MFG 2.0

From More Of Less To Less Of More

I heard an interesting insight on Tom Parish's podcast from Capgemini CTO Andy Mulholland on how the business landscape is changing, and how enabling technology is changing in response.

According to Mulholland, IT as we know it began in the 1990s, when a combination of a stable market and a desire for maximum efficiency led large firms to make large capital expenditures in supporting enterprise technology systems that had long payback periods, but that brought cost down, introduced efficiency, cleaned and organized data into a single version of the truth. This allowed manufacturers to do "more of less" -- that is, laser-focusing on those products that made the firm most of its money, while introducing efficiency of supporting technology scale as a competitive advantage.

Now, of course, the landscape is much different. Markets are unstable enough that large, multi-year investments in supporting technology would be tough to justify even if the supporting enterprise technology landscape weren't already saturated (who among the Fortune 500 hasn't installed SAP or Oracle?) The mantra these days, says Mulholland, is to do "less of more" -- more customization, more customer choice, more collaboration, more speed and agility to compete in a market with more global players. The example he gives is the BMW Mini:

The BMW Mini has literally almost endless degrees of customisation, yet is highly profitable, allegedly more so the conventional BMW 3 Series with its controlled series of options. This is in part because the customers will pay more to get exactly what they want, and in part because the suppliers are working together in a new way across business networks' to be able to support such flexibility.

While I'd argue that this is not an immutable rule -- for example, many B2B manufacturers are mostly exempt from the "prosumer revolution" of mass-customization (see: Pimp Your Product) -- but the insight is still interesting nonetheless. Are you doing more of less, or less of more?

TAGS: Innovation
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