Digital transformation in a rather conservative manufacturing industry has to cope with several challenges.
On October 7, 2020 I chatted with Karen Kerr, former GE Ventures executive and now founder of Exposition Ventures, and Brian Hand, serial entrepreneur and co-founder of the FireStarter Fund. Both live and breathe entrepreneurship and manufacturing, so talking about the state of manufacturing and hardtech startups as a driver of innovation in smart manufacturing was not a problem – the only challenge was keeping our conversation under the one-hour time limit!
Digital transformation in a rather conservative manufacturing industry has to cope with several challenges. Here are some of the key challenges to overcome what we discussed:
Don’t forget about culture.
Changing processes and behaviors on the factory floor is difficult. It needs more than the C-suite telling the staff what to do. Operators on the factory floor need to be bought in and involved in the change rather than having it mandated from executives on the top floor or simply receiving directions from the IT department.
Digital transformation is much more than technology; it’s about people.
Too often there is a fear of job and role stability. Involving the factory floor operators in the change and expressing that technology is meant to add efficiency to operators’ roles or improving their safety rather than making their jobs seem obsolete, is key to culture and people management.
Manufacturing is capital-intensive; one can’t change that overnight.
The manufacturing industry requires high capital investments in production and assembly lines. One needs to take into account decade long amortization times.
Too often, transformation follows the shiny object.
Sometimes a project is launched simply for the sake of fancy technology and not for solving a real problem. Look at new tech solutions through a bigger lens of value, impact and scale.
Transformation doesn’t happen in a silo.
Transformation simply cannot be done by one party without inputs from the broader ecosystem. To drive new innovation, include your suppliers, clients and new ideas from outside your particular sector. Solutions from hardtech entrepreneurs are an important element in this.
On the question of whether COVID-19 has accelerated transformation in manufacturing and supply chains, our panelists answered with a definitive “yes, but …”. There is a general recognition that supply chains need to become more resilient. However, don’t expect an avalanche of change to happen any time soon. They expressed that there are examples being implemented today, but we will likely see much more happening in the medium timeframe, simply because change takes time to develop and implement.
For some hardtech startups the timing couldn’t have been better – their value proposition needs no further explanation because manufacturers are experiencing acute pain, i.e., think of the need for remote asset monitoring. Other startups have pivoted quickly to respond to urgent needs on the factory floor, i.e. think of tracking physical distancing measures. Only some manufacturers have been able to adapt based on prior digital transformation investments, while many have not and are struggling. And herein lies an opportunity for hardtech startups.
So what was Karen and Brian’s advice for startups focusing on smart manufacturing and IIoT?
Work on solving real pain points.
You might think you know what the problems are, but it’s better to talk to manufacturers and listen and observe.
Forge relationship or partnerships with manufacturers or corporate partners.
Building an ecosystem puts you on a fast track from concept to customer while keeping a keen focus on product development. It’s all about combining the industry knowledge with your lean startup capability.
Running a hardtech startup is capital-intensive.
Find communities that can offer access to prototyping equipment and other innovators, where you can build your first prototype, validate your concept and manufacture the first small batch of product.
This talk was a terrific segway to mHUB’s newly launched hardtech accelerator (www.mhubaccelerator.com) that provides that ecosystem of mentors and corporate partners in a community with state-of-the-art prototyping facilities. In addition, our accelerator teams will be supported by mHUB’s Product Impact fund that invests directly in the startups selected into the accelerator cohort . The program’s first cohort focuses on Industrial IoT (IIoT)/Advanced Manufacturing solutions and the call for applications is open until mid-December.
I’d love to hear your thoughts and happy to chat with you. Feel free to reach out to me at firstname.lastname@example.org.
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