Coffee shops seem to be the harbinger of our growth patterns, they are popping up everywhere, staffed by baristas (has that become a profession?) with cutting edge hairstyles and tattoos. They all add to the GDP numbers in some tiny way, but are they all we need?
When you look at economic history, sustainable growth always comes from manufacturing, not services. Ok, some comes from agriculture, as we all need to eat, and I guess someone has to grow, transport and roast the coffee, but it pales into insignificance beside the society changing impacts of manufacturing.
When growth happens, it is as a result of manufacturing, and the changes that manufacturing drive.
Look at the culture changing manufacturing innovations of the past: The printing press, steam engine, and the first wave of automation in the 70’s.
In the past, we have always looked for productivity by building scale. In a manufacturing operation, the more you make of any one item, the longer the runs, the lower the marginal costs.
However, we are now approaching the point where we can create the next big change, shape the major technologies emerging.
Manufacturing robots that can be programmed to do the tasks that are not just the repetitive tasks they currently do, but the robots will start to learn, it is happening now
The next step is not just better smart products, but customised specialist products that combine the abilities of robots and additive manufacturing to immediately create the products that you need.
The outcomes are that factories will move back closer to markets, they will be smaller more flexible and reduce the time frames of the chain, the products will be much cleaner and better for the environment, and will create growth in areas hard to imagine as I sit here in the middle of 2017
This does not happen by rote, we need to teach the new stuff at the universities, and importantly we need to teach these kids how to think critically and analytically so they have the intellectual tools to adapt, and we need to engage with the changes to ensure they are accommodated within our economies
The new manufacturing revolution will drive manufacturing and consumption back to the smaller regions. China will become as expensive as Australia in 10 years, and the trade patterns will follow and I suspect will accelerate regionally with lower barriers and shorter transit times, rather than being international
We are reaching the point where increasingly challenging manual tasks can be taken by robots. This delivers a potentially huge productivity increase, but it also delivers one of the key questions of the 21st century: what happens to those displaced? Particularly skilled workers in their middle and later lives when retraining might sound nice, but has proven to be a mirage despite the billions thrown at it.
However, there is a confluence of hardware and software happening at Moore’s law speed. The take-off will vary by sector and by economy, logically it will occur first in high cost developed nations and filter down
This will lead to a productivity surge, further reducing the disparity of costs between economies, leading to a change in the ‘offshoring’ that has occurred. It will no longer be better to outsource to China, outsource it to the bloke down the road, where when necessary you can get our hands around his throat, and/or collaborate in a meaningful way that is very hard across borders, languages and cultures.
So how do you prepare for this?
Understand and be engaged with the developments occurring in your and adjacent domains globally. This is a big call, but putting aside some time for the reading and understanding of the relevant material by authorities and the those on the leading edge can make it a highly productive expenditure of that most valuable resource.
Normally I dislike the term benchmarking, as it leads to copying processes and programs that worked for others, but by the time you have implemented, usually less than 100% effectively, the trend setters have moved on so you are always playing catch up. However, in the case of keeping current, recognising the things the leaders are doing is pretty important, and modelling the best bits that suit you can be very worthwhile.
Prepare your stakeholders, particularly the employees for the changes to come. There is nothing so unsettling as uncertainty itself so my advice is to communicate extensively, encourage feedback and comment as well as input to the conversations.
Prepare the organisation for the changes that will evolve in the business models and supporting areas such as capital and human capability development.
As a final note, those that will survive do not have the luxury of time. The average life of enterprises is shortening annually, it is really a commercial Darwinian process, and incumbents who are not willing or able to adapt quickly will go the way of ‘Lonesome George,’ the last of the Pinta island sub species of Galapagos turtles that dies almost on camera with David Attenborough.