The pace and scale of change across high-tech manufacturing is a once-in-a-century transformation. The resulting convergence and disruption—affecting every corner of the manufacturing sector—is profoundly, permanently altering the industrial landscape. The old rules are changing: New competitors are emerging, consumer expectations are shifting, and market share is up for grabs.

1. CONVERGENCE AND
DISRUPTION IN
MANUFACTURING
How Companies are winning market share
The pace and scale of change across high-tech manufacturing is a once-in-a-century transformation. The resulting
convergence and disruption—affecting every corner of the manufacturing sector—is profoundly, permanently altering the
industrial landscape. The old rules are changing: New competitors are emerging, consumer expectations are shifting, and
market share is up for grabs.
EVOLVE OR
RISK IRRELEVANCE
There will be winners and losers. We’ll see fewer manufacturers, but those
that win out will earn greater profits.
50%
Since 2000,
of Fortune 500-listed companies
have either gone bankrupt, been
acquired, or ceased to exist.1
- National Academy of Engineering
Manufacturing can no longer be considered separate from the value chain, the
system of research and development, product design, software development
and integration, and lifecycle service activities performed to deliver a product
or service to market.2
Manufacturing
Research
& Development
Software
Development
& Integration Lifecycle
Service Activities
Performed to
Deliver Product
or Service
Product
Design
New methods and collaborations, such as those
within the burgeoning ‘maker movement’—which
combines artisan craftsmanship with 3-D printing
and other modern technology—are drawing the
attention of consumers and manufacturers alike.3
- Rachel Barker and Amy Liu,
the Brookings Institute
BLURRED LINES:
IS THAT A VEHICLE OR
A MOBILE DEVICE?
Manufacturers are no longer merely competing against one another: They are now competing in the data marketplace.
Apollo 11 had
145,000
LINES OF
COMPUTER
CODE.4
Modern cars have more than
100 MILLION
LINES OF
COMPUTER
CODE.4
I originally joined the auto
industry because it was the
ultimate industrial product and
the ultimate consumer product.
Now the car has become the
ultimate technology product.5
- Ford CEO Mark Fields
Apple fanboys and Samsung’s
‘Next Big Thing’ers would hoot
with derisive laughter if The Wall
Street Journal or Financial Times
reported that GM or Ford planned
to rewrite the rules of smartphone
innovation. But when media
coverage suggests Apple may
redesign the automobile, even the
most cynical car-lovers quiver
with righteous curiosity.
They should.6
- Michael Schrage,
MIT Center for Digital Business
MANUFACTURING A
BRAND EXPERIENCE
Customers are no longer buying a widget; they're looking for experiences
delivered through product-based services.
57%
OF I.P. TRAFFIC WILL ORIGINATE WITH
NON-PC DEVICES BY 2018.
MACHINE-TO-MACHINE MODULES WILL
HAVE IP TRAFFIC CAGR OF 84%.9
[Apple is] not in the business of selling phones.
It’s in the business of enabling and creating services.7
- Horace Dediu, Asymco
Customer experience (CX) is increasingly being
viewed by manufacturers as a necessary element of
business-to-business (B2B) transactions, one that is
enabled by the 3rd Platform, specifically social,
mobile, cloud, and big data analytics.8
- IDC
ADAPT AND THRIVE
Those who are willing to adapt and proactively shape customer
demand have the opportunity to set the future course — not only
for their enterprise but for entire segments of the market.
SUCCESS WILL COME TO
THOSE WHO CAPTURE THEIR
CUSTOMERS' IMAGINATIONS
AND BECOME INTEGRATED
INTO THEIR DAILY LIVES.
They'll get there by focusing on manufacturing
a distinct brand experience and building
organizations that relentlessly pursue, project,
and protect that experience.
- Booz Allen Hamilton
The changing nature of products is also disrupting value chains, forcing
companies to rethink and retool nearly everything they do internally.10
- Michael E. Porter, James E. Heppelmann, Harvard Business Review
1
R “Ray” Wang, May 3, 2015, http://blog.softwareinsider.org/2014/02/18/research-summary-sneak-peaks-from-constellations-futurist-framework-and-2014-outlook-on-digital-disruption/
2
http://www8.nationalacademies.org/onpinews/newsitem.aspx?RecordID=19483
3
http://www.brookings.edu/blogs/the-avenue/posts/2015/05/20-corporations-and-entrepreneurs-collaborate-barker-liu
4
http://resources.infosecinstitute.com/information-security-vulnerabilities-automobiles/
5
http://fortune.com/2015/04/24/mark-fields-ford-ceo/
6
https://hbr.org/2015/02/what-happens-if-apple-starts-making-cars
7
http://www.asymco.com/2013/09/11/s-is-for-service/
8
https://www.idc.com/getdoc.jsp?containerId=prUS24747414
9
http://www.cisco.com/c/en/us/solutions/collateral/service-provider/visual-networking-index-vni/VNI_Hyperconnectivity_WP.html
10
https://hbr.org/2014/11/how-smart-connected-products-are-transforming-competition
Sedar LaBarre
Vice President
LaBarre_Sedar@bah.com
+1 202 346 9201
Jon Allen
Principal
allen_jonathan@bah.com
+1 703 377 7194
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