In his keynote at this year’s Manufacturing Innovation Summit, Dr Florian Urmetzer explained that businesses have three choices: Disrupt, be Disrupted or Innovate.
From digitalisation to sustainability, new business models to low-cost entrants and commoditisation, manufacturers are facing disruption in many forms.
Within their business ecosystem, organisations are having to anticipate change, act early and innovate to turn threats into opportunities. Not many are managing to achieve that objective successfully.
During a day of interactive roundtable discussions, Dr Florian Urmetzer from the University of Cambridge’s Institute for Manufacturing (IfM) took to the stage to explore how manufacturers can better consider the threats and disruptions in their business ecosystem, and – importantly – what to do about them.
What is a business ecosystem? There is still some argument regarding a definitive description, but it’s largely agreed that a business ecosystem is a network of enterprises, firms and organisations which work together in order to offer propositions of greater value than any one party could create individually.
Who has the potential to disrupt us?
Traditional value chains comprising supplier’s and their suppliers, customers and end-users have become far more networked and complex. Parties to consider now include a myriad of influencers interacting with your suppliers, customers, end-users, competitors and partners.
According to Dr Florian, all of them are capable of disrupting your business.
How to reduce or understand the complexity
To help organisations to better understand their business ecosystem, Dr Florian used an airline as an example.
The first step is relatively straight-forward, defining who your end customers are. For an airline, that includes business passengers, leisure passengers/platforms and cargo handlers.
The next step is to identify all the players who impact or influence your ecosystem (end customer, supplier, partner, partner, competitor, influencer). For the airline example, the picture becomes a lot more complex:
What’s important, according to Dr Florian, is to prioritise and focus on the connections which directly add value to your business or you offer value to, i.e. your strategic partners, suppliers, customers.
He also suggested clustering members together, i.e. research partners, producers, buyers/users, based on attributes such as training, equipment, personnel, information, concepts and doctrine, organisation, infrastructure and logistics.
This makes a seemingly complex business ecosystem a lot easier to manage and define the monetary transfers between different members or clusters of:
How do phrase new value propositions?
Value can be either direct (monetary exchanges) or indirect through:
- Company – financial, proximity, trust
- Managers – coordination experience, technological knowledge, KPIs
- Strategic – intent of the organisation or stakeholders
- Risk – aversion of market and other risks
Value can also be captured, as well as created – something that is often forgotten, Dr Florian noted.
Key actions for your organisation:
- Understand the complexity of your business environment to identify your customers, influencers and disruptors
- Map your business ecosystem and understand in detail what the value exchange is between you and your customers, influencers and disruptors
- Understand that you WILL be disrupted and define appropriate counter measures
- Implement them!
All images courtesy of University of Cambridge’s Institute for Manufacturing (IfM)