Will Manufacturers Rule the Global Economy Once More?

strategy+business, February 1, 2019

by Theodore Kinni

We’ve been treated to various versions of manufacturing in the past couple of decades. There’s manufacturing as an exercise in financial arbitrage — a link in a global supply chain that is reforged whenever and wherever people will do more work for less pay. There’s the maker movement, populated by hordes of entrepreneurs laboring away in shared shops. There’s Industry 4.0, where we inefficient humans need not apply. There’s the revitalized rust belt, polished to a mirror’s shine with tariffs. And now there’s Tuck School of Business professor Richard D’Aveni’s vision of manufacturing, detailed at length in The Pan-Industrial Revolution, a book that starts out strong but eventually bogs down in speculation.

D’Aveni’s version of manufacturing could be labeled “when dinosaurs rule the Earth once more.” He thinks that hulking tyrannosaurs like battered General Electric are going to rise up and roar in the years ahead. If he’s right, the Dow Jones Industrial Average might actually become industrial again.

D’Aveni weaves this new vision on an intricate loom. Its weft is composed of additive manufacturing (AM), which includes all the evolving forms of 3D printing in combination with other production technologies, such as lasers and robotics; its warp is digitized, AI-powered management systems and platforms.

AM is a game-changing family of technologies, and D’Aveni illustrates them with a host of gee-whiz examples. Lockheed Martin can 3D-print the entire body and interior of its 12-ton, 50-foot-long F-35 fighter jets in about three months, compared with the two to three years it takes to make them using traditional technologies. (It’s now working to cut production time to three weeks.) Electronics parts supplier Lite-On is using 3D printers to make 15 million smartphone antennas annually, demonstrating the technology’s potential for cost-effective mass production. The medical device company Stryker, which is already 3D-printing joint implants, is developing machines that can be installed in hospitals to produce customized implants while surgeons and patients wait. Local Motors has demonstrated its ability to 3D-print a car — reducing the number of parts needed from 30,000 to 50. Read the rest here.

TechSavvy: Why Digitization Won’t Put Operations Managers Out of Work

MIT Sloan Management Review, October 13, 2016

by Theodore Kinni

On Oct. 3, ING Group joined a growing number of big European banks when it announced a big investment in digital technology (800 million euros) and a big reduction in force (11% or 5,800 jobs). “Unfortunately digital transformation means less jobs,” CFO Patrick Flynn told Bloomberg Television not very ruefully.

But perhaps not fewer management jobs. “Even as organizations balance lower investment in traditional operations against greater investment in digital, the need for operations management will hardly disappear,” write McKinsey consultants Albert Bollard, Alex Singla, Rohit Sood, and Jasper van Ouwerkerk in a new article in McKinsey Quarterly. “In fact, we believe the need will be more profound than ever.”

In the near term, the challenge will be the ability of companies “to embrace digital innovation and operations-management discipline at the same time.” That, the authors say, will require figuring out how to combine digital and human resources, modify employee roles to showcase and sustain digitization, support customers as they figure out how to work with the organization, and develop leaders and managers with “much stronger day-to-day skills in working with their teams.” Read the rest here.

Tech Savvy: What AlphaGo Means to the Future of Management

by Theodore Kinni

MIT Sloan Management Review, March 24, 2016

AI as management assistant: The artificial intelligence program AlphaGo got a lot of attention for beating 18-time Go world champion Lee Sedol four out of five games last week. The significance of this achievement is rooted in the extraordinary number of possible moves in Go: 2.08168199382 … × 10170, reportedly more than the number of atoms in the universe.

That’s too many possibilities for brute computing force to handle (which is how IBM’s Deep Blue beat chess master Garry Kasparov 20 years ago). Yet AlphaGo, created by Google DeepMind, formerly British AI company DeepMind Technologies, mastered the 2,500-year-old board game on its own in a matter of months. “It started by studying a database of about 100,000 human matches, and then continued by playing against itself millions of times,” reported science correspondent Geoff Brumfiel at NPR.

Go bragging rights are nice for Google, but what does AlphaGo’s victory mean for management? “These machine-learning methods will also have significant impact on how we perform unstructured and complex business processes and decision-making tasks in day-to-day work,” explains Lei Tang, chief data scientist at Clari, a sales analytics company, in VentureBeat. “AI routinely considers options ignored by human beings … In this sense, AI is creative, helping humans achieve more.”

Tang says that “self-driving” enterprise applications will be managerial assistants that “detect relevant context changes (location, target customer, timing) and deliver relevant information at the moment it is most helpful.” Better yet, like AlphaGo, they will “become smarter as they analyze the results of ongoing operations, such as marketing campaigns, lead conversions, sales meetings, email flows, interactions with customer success teams, or customer churn.” ...read the rest here

Tech Savvy: When to Hire a Robot

by Theodore Kinni

MIT Sloan Management Review, March 10, 2016

When to hire a robot: Robotics have reached their tipping point, according to International Data Corp. In a newly-released research report, the firm forecasts a near doubling of the worldwide robotics market over the next 4 years — from $71 billion in 2015 to $135.4 billion in 2019. Almost simultaneously, President Obama sent The Annual Report of the Council of Economic Advisors to Congress. It says advances in robotics technology are “presaging the rise of a potentially paradigm-shifting innovation in the productivity process.”

Tongue-twisting alliteration aside, this feeds fears that robots may eventually replace most employees (a thesis argued persuasively by Mark Ford in his award-winning book, Rise of the Robots). But how should your company use robotics between now and then? One answer, highlighted in two recent stories, is to hire robots for supporting, rather than primary, roles.

Mercedes-Benz came to this conclusion in a backward sort of way. As the company expanded the number of models and options it offers, it discovered that its existing assembly-line robots could not be adapted quickly and economically enough. So it’s hiring people to replace some of its robots, report Elisabeth Behrmann and Christoph Rauwald inBloombergBusiness, and equipping them “with an array of little machines,” a solution that the car maker calls “robot farming.”

Mark Rolston, the cofounder and chief creative officer of argodesign, sees the design industry following a similar strategy. “It’s easy to see how an AI-infused computer algorithm such as the future Netflix — after a human has completed the initial design and programming — could do the hard work of improving and evolving to accommodate user preferences largely on its own,” he writes in Fast Company’s Co.Design. “Moreover, 90% of product design today happens in the ‘fat middle ground’ between purely aesthetic and purely technical — incrementally tweaking designs, optimizing column widths, and experimenting with color schemes. These tasks are bread and butter for much of the design industry, and they are progressively being automated.” ...read the rest here