SERVICES
Significant Augmentation– Toyota Hybrids
– Apple Ipod
– Sony 4 generations and 150 variations of Walkman
– Merrill Lynch Cash Management Account
Platform- Exploiting commonality
Common components as building blocks– Airbus common cockpits
– GM OnStar
– Disney animation
– Microsoft Suites
Solution- Solve complete problems
Customized combinations– UPS complete 3PL
– DuPont selling painted bodies to Ford
– IBM bundling of hardware, service and financing
Customer- Serving unmet needs
Identify unarticulated latent needs and resegment markets
– Chrysler minivan
– Home Depot ‘almost pro’
– FedEx segmenting by time instead of volume
Customer – Redesign interface
Broaden touch points and life cycle interface– Saturn no haggle pricing
– Cabela’s store as entertainment
– Amazon returns handling
– Everything about ‘American Girl’
Value Capture- Changing how you get paid
Changing yield management or position in the value chain
– Google paid search
– GE time in air
– Progressive utility pricing
Organization and Process
Design for internal improvement and process streamlining
– Boeing 787
– 3M Slack Day
– Google 20% program
– Cisco partner centered network
Supply Chain Flow
Primarily increased communication within channels
– Walmart VMI
– Dell user-direct one-off manufacturing design
– Home Depot/GE appliance floor plan
Presence- How customers access you
Augmenting channel mix, including self service
– Enterprise in repair shops
– Netflix
– McDonald's and BOA
– Diebold remote teller
Networks-Exploit network intelligence
Leverage network connectivity– Otis elevator
– Electrolux auto replenished refrig
– Peapod edible billboards
– Microsoft Xbox Live channel
Brand Leverage
Co-Branding into new product classes– Virgin Mobile, Air, etc
– Cat Boots
– Intel Inside
– Yahoo as a lifestyle brand
– (not Champion filters!)
Drivers of Service / Dealer Affinity
• Accelerating Regulation (i.e.. OSHA)
• Extended Trade Cycles (new normal)– Vehicle Economy
– Refurb Economics
– Warranty Control
• Proprietary Information
• Labor Shortage
Fuels… It is all about the juice!Ethanol (17) Westport Engine
Biodiesel (19) Electrics / Hybrids
Hydrogen (21) ‘Green’ Issues…
CNG (23)
LNG (23)
Synthetic Diesel (26)
Methanol (27)
DME (29)
Innovation Boosters: Adaption and Aliens
2014…Labor Shortage and the Agent EconomyOutsourcing… and Aliens
Ferguson/Wolseley, Grainger, HD Supply, MRC Global Corp. (formerly McJunkin-RedMan), Airgas, Motion Industries, Fastenal Company, McMaster Carr, Applied Industrial Technologies, MSC
Industrial Direct, Wurth (North America), Kaman Industrial Technologies, BDI, Barnes Distribution Industrial Distribution Group,
SunSource, Lawson Products, BlackHawk Industrial Distribution
B-to-B from the B-to-C• Lowe’s has launched their
Lowe’s ProServices
• Ace Hardware has The Supply Place
• Staples has a strong B-to-B component that now includes medical supplies.
• Home Depot ‘On Set’
Distribution Trend - Service Overtakes
‘Box Pushers’
Services • Emergency Services • Energy Services • Grainger TripleGuard Repair• Inventory Management • Online Purchasing Solutions • Product Services • Products Beyond the Catalog • Safety Services
Technician Training
• Who do you expect to provide this and who should bear the cost?
• Delivery… Let’s discuss the different possibilities.
• Technician shortage… How concerned are you?
• What is your strategy for recruiting?
Newest Service: 3D Parts PrintingType Technologies Materials
Extrusion Fused deposition modeling (FDM)
Thermoplastics (e.g. ABS), HDPE, edible materials, Rubber RTV silicone, Porcelain, Metal clay (including Precious Metal)
WireElectron Beam Freeform Fabrication (EBF3)
Almost any metal alloy
Granular
Direct metal laser sintering (DMLS) Almost any metal alloy
Electron-beam melting (EBM) Titanium alloys
Selective laser melting (SLM)Titanium alloys, Cobalt Chrome alloys, Stainless Steel, Aluminum
Selective heat sintering (SHS) [18] Thermoplastic powder
Selective laser sintering (SLS) metal powders, ceramic powders
Powder bed and inkjet head Plaster-based 3D printing (PP) Plaster
LaminatedLaminated object manufacturing (LOM)
Paper, metal foil, plastic film
Light polymerizedStereolithography (SLA) photopolymer
Digital Light Processing (DLP) photopolymer
New Service Market Opportunities
• Telematics• Aerodynamics• Ergonomics• Exhaust / Fuel • Hybrid Systems• Marking / Optics• Accessory Adoption• Tools / Shop Equipment
Training…Training… Training
Innovation
Never Leave Serendipity to Chance !
Questions ? Comments !
Special thanks to Professor Robert WolcottNorthwestern University
Bill Wadewade-partners.com
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