We live in a world where change is becoming more dramatic and unpredictable. It is becoming nearly impossible to plan for investment, and growth with the uncertainty in the path ahead. Our modern world is now a complex environment where traditional conceptions no longer enable emergence of desired outcomes.
Huge natural disasters that bring severe damage to communities and their industries have significantly increased. $15.9 billion USD was the economic loss of the 2nd most violent tropical cyclone (typhoon Hagibis) in the history that caused significant destruction in Japan; It was the largest global economic loss in 2019. The 3rd largest economic loss from a typhoon had occurred only one year earlier in 2018. Earth’s average surface temperature has increased by 1° C since 1900. It is predicted that this temperature rise by 4 degrees by the end of this century.
The political risks including international trade agreements have been putting increasing pressure on manufacturers to secure critical materials and natural resources. The supply of rare metals which are indispensable to manufacturing has become an urgent issue disrupting supply chains.
Uncertainty in the presence of reliable workforce is fast becoming conventional wisdom. The automotive industry reported a loss in revenue of $200 billion USD in 2021 due to shortages associated with labor and semi-conductor products. Skills shortage is becoming a real issue in managing manufacturing environments. The aging labor population has caused a loss of craftsmanship and know-how.
Immediate need for decarbonization is setting targets and requiring serious actions from industrial manufacturers to measure, reduce and report their green house gas emissions associated with their operations. A successful initiative well adopted in aviation industry was introduced by the analytics company, Cirium. The company has developed a technology to estimate Co2 emissions and fuel burn calculations per flight to enhance transparency and promote awareness in aviation industry. For advanced manufacturing segment, the focus on environmental sustainability is leading the way to business sustainability and along this path, our ability to respond to ambiguity will determine those who not only survive but thrive in today’s ecosystem of learn, unlearn and relearn.
A tragic example of a stiff response to ambiguity is the traditional American company Kodak. The company had developed the first digital camera in 1975, however resistance to change the main line of business (photography films) caused the company to not pursue digital photography. When competitor Sony launched the first digital camera in the early 1980s, Kodak commissioned an extensive study to explore whether digital photography posed a threat to its film-based core business. The study concluded that it would take about 10 years for digital technology to displace traditional film cameras. It took less than a year for the company to report a dramatic decline in sales. Kodak’s executives became victims of ambiguous information in such crucial situation and the company filed for bankruptcy after 120 years of corporate history.
Technology has become disruptive, exponential and quickly evolving. It has paved the way for development of automated systems. It is enhancing our agility in responding to inefficiencies in the process in a holistic way. It is creating new opportunities to derive value from previous experiences and errors. Available data, computing speed and connectivity have been instrumental in improving our situational awareness and achieving excellence in decision making.
In today’s global economy, manufacturing industry has started to realize that traditional business models relying on preparing for most probable future states are no longer effective; Leadership is the ability to embrace and exploit unpredictable circumstances; promote a consistent culture for making decisions; facilitate creation and innovation that lead into resilience, sustainability and profitability.