Fragility,
Anti-Fragility
and
Innovation
Bill Wade
wade-partners.com
We’ve Been Discovered !
Complete Surprise:
The Black Swan
What is the opposite
of “Fragile”?
What is the opposite
of “Fragile”?
an·ti·frag·ile: something that benefits from
stress, harm, chaos, events, disorder,
unforeseen consequences, uncertainty, time
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English
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German
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Turkish
Astronaut Atrophy
Tourist Trophy Hunt
Air Travel
Mithridates VI
Humans
are
antifragile.
Human
systems are
antifragile.
Removing stress doesn’t
make us stronger.
Removing skin from the game.
Making everything bigger.
Stifling freedom of everything.
Risk Forecasting
Trains Will Haul Bulk
Power Plant Fuel
Trains Will Haul Bulk
Power Plant Fuel
OOOPS !
Major Structural Trends (Threats?)
In the Ag Equipment, Parts and
Service Markets
• OEM Component
Integration
• OEM Vocational
Standardization
• Design for Recycleability
• Supplier System
Partnership
• Death of Diagnose and
Repair… Severe
Technician Shortage
Anti-Fragile Strategies…
John Deere to Titan to Ralph’s Farm Supply
• Size alone is not a strategy…
nor is a footprint
• Fee follows function…
discounts become discriminate
• Information is the ultimate pop code ‘A’
• VIN tyranny splinters
• War declared by European (and Domestic) OEMs
• Tuángòu explodes
• Net conquers gross… and CASH conquers all!
Innovation…
All that distinguishes leaders from followers… S. Jobs
Offense or Defense…
What does this really mean to you?
Is Your ‘Model’ Sustainable…
Machines, Markets, Distribution
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Facing the ‘Great Moderation’
Define the ‘New Normal’
Indefinite Warranty
Permanent World Maps ?
Guessing the Future…Economic Cycles
– Market has called 9 of the last 5 downturns
Innovation
The only net creator of
new wealth.
Innovation
is all that
foiled
Malthus.
Global
warming
next ?
Innovation
The only net creator of new wealth.
• Something newly tried.
• New combinations.
• Creating a portfolio of options to achieve
substantial, profitable and sustainable growth.
• Other activity is caretaking, improvement at
the margin or rearranging the deck chairs.
Fortification vs Exploration
• Tension between defending existing dominance
and creating new growth paths
• Chance favors the prepared mind… or company
Innovation… How to?
• Be absolutely clear
about the mission
to everyone.
• Create just enough
structure.
• Match people and
horizons.
Innovation… How to?
• Think businesses… beyond product or
technology.
• Innovate on behalf of your customers …
not your existing position.
• Diverge early…
converge late.
Things I’ve Noticed
• Iterate and communicate
• Don’t try to predict… buy options
• Runway…. electric cars vs. newspapers
Business Innovation Radar
• Creation of radical
new value for
customers
• In the beginning,
all you have is data
and intuition
• Almost never
just product
Create Insight, Avoid Reflection
• Industry mirrors ?
• Best Practices Kill!
• Which industry orthodoxy
can be challenged?
• We only see things
for which we are looking.
• Mission Focus: Target Definition
• Mission Clarity: Organization
Understanding
Periphery Is Your
Preferred Frontier
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It is where to look first, but not exclusively
Avoid the Success Trap
Chaos vs. Structure
The better we are at ‘this’,
the tougher it is to try ‘that’
• Define ‘Factors of Merit’…
Speak multiple languages in multiple worlds.
