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Megatrends for this decade – XIV

 

Up to now, with very few exceptions, the factory produced a product and the end user bought it. In the future we will experience a much higher level of customisation and in several instances the factory will produce “on-demand” and based on the end user specification. Image credit: modified image from Proto3000.com

13. Instant economy of Things

The great change brought by the Industrial Revolution was the production of goods for an unknown customer. Think about it. Before the industrial revolution production was handled by artisans and they worked on demand. Their wares were manufactured based on customer’s specification, be that a piece of furniture, a sword or a cart. The Industrial Revolution changed the paradigm and changed the overall business landscape.

It was the Industrial Revolution that “invented” marketing, since it needed to push product produced “in absence” of a specific demand to the market, stimulating people to buy them!

The Ford model T. The first batch came in black colour only. This was a way to create economy of scale and keep the cost down (hence the price down to reach a broader market). Image credit: Ford

We take all this for granted, since we have lived all our life in an economic framework where goods are on a shelf and we have the right to choose one among them and that’s it. Ford mentioned in his biography having said to his sales dealers

Any customer can have a car painted any colour that he wants so long as it is black.

However, market competition and flexibility in production have created an enormous variety of products offering us an amazing choice, something that was unthinkable 100 years ago. Yet the paradigm is the same as it was in the XVIII century: the factory manufactures products that go on a shelf where customers may decide to buy them. Over the last decades, however, the variety of choices and the preference of the market have sent clear signals to producers: if customers prefer a certain shape/function the industry takes note and starts investing more on that, leading to products that are more and more in synch with the market (differentiation and fine tuning go hand in hand in mass market production).

More than that. In this last decade have start seeing the first signs of a paradigm shift, taking us back to the pre-industrial era, but still preserving all the advantages of the industrial revolution (abundance, low cost):

  • we may create our own photo book and have it delivered to our home n a matter of days
  • we can customise our next PC by selecting the types of chip, the RAM, the storage, the interfaces, the keyboard… and have it assembled on-demand
  • we can customise our new car by choosing among such a number of “optionals” that our car might turn out to be unique, manufactured just for us

These are just a few examples of a paradigm shift, as shown in the first graphic. We are moving from being a “buyer” to becoming a “builder”. Of course, it is way easier to be a buyer (all you need is money) than a builder. However, technology is progressing at an amazing pace.
Think about creating an app. Writing software used to be a very specialised form of technical art (it still is) but now there are tools that can make life pretty simple. I am just using one right now to write this post. There is a huge software that is supporting me, although I may not appreciate it. What has been done in these last ten years on production of software will likely happen in this decade (and the following ones) to hard products. This is what this Megatrend is all about: On demand production and on demand delivery. Initiatives like EIT Manufacturing (watch the clip) are paving the way towards this paradigm shift.

Industry 4.0 is a big part of it but there is more:

  • design of raw material
  • design through Digital Twins
  • on-demand production
  • servitization
  • instant delivery
  • build/customise as you use
  • recycling/circular economy

I’ll look at each of them in the following posts.

About Roberto Saracco

Roberto Saracco fell in love with technology and its implications long time ago. His background is in math and computer science. Until April 2017 he led the EIT Digital Italian Node and then was head of the Industrial Doctoral School of EIT Digital up to September 2018. Previously, up to December 2011 he was the Director of the Telecom Italia Future Centre in Venice, looking at the interplay of technology evolution, economics and society. At the turn of the century he led a World Bank-Infodev project to stimulate entrepreneurship in Latin America. He is a senior member of IEEE where he leads the Industry Advisory Board within the Future Directions Committee and co-chairs the Digital Reality Initiative. He teaches a Master course on Technology Forecasting and Market impact at the University of Trento. He has published over 100 papers in journals and magazines and 14 books.

One comment

  1. Thanks for the interesting post Roberto!! Agreed, Digital Transformation should give the opportunity again to successfully use a more artesian and artistic business approach. https://ethicsplayground.wordpress.com/2016/02/18/puccini-ferrari/