Relearning what it means to be globally competitive

14 May 2019

By Dr Dieter Adam, Chief Executive of The Manufacturers' Network.

The Boston Consulting Group (BCG) recently published interesting paper on redefining competition. Many of us have already learned, painfully at times, that competition is not only about sales and market share. Increasingly, I hear that “we could sell more if we could make more, and we could make more if we had the (right) people for it”. In other words, competition for talent has become just as important as competition for market share. And, like the competition for market share, which is global for many New Zealand manufacturers who export much of what they make, competition for talent is global, because the skills shortages we experience are the same in most manufacturing economies. BCG are now taking us a couple of steps further in our thinking about competitive strengths we need to maintain and expand if we want to remain globally competitive. The common thread behind all of these is that we live and operate in a world in which the rate of change has gone up and our ability to predict future states of the economic, social, cultural and even physical dimensions of that world has gone down – think trade wars, income inequality, digital natives and climate change as obvious examples.

Five dimensions of Competition:

Source: BCG Henderson Institute (The new logic of competition; March 2019)

How does this concept apply to New Zealand manufacturers? If we start with Rate of Learning, we are all familiar with the idea that as individuals we need to keep learning (faster) to keep up with the play, even though we don’t always create the space required to do so – “we’re just too busy right at the moment!”. But how well is our company equipped to learn, and what does that mean? Companies learn through accumulating knowledge about their processes, enabling them to improve processes and structures, both physical and organisational. But in a rapidly changing world processes, structures and even business models need to change more often, and the ability to ‘unlearn’ is becoming just as important. Tacit inertia (“we’ve always done it that way”) is a basic human condition, often amplified on an organisational scale. Continuous improvement programmes are designed to overcome that inertia and have been around for a long time but are still missing in action far too often, and they need to pick up the pace now.

Connected world – we all understand the importance of being closely connected to our customers, our workforce, and our suppliers. Talking about business ecosystems has become very fashionable, but what does it actually mean? Well, apart from the fact that society, granting us a licence to operate (or not) through government as a regulator, is gaining greater influence, the network of relationships manufacturers need to consider and manage is just becoming increasingly complicated. The ‘us against the rest of the world’ mindset is often no longer helpful. Could your competitor become an ally in opening up new market opportunities, for example, does your relationship with your customers need to change as you become a provider of services as well as products, and (how) could you accommodate workers who wish to become independent contractors?

Blending of physical and digital worlds – not a new trend for manufacturers, who have seen digital technologies penetrate factory floors and support processes for a long time. But Industry 4.0 technologies will accelerate the pace here as well and, among others, offer manufacturers the opportunity to add digital service offers (such as remote support and maintenance) to their suite of products. At the same time we see early ‘digital’ companies entering the space of manufacturing as well, like Google entering the automotive sector with its Weymo subsidiary.

Imagination – the ‘innovate or die’ mantra has been with us for a while now, and many New Zealand manufacturers ticket to survival and growth has been their ability to be better than the competition when it comes to product (and service) innovation. The next challenge comes from applying the same approach to your business model – becoming the business that puts your business out of business. And to reinvent your business may well require a step beyond innovation – being able to see things differently and identify possibilities that currently don’t exist but could be created.

Last, but certainly not least, is your ability to be more resilient as an organisation – and as a leader – than the competition. Resilience here means the ability to withstand the impact of outside forces beyond your control, be that natural forces like catastrophic weather events interrupting power supply to your factory more frequently, or changes in market access due to trade wars, for example.

Resilience requires the ability to adapt quickly to changes never experienced before, and the remarkable ability of many Christchurch manufacturers to spring back into life so quickly after the earthquakes points to New Zealand manufacturers innately scoring quite highly on that front. But resilience also taking a long-term perspective – monitoring long terms trends and preparing for a surviving and thriving under a range of scenario, some of which might appear quite outlandish at the time. We all have to ask ourselves how good we are at the latter?