Accelerating growth in the industrial renaissance
April 14, 2021
At the turn of the 20th century, industrial titans shaped the future and ignited incredible growth around the world—Rockefeller, Carnegie, Vanderbilt and Ford. At the heart of this revolution were new technologies and changing customer wants and needs.
Now, more than 100 years later, we are in a similar situation, where revolutionizing agents of change are shaking up the industry. The current environment is a time when information is exponential, change has become continuous, and it happens faster in a compressed time frame. The pandemic has accelerated the consumerization of B2B commerce and the competitive convergence of companies.
What is needed now is not so much an industrial revolution, but rather an industrial renaissance that will bring to the forefront the next generation of industrial leaders.
Historically, it was a change in mindset that triggered the spectacular inventions in science and art of the Renaissance. After the Middle Ages, people were somewhat freed from the grip of the church and could imagine a different way of life, based on science, empirical methods, evidence and logic. It is in this environment that thrived possibly the greatest mind of all times—the artist, the inventor, the engineer—Leonardo da Vinci.
Da Vinci was first and foremost, a restless ingenious mind. Today, we would say that he had an entrepreneurial spirit—constantly inventing and taking risks, at any cost, even if that meant entering the world of what seemed impossible. It is to this kind of growth mindset that industrial companies need to shift to in order to discover a new formula for accelerated growth.
We have found that to help industrial companies renew growth post-COVID-19, two factors need to become their obsession: customers and talent.
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Customers will move industrial companies forward
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A sure path to growth is to focus on customers and have a clearly communicated purpose. This takes exploration, planning and integration. Exploring with customers means identifying their biggest pain points and solving them. Through this process each company can assess clearly where they have the advantage and the capabilities to win market share, where they will have to define tomorrow's markets, and where they need to find valuable partners to ensure success.
Finally, planning goes hand in hand with having a comprehensive and integrated investment strategy for growth, where M&A and venture-capital-style funding are needed to fit together in the big picture. In addition, no future planning for growth will be complete without clear environmental, social and governance goals that are built into the fabric of growth.
Industrial companies’ customers are changing their mindset and are well on their way to expecting digital products and services, as well as digital ways of interactions. As a result, industrial companies should make changes now, even if some of their customers do not require them yet. They should anticipate customer needs before they become a reality and necessity.
Growth needs investment, but there is a delicate balance between investing for tomorrow and being efficient today. To maximize impact, companies need to stage a comprehensive approach to funding as the steering force for growth, while managing for short-term and long-term targets. For instance, this implies finding operating efficiencies to fund investment in future growth, but also dynamically allocating and re-allocating investment based on changes in market opportunities and customer preferences. One example of such funding is milestone-based funding, which works very much like venture capital funding, except that it is internal funding reserved by the company for growth and innovation initiatives. In this model, teams receive further funding at set milestones and based on what they have achieved. This is similar to VC-funding, where there is a risk of failure involved and no guaranteed ROI on the investment in the short-term.
Even though this may be an investment model that industrial companies have not traditionally been used to, adopting it would open the way for innovation and would fuel growth.
Growth will rely on launching new products, services and differentiated experiences with and for customers. What it takes is using rapid experimentation to de-risk these new business ventures, and it is not an easy feat to do. Successfully executing on short-term and long-term growth will require agility, and this can be achieved by: 1) working in small, multi-disciplinary teams that are empowered to make decisions; 2) tapping into new value pools and new business models; 3) rapidly moving from prototypes, to pilots, to scale; and 4) collaborating with partners to scale faster.
Industrial companies have historically been successful at making investments with a secure ROI. Adopting new funding models may push industrial decision makers outside their comfort zone and will require them to embrace the probability that failure is possible. But learning from these situations can also serve as an engine for future growth.
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Lead with visionary people
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People need to be at the heart of a company’s vision for the future, turning its vision into reality. Leaders set the vision for the future, by taking the long view and actively supporting growth initiatives that may not have immediate results in the short-term. This implies having a good understanding of the potential of emerging technologies and using this knowledge in defining a clear ambition for growth. Next comes reaching consensus at the C-suite level on the way to take the company forward, which then can be effectively communicated to everyone in the company. At the same time, this implies making prioritization choices that will encourage behaviors conducive to growth.
Create encouraging conditions to enable your people to pursue change and embrace new mindsets and behaviors. Lead by example.
Enabling growth will take a 360⁰ approach to talent, partnerships, and supporting structures and tech platforms. Diverse perspectives foster innovation and shake up the status quo. So, the way to move forward into the future is to build on the knowledge and know-how of your existing talent, while also retraining them for the skills required in a digital age. At the same time, companies need to attract new talent with a great understanding of the potential of emerging technologies.
Next comes looking for strategic partnership opportunities and establishing powerful relationships with ecosystem partners. Partners can have the technology tools and talent that support rapid experimentation, speed to market, and growth. While companies should have their own technology infrastructure to enable their talent, partners can supplement or allow for quick access to additional tech capabilities.
Put diversity and inclusion at the center of your recruiting and hiring strategy and practices. Research and invest in what attracts the best talent to the industry, while also securing the loyalty and satisfaction of your existing workforce.
Future growth will depend on people more than ever. Because the established ways of doing business are strongly challenged, a culture of growth will need to encourage new mindsets, behaviors, ways of working and learning. Companies that manage to spearhead growth will harbor a safe culture, where existing talent will be encouraged to learn rather than be expected to ‘know it all’ and where they will have the opportunities to adapt their skills based on changes in technology and the market. In addition, the culture of leading companies will facilitate the integration of new talent into the company and focus on diversity. Being inclusive and establishing a united front to harbor growth long-term will incentivize people to move towards change and will encourage collaboration across siloes.
Our recent Accenture research confirmed that the pandemic heightened people’s attention to the connection between business and purpose. As ‘makers,’ many industrial businesses found a renewed sense of purpose during the pandemic, and this is what can be reinforced through culture for the industry long-term.
Past recessions showed that companies emerged more successfully from the storm of a crisis when they struck the right balance between investment and efficiency, and when they embraced decentralization to adapt faster. All of this points to people and new ways of thinking and working. People—customers and talent—will shape future growth. Resilience and adaptability will remain the main factors for the industrial renaissance.
Many of Da Vinci’s inventions were failures, or they were not quite right. However, when looking at his notebooks retroactively, it becomes clear what a visionary mind he was. When creating his flying machine based on his study and fascination with birds in flight, he concluded correctly that an airplane could have fixed wings and propulsion engines. It took another approximately 400 years for the Wright brothers to test these hypotheses. What will be the next great industrial idea to take flight and who will be the people behind it?
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