Since the introduction of Henry Ford’s moving assembly line in 1913 time has become an important dynamic for every business, large and small. Fast forward nearly a hundred years and most manufacturers, including coatings operations, see or feel the effects of time being compressed. It has become a force of change that your business must reckon with, if it hasn’t already. What was novelty in 1913 could become a business imperative for you by 2013. In the most recent Material Insights post titled Four forces of change…why it matters so damn much, April 11, 2011, I identified four major phenomena of change that have been occurring under our noses. It’s stuff that was previously too difficult to put your finger on exactly—changes that have been coming down upon us for years. Here, I offer some insight into the first one of those forces, “Increasing compression of time and space.” We’ll explore the other 3 change forces in upcoming posts.
The world has gotten smaller
Ever since Federal Express appeared on TV in the early eighties with their audacious “absolutely, positively, overnight delivery” brand promise, the challenge of distance—or “space” if you will—has been compressing faster and faster. If you need a part or a chemical tomorrow morning—from almost anywhere in the world—you can have it. Or, with a computer and the help of UPS you could start an international business and operate it out of your spare bedroom.
Of course our ability to communicate and/or exchange documents instantly around the world has dramatically compressed both time and space. Within an hour of Japan’s recent disaster, more than 1,200 tweets a minute were coming from Tokyo. By the end the day a total of 246,075 Twitter messages using the term “earthquake” had been posted when most mobile phone networks and telephone landlines had collapsed following the 8.9 scale earthquake. Just this week, Microsoft paid $8.5 billion for Skype—the most bacon the company has paid to buy another company in its 36-year history. The amount is three times more than Skype’s value the last time it was sold just 18 months ago. That’s some serious chip. The big guns seem to be visualizing a very different kind of future. My point in all this is this: compression of time and distance means there are new markets and new ways to service these new markets. The rest is up to you.
“… then you better start swimmin’
Or you’ll sink like a stone
For the times they are a-changin’”
—Bob Dylan
Shouldn’t you be at least experimenting?
I’m inclined to believe that the forces of compression probably hurt the big guys the most. Size and the culture that usually comes with it create its own set of problems that you may never have to face.
Look back a few years to the book The World is Flat, by Thomas Friedman. He may be a little doomsday in his message but he does side with small business suggesting that the gradual changes we’re talking about will only help in the long run. He speaks of ten specific factors that are causing the world to compress and become “flat.” But on the flip side, these same practices allow smaller businesses to compete on a more equal playing field creating “a new small world economy” as author Peter Sheahan describes it (see credits). So I picked five of these “business experiments”—as I’d like to call them—for you to ponder. They were, in my estimation, the most relevant of the bunch to small industrial businesses. I then characterized each one with a descriptive noun to help differentiate the intent. My challenge to you would be to pick one that you would be willing to commit some time to better understand. Later, perhaps you could experiment a bit and explore ways to adopt it into your own 21st century business model.
1. The Connector: Work flow software [and I add] cloud computing
Workflow software allows more people to collaborate within and between businesses and continents at a faster pace than ever before. “Clouds” is distributed computing. An application that uses the resources from multiple services and from multiple locations. This is important because clouds have the potential to create a cascade of more disruptions transforming many industries—some could be your customers. Shared software and applications like clouds easily compress time and space, how can you utilize these concepts to ride the waves of change in your business?
2. The Enabler: Outsourcing
Outsourcing makes things easier, and the best companies use it as a method of growth, without shrinking their workforce. They accomplish certain tasks before they are ready to hire a full time person or enlist someone very specialized who will take less time doing it well. Outsourcing allows small companies to provide more and better services, more efficiently because it compresses time and space, how can you utilize this concept in your business?
3. The Deflector: Offshoring
When we move, build, or employ a plant in another country, gaming for its cheaper labor and resources, we deflect trade barriers and taxes. This principle saves cost by compressing time and space. How can you utilize this concept to ride the waves of change in your business?
4. The Mover: Supply-Chaining
Collaborating horizontally among suppliers (and customers) to create value is a supply chain. A model of efficient manufacturing and marketing that moves products from supplier to customer. These systems, which often include elaborate distribution channels, are designed with the intent to cut cost, compress time and compress space, how can you utilize this concept in your business?
5. The Creator: Insourcing
Insourcing allows smaller companies to develop complex supply chains by hiring other companies to do it for them. Thus creating more avenues to buy materials and sell and produce or even service their products. Toshiba was once criticized for taking too long to repair their broken computers so the company collaborated with UPS to make the process go faster. Customers were instructed to ship all warranty repairs to Toshiba via UPS. But what actually happens is that UPS repairs the laptop in a Louisville UPS workshop and then returns it to the customer on behalf of Toshiba. Talk about a huge compression of time and space! How can you utilize this concept to ride the waves of change in your business?
The accelerant that’s [still] changing everything The Internet was not just a wave of change that rolled in, it was a tsunami of change and nothing has looked the same since. The Internet is a major facilitator in the global economy and perhaps the most accessible advance in technology ever. It has shortened distance and transformed the way the world works with ever increasing ease and speed. It has accelerated change in behavior and expectation. And it has facilitated the increase in demand for faster, better, more accessible products and services.
INSIGHT:
As a third-tier supplier, you feel insulated from the dynamics of the marketplace since you rarely deal directly with end users. But the mistake would be to rest in that position. We must continue to look out for ourselves and keep moving forward in spite of ambiguity. Learn new skills and practice new behaviors. Be prepared to unlearn what we think we know and shift away from anything that no longer supports our ability to reach the vision. As Sheahan put’s it, “if the twentieth century was about doing more with less, then the early twenty-first century will be about doing more with less, faster!”
My inspiration is yours. The central idea, “The Four Forces of Change,” is derived from a book titled Flip— How to Turn Everything You Know on Its Head—and Succeed Beyond Your Wildest Imaginings by Peter Sheahan. Other sources include The World is Flat by Thomas L. Friedman.
As always, I welcome your comments, questions or more discussion.