Productivity, sustainability or digital? What are the priorities within your business for the 2020s?
As we move towards the end of the 2019 and into the third decade of this new century, it is interesting to reflect on the forces that are shaping industry and how businesses can and should respond.
At Aston Business School, we are fortunate. We sit at the confluence of two communities; the first comprising of those senior leaders who shape industrial practice through their strategic decisions, policies and actions, and in the second, their equivalents in the research community who trace, interpret and seek to understand and predict the macro-forces shaping business, economies and society. As we draw towards the end of 2019, we have solicited views and opinions across these communities in an attempt to understand what are likely to be the strategic priorities for business in 2020 and the following decade.
Disentangling what we have been told is challenging. We are dealing with predictions and all the associated caveats about foretelling the future, but nevertheless, there are two strategic imperatives that keep reoccurring in conversations with these leaders - productivity and environmental sustainability. Of course they occur amongst a myriad of topics such as digital, skills, demographics, gender, regulations, and of course Brexit. But focus on those strategic imperatives which have both a long-term impact, and represent an opportunity for commercial growth and resilience, and the field narrows considerably to these two topics.
Accelerating productivity improvements and finding ways to deliver environmentally sustainable business outcomes are commonly seen as strategic opportunities for business. Many other factors of course influence how quickly and effectively these may be realised – and of these digital is at the forefront of thinking for many. Digital technologies, systems and their integration, whether its Digital Twins, AI or Industry 4.0, are key enablers for improvements in productivity and environmental sustainability. Seniors across communities are acutely aware of this potential, but also that it is crucially important to focus on how digital can enables success. For manufacturers, wealth is created through the business model innovations that digital enables and the principal opportunities for these business models are around productivity and sustainability.
Many leaders recognise, however, that the existing business models for many manufacturers are not fit for purpose – they will not deliver against these strategic imperatives. Significant increases in productivity and environmental sustainability will not be achieved through incremental reductions in product lead-times, a focus on shifting boxes or labour reduction to reduce costs. The opportunities are beyond ‘factory gate thinking’ and require managers to move away from a ‘goods based logic’ and instead focus on high-value service based business models that focus on delivering outcomes. This is the world of Advanced Services, and the means through which manufacturers innovate to compete in this way is referred to as Servitization.
Advanced Services and servitization complement the strategic imperatives of productivity and sustainability. Productivity improvements are achieved through a focus on creating more value out for the same input of resources; sustainability because a focus on outcomes leads to a dematerialisation of the supply chain. The arguments for servitization are compelling, and indeed the global market growth for services significantly outstrips that for products. Yet, servitization remains a topic that many manufacturing managers struggle to properly understand and this is a major inhibitor for businesses attempting to respond to the strategic imperatives of 2020 and beyond. There are a variety of reasons why this is the case, and though it’s not our purpose to delve into these here, what we do believe is that many of these barriers can be overcome by bringing servitization ‘alive’!
Fostering awareness, education and engagement with servitization can be accelerated through businesses demonstrating their collective service innovations – integrating their products, digital technologies, and storyboards to illustrate their progress with servitization. Imagine the impact of an exhibition where a large group of leading manufacturers brought the world of servitization alive in this way.
This is the reason why we have created the World Servitization Convention, which will run in Birmingham on 5th/6th & 7th 2020. We are bringing together businesses big and small to demonstrate and exhibit their service innovations, along with the leading executives and international experts to share their experiences. This will be managed by our team at Aston to ensure all contributions are relevant and delivered on a neutral platform. It will be the venue for all things servitization in 2020 and our goal is that this will accelerate the realisation of high-productivity and environmental sustainability in this third decade of this new century.
To find out more about the World Servitization Convention, visit https://www.advancedservicesgroup.co.uk/wsc2020