Paradigm shift in collaborative behaviors of companies
July 18th, 2011 Rainer Mewaldt
Part 1 – What has happened in the past?
Looking back in the history of collaborative behaviors in industry companies we see row of changing strategies, each spanning roughly a period of 10 years each. Of course, in detail these periods vary from industry to industry and company to company and the transition phases are considerable, but the big picture is clearly visible. Companies behave similar, defining business processes and setting up their IT alike until that specific strategy is facing more and more unsolved challenges, caught in a pitfall that is characteristic of that certain behavior.
Product Lifecycle Management (PLM) is a collaborative business process par excellence. Hence it provides a perfect showcase to illustrate the changing strategies and the reasons for the paradigm shifts.
So let‘s make a time travel back into the eighties. The dominant behavior was to enhance the local effectivity of functional departments. Inebriated by the cheapening IT, upcoming Unix Workstations and PCs providing enormous computing power available to the users, with new, user friendly software, companies have been enthusiastic e.g. by product development with brand new 3D CAD models, allowing simulation and other previously unthinkable virtual gadgets. In a decade that was still dominated by paper drawings and snail-mail (the good old postage), this led to a dramatic increase in the performance of engineering departments. Development time could have been cut drastically if not the complexity of the products would have been increased (often with intend) too. It was a time where most companies, even in automotive, did nearly all of their development internally. So data exchange with partners was limited. Even inside the company it was not of high importance. If required a point-to-point connection was developed. The philosophy was: every department chooses (what they think is) their best of breed. Obviously that was a very successful strategy at it‘s time.
One morning, the IT guys woke up and recognized, that the wall of their office was not longer big enough to pin the application landscape on. What has happened? Of cause we know: the CEO has announced the strategy to go international (which multiplied the individual tool selections and increased the need for internal data exchange), or to „focus on the core business“ (which created the need to collaborate with other companies), or dozen other strategies that have been up to date at the end of the eighties.
The companies had fallen in the pitfall of complexity and cost. The IT and application landscape was not manageable anymore.
So a new master plan dominated the nineties: „consolidation and harmonization“. Some companies are still working on it, but the main peak was before the end of the last century. It was a gigantic task. Complete process and IT landscapes had been ploughed. Though the automotive industry started to tear down the barriers between the companies, the nineties was the decade of company internal collaboration. The companies got back their ability to steer and adjust business processes: the manager got back their companies, sometimes after hard fights with the local application owners.
But now more and more companies realized that others were better in their special field of expertise. Generally the products had become so complex, that a company could not have all the required expertise by their own (or their product strategies were limited by their abilities). They got in danger to loose their competitiveness. But remember the purchasing processes and behaviors at that time. Most companies weren‘t prepared to collaborate successfully with system- instead of component-suppliers. It was the pitfall of lacking competence and efficiency.
From 2000 on
Especially the automotive OEMs early set the foundation stone for enormous reduction of the in-house engineering and production depth as a base for their ability to manage the explosion in complexity (that is ongoing until today). Most of the companies followed in the first 10 years of the current century.
You’ll remember that this century started with the eBusiness hype. A lot of the ideas were compelling and a lot of it is common behavior nowadays without a lot of fuss. But in the beginning, the business model was suffering the lack of process and IT capabilities. Legal issues needed to be solved, consistent change management, standards and data exchange capabilities, etc. needed to be developed. Purchasing processes to control suppliers of increased importance needed to be implemented.
Today companies are feeling more and more confident in their abilities to interact with external companies. But new dark clouds are gathering again. What is happening? The current common collaboration model is a pyramid model with an OEM (or something similar in the certain industry) on the top. He sees his role as the ultimate leader of the collaborative process, as he is assembling (not even necessarily) and marketing the product. It‘s him having created the ideas and concepts, he‘s the natural owner of the product. Companies he is working with are contractors only, ordered and controlled by him. A strictly hierarchical system.
What’s comming now?
A situation well known to all of us. Are there really indicators that the days of today’s behavior are numbered?
Stay tuned. In next weeks edition I will tell you what we are facing and why things will change in near future.
Categories: Scientific Community