In the late 1980s, Motorola faced a major threat to its fast-growing cell phone business. Rivals were developing digital technology to replace the existing analog standard. Internal debate raged. Should Motorola keep its focus on analog, or switch over to digital? Build off its core competence, or play from weakness? Could both technologies exist side by side? Or would only one survive?
Engineers at the company came down squarely on the side of analog. Digital, they pointed out, was simply inferior to analog as a medium for storing and transmitting audio. After all, it stripped away 60 per cent of the information contained in the original analog message.
What those engineers couldn’t see was that, for most listeners, digital technology’s advantages far outweighed the often undetectable losses from digitization. That’s partly because they had spent much of their lives building up their expertise in analog technology. A shift to digital would require them to learn a great deal from scratch. So it was easier to see the negatives than the positives. The end result was that Motorola’s conversion to digital took much longer than it needed to. The company lost its leadership of the very industry that it had invented back in 1973. And it wasn’t alone – another audio leader, Sony, similarly lost market share in electronics because of its analog bias.
An equivalent challenge is now looming for companies in many industries. 3D printing, or “additive manufacturing,” essentially digitizes the production process. Like digital audio in the 1980s, this young technology has some drawbacks compared to conventional “subtractive” manufacturing. But as I explained in a Harvard Business Review article, the flexibility and versatility it offers will eventually make it the preferred choice for companies in many industries. And the opportunities to combine parts, reduce inventory costs, and earn a premium price for customization often compensate for the higher direct costs of 3D printing.
I recently attended a private conference with panels led by manufacturing experts from multi-billion dollar firms. One after another they explained why 3D printing wasn’t ready for high-volume manufacturing in their industry. They feared problems with durability and strength, not to mention customer reactions to the horror of discovering that their products were printed. (It was as though they’d never heard of Walmart, whose profitability depended on selling products from overseas factories with lower quality standards.)
Then a young woman shook things up. She got up to the podium and said, “It’s a good thing I never met any of you before. Otherwise my firm wouldn’t have made $40 million last year. You are so busy looking at what 3D printing can’t do that you’re ignoring what it can do!”
While her competitors had dismissed additive manufacturing because it couldn’t (at that point) print an entire product, she had focused on just one element of the product. Her firm ramped up from 100 customized parts to 10,000 in just one year. It is now expanding into other parts, and will soon be able to offer customization of the overall product at a premium price. As the company moves down the learning curve and costs come down, the savings from reduced waste, inventory, and assembly labor will even make it competitive for the mass production segment of the market.
Her secret is a process I call “Just Say Yes”: Listen to what your engineers say, then put them to work solving those problems one by one, even if the solutions aren’t immediately apparent. Just say yes is much like Gene Krantz’s famous command, “Failure is not an option,” when faced with the Apollo 13 crisis that nearly killed three astronauts on the way to the moon. Here’s the process in four steps:
- Gather knowledge from the outside. Don’t rely solely on your in-house engineers – some of them are likely to be guardians of the status quo. Reach out to additive manufacturing printer and software providers, and your industry associations, to see what already exists for your product categories. Talk to universities and governmental laboratories to learn about the current state of 3D printing and how well it performs on the materials and attributes that your customers prefer – not just the ones you have always provided. Include your staff engineers on the learning teams but make sure they don’t dominate the discussion.
- Move one baby step at time. Build expertise and reduce internal resistance through incremental experiments, exploring and adjusting to new technological development as you go. Engineers love challenges, so internally you can set up tiny, non-threatening pilot programmes and see where these take Always listen to skeptics and take the problems seriously, but project confidence that the kinks will be worked out over time.
- Focus and prioritize. No firm can explore the many possibilities of additive manufacturing all at once. So you’ll want to start with the most promising and feasible choices first, and build up small wins. But don’t expect a carefully planned sequence of development. As technology and the industry ecosystems develop, you may well adjust your priorities as you meet various milestones.
- Keep an eye on the long run. Especially for large companies, the goal is to revamp the industry’s value chain and ecosystem to reduce total costs of the value chain and especially your firm. So look for opportunities to develop or support an emerging software platform or superior printer technology. Your explorations should have a logical, cohesive, long-term goal of pulling together the initiatives into an integrated 3D-printing-based manufacturing system.
With enough encouragement, you’ll see 3D printing champions emerge in your organization to help drive the process forward and build momentum. Some people (and organizations) won’t be able to embrace the technology in time and will be passed by. If you keep Motorola and Sony in mind, you won’t be one of them.
About the author
Richard D’Aveni is the Bakala Professor of Strategy at Dartmouth College’s Tuck School of Business.
This is an excerpt from Strategy@Work, a Brightline and Thinkers50 collaboration bringing together the very best thinking and insights in the field of strategy and beyond. This blog was originally published online by Harvard Business Review.