Riding a dead horse

According to Wikipedia, Industry 4.0 or the Fourth Industrial Revolution is “a word creation originating from a project in the high-tech strategy of the German government, which promotes the computerisation of manufacturing.” Is this now the panacea for all the problems of the manufacturing industry? Is it enough to network a factory?

An industrial revolution is characterised by the fact that it brings about fundamental changes in all areas of social life and thereby changes and reorganises the economy. But a few more sensors, some big data here and a pinch of cloud services there are not enough. It’s about more than integrating planning, production and resources. Many companies have to ask themselves whether their business model will still function at all in the future in the environment of new technical developments and social changes.

As far as the development of electric cars is concerned, the automotive industry has been overtaken by a manufacturer who had never built a vehicle before (Tesla). Large hotel chains are fighting against AirBnB, which with over 5.3 million properties (end of 2018) has already overtaken the large hotel chains InterContinental, Marriott and Hilton (each approx. 700,000) several times. And none of these hotel chains saw it coming.

Many taxi companies had also made themselves comfortable in a regulated environment until Uber or Lyft appeared on the scene. Losing their passengers will give them more time to demonstrate against the “competition”. Unfortunately for them, most customers love the service offered by Uber. These examples show that it is not enough to be just a little faster or more effective.

If you step on the gas at a dead end, you will only reach the end faster!

What is needed is a much broader view of what companies, the economy, society and individuals will face in the coming years. New technologies are changing our consumer behaviour and new business models are displacing existing ones faster than they want to admit. Entrepreneurs who constantly look in the rear-view mirror to keep an eye on their (supposed) competitors overlook the “maverick” who, racing along the overtaking lane, take the lead from them.

Many companies treat their business models, processes and production methods like a dead horse. You sit on it and try your hand at resuscitation.

This is not about throwing all existing business models overboard. Rather, what is needed is an open, unbiased discussion of future trends and their possible effects. However, a few more networked machines and/or new software programs are not enough. Topics such as artificial intelligence, machine learning, sharing communities, portable and/or implanted devices will still cause a lot of fuss. Intelligent algorithms are already writing newspaper articles or answering customer enquiries – 24/7, 365 days a year. Without holidays, without illness and without their artificial or mechanical nature being noticed.

Deep Knowledge Ventures, a Japanese venture capitalist, appointed an artificial intelligence algorithm called “Vital” to the Supervisory Board back in 2014. Vital supports the other (humane) supervisory boards providing comprehensive analyses, market observations and investment recommendations, with equal voting rights.

Anyone who still believes that the changes will only take place in production can think about what he will do with his leisure time in the future.  However, leisure time without wages has limited charm.

The changes won’t spare the new shooting stars either. What happens, for example, to self-driving cars when they become reality? What about AirBnB when new self-regulating sharing platforms based on blockchain technology develop? Companies are well advised to deal with trends that at first glance have nothing to do with their product. The power of social networks in evaluating products and companies, social trends such as “sharing” products or services and new technologies such as augmented reality or 3D printing will bring down many previously successful business models. Then it will not be enough to provide the dead horse with a pacemaker.

We should be pleased about all the possibilities and chances which are opening up.  It is not yet too late (for most companies at least) to face the challenges within the framework of small think tanks while the existing business is still running. Cooperations and mergers offer new and previously unimagined opportunities. Why shouldn’t a machine builder seek close cooperation with a 3D printer manufacturer? Perhaps he will  “kill” his previous business, but at the same time ensure his survival.

Netflix started as a mail order company for DVDs and is now a company that records the preferences and interests of its customers using software developed in-house.  Based on this information, Netflix produces series, the success of which is usually determined in advance. Netflix could (and perhaps will at some point) sell its algorithms and know-how to other companies.

Behind every threat are new opportunities. It is up to each company itself to recognize and use these – or to fall by the wayside on the dead horse.