Sunday, October 21, 2018

D’Aveni, The Pan-Industrial Revolution

Richard D’Aveni, a professor at Dartmouth’s Tuck School of Business, has set forth a bold hypothesis. As 3-D printing or, more generally, additive manufacturing (AM) becomes increasingly sophisticated, manufacturing will be transformed and pan-industrial companies will come to dominate the world economy. At the moment, although investors certainly haven’t bought into this story, among the leading contenders for dominance are Jabil, GE, Siemens, and United Technologies.

In The Pan-Industrial Revolution: How New Manufacturing Titans Will Transform the World (Houghton Mifflin Harcourt, 2018) D’Aveni argues that, contrary to the popular myth, “the future of additive manufacturing does not lie in a world of ‘makers’—hobbylike small-scale craftspeople producing a few items at a time in little workshops scattered all over the world.” Instead, “the logic of the pan-industrial revolution—and the power of the virtuous cycle of growth that it will set in motion—will make the drive toward bigness practically irresistible.”

Pan-industrial firms are distinguished by their ability to “use industrial platforms to build flexible supply chains and powerful business ecosystems, enabling greater product diversification than practiced by any corporation of today.” In contrast to traditional manufacturing, which puts efficiency first, platform-managed AM puts agility first. Among the characteristics of platform-managed AM are: (1) products are built all at once, eliminating assembly and permitting internal complexity, (2) flexible equipment and workers are used to make a broad range of products at an affordable cost, (3)shallow learning curves facilitated by software, AI, and machine learning make innovation and entry to new markets relatively easy, and (4) short supply chains move production close to customers and minimize costs of transportation, warehousing, and inventory control.

AM has already made great strides in industries as diverse as medical devices, fashion, construction, and food. For instance, Dubai has partnered with the Chinese company Winsun to 3D print offices and homes, with a goal of having 30 percent of the city 3D printed by 2030.

Even though the future is unlikely to play out exactly as D’Aveni foresees it, he makes a strong case for an exciting new industrial revolution, the initial stages of which we are already beginning to see.

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