Perspective is everything
10 Ways to Slice It….
Offering-Creating new
product or SERVICES
Significant Augmentation
– Toyota Hybrids
– Apple Ipod
– Sony 4 generations and
150 variations of Walkman
– Merrill Lynch
Cash Management Account
Platform- Exploiting
commonality
Common components as building blocks
– Airbus common cockpits
– GM OnStar
– Disney animation
– Microsoft Suites
Solution- Solve complete
problems
Customized combinations
– UPS complete 3PL
– DuPont selling
painted bodies to Ford
– IBM bundling of
hardware, service and
financing
Customer- Serving unmet
needs
Identify unarticulated latent needs and
resegment markets
– Chrysler minivan
– Home Depot ‘almost pro’
– FedEx segmenting
by time instead of volume
Customer – Redesign
interface
Broaden touch points and life cycle interface
– Saturn no haggle pricing
– Cabela’s store as entertainment
– Amazon returns handling
– Everything about ‘American Girl’
Value Capture- Changing
how you get paid
Changing yield management or position in
the value chain
– Google paid search
– GE time in air
– Progressive utility pricing
Organization and Process
Design for internal improvement and
process streamlining
– Boeing 787
– 3M Slack Day
– Google 20% program
– Cisco partner centered
network
Supply Chain Flow
Primarily increased communication within
channels
– Walmart VMI
– Dell user-direct
one-off manufacturing
design
– Home Depot/GE
appliance floor plan
Presence- How customers
access you
Augmenting channel mix, including self
service
– Enterprise in repair shops
– Netflix
– McDonald's and BOA
– Diebold remote teller
Networks-Exploit network
intelligence
Leverage network connectivity
– Otis elevator
– Electrolux auto replenished refrig
– Peapod
edible
billboards
– Microsoft Xbox Live channel
Brand Leverage
Co-Branding into new product classes
– Virgin Mobile, Air, etc
– Cat Boots
– Intel Inside
– Yahoo as a lifestyle brand
– (not Champion filters!)
Drivers of Service / Dealer Affinity
• Accelerating Regulation (i.e.. OSHA)
• Extended Trade Cycles (new normal)
– Vehicle Economy
– Refurb Economics
– Warranty Control
• Proprietary Information
• Labor Shortage
Fuels… It is all about the juice!
Ethanol (17)
Biodiesel (19)
Hydrogen (21)
CNG (23)
LNG (23)
Synthetic Diesel (26)
Methanol (27)
DME (29)
Westport Engine
Electrics / Hybrids
‘Green’ Issues…
Innovation Boosters: Adaption and Aliens
2014…Labor Shortage and the Agent Economy
Outsourcing… and Aliens
Ferguson/Wolseley, Grainger, HD Supply, MRC Global Corp.
(formerly McJunkin-RedMan), Airgas, Motion Industries, Fastenal
Company, McMaster Carr, Applied Industrial Technologies, MSC
Industrial Direct, Wurth (North America), Kaman Industrial
Technologies, BDI, Barnes Distribution Industrial Distribution Group,
SunSource, Lawson Products, BlackHawk Industrial Distribution
B-to-B from the B-to-C
• Lowe’s has launched their
Lowe’s ProServices
• Ace Hardware has The
Supply Place
• Staples has a strong B-toB component that now
includes medical supplies.
• Home Depot ‘On Set’
Distribution Trend -
Service Overtakes
‘Box Pushers’
Services
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Emergency Services
Energy Services
Grainger TripleGuard Repair
Inventory Management
Online Purchasing Solutions
Product Services
Products Beyond the Catalog
Safety Services
Technician Training
• Who do you expect to provide this
and who should bear the cost?
• Delivery… Let’s discuss the
different possibilities.
• Technician shortage… How
concerned are you?
• What is your strategy for recruiting?
Newest Service: 3D Parts Printing
Type
Extrusion
Wire
Technologies
Materials
Fused deposition modeling (FDM)
Thermoplastics (e.g. ABS),
HDPE, edible materials, Rubber
RTV silicone, Porcelain, Metal
clay (including Precious Metal)
Electron Beam Freeform Fabrication
(EBF3)
Direct metal laser sintering (DMLS)
Electron-beam melting (EBM)
Granular
Almost any metal alloy
Almost any metal alloy
Selective heat sintering (SHS) [18]
Titanium alloys
Titanium alloys, Cobalt
Chrome alloys, Stainless Steel,
Aluminum
Thermoplastic powder
Selective laser sintering (SLS)
metal powders, ceramic powders
Selective laser melting (SLM)
Plaster
Powder bed and inkjet head Plaster-based 3D printing (PP)
Laminated object manufacturing (LOM) Paper, metal foil, plastic film
Laminated
Light polymerized
Stereolithography (SLA)
Digital Light Processing (DLP)
photopolymer
photopolymer
New Service Market Opportunities
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Telematics
Aerodynamics
Ergonomics
Exhaust / Fuel
Hybrid Systems
Marking / Optics
Accessory Adoption
Tools / Shop Equipment
Training…Training… Training
Innovation
Never Leave Serendipity to Chance !
Questions ? Comments !
Special thanks to
Professor Robert Wolcott
Northwestern University
Bill Wade
wade-partners.com
[email protected]
847-760-0067
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If the ‘World Is Flat’