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By Buckley Brinkman, Executive Director/CEO, Wisconsin Center for Manufacturing and Productivity
The pandemic, an uneven economic recovery, new technology, social unrest, and other forces are changing the landscape we face and make for a potentially calamitous situation.
These dislocations create unprecedented uncertainty for most manufacturers. Risk and change always create opportunity. Here are five forces manufacturers face and four actions to help take advantage of the opportunities emerging in 2021.
Force #1: Cybersecurity is the lowest-risk crime in the world with the largest pool of potential victims. Modern cyber criminals attack organizations around the world with little fear of prosecution. The criminals want money and will destroy a company to get it. Statistics show over 40% of companies are no longer in business two years after an attack. Most manufacturers don’t take straightforward steps to mitigate most exposures. Reacting after an attack can kill a business!
Force #2: No U.S. workforce growth for the next two decades. More people are aging out of the workforce than into it. The trends paint a dismal picture as fertility rates fall. Reliable spot labor markets are gone for the foreseeable future. Manufacturing talent is getting scarcer. Successful companies revamp their operations and talent strategies to match these new realities.
Force #3: Overloading our ability to act effectively. Change accelerates faster than anyone can understand. We experience it every day as marketers bombard us with new products. Many of these shiny objects promise instant success or the ultimate solution to intractable problems. Innovations, information flows, and broadening horizons make it difficult to engage the future and chart a steady course.
Force #4: Social activism over the past year changed employees. Protests last summer and the reactions to them unleashed a new source of energy. It changed the way young, talented people measure their employers. A recent McKinsey study showed that 39% of respondents refused to pursue or accept a position at a company they viewed as not inclusive. The pandemic also raised concerns about working environments, employee well-being, and companies’ focus on a purpose higher than profit. This instability creates new challenges and opportunities in the markets and inside a firm.
Force #5: Transforming the speed of business. Free-flowing information drives faster and more ubiquitous change. It’s nearly impossible to operate with any degree of confidentiality, making it difficult to maintain lasting competitive advantages or disguise business weaknesses. More people demand change more often. Constantly shifting demands put a premium on flexibility and resilience, especially during the pandemic. Successful companies adapt to capitalize on changes in the market.
The following four actions can change threats into opportunities and put a company in a proactive stance, taking advantage of trends rather than reacting to failures. Proactivity positions a company for strong growth and improving profitability.
Action #1: Get the basics right. Solid business processes and systems provide a firm foundation for future change. That solid foundation defines change as improvement and opportunity, rather than chaos and disaster. Technology engaged around solid processes sharpens performance rather than magnifying shortcomings.
Action #2: Drive productivity. Improving productivity by 30% or more mitigates the workforce shortage but also requires coordination and alignment on key operating elements. We learned that focus on productivity as an overarching goal makes it easier to maintain an operational cadence, leverage critical investments, and stay on track with strategic direction. Improved productivity strengthens market positions by making companies more competitive, opening new market opportunities.
Action #3: Fully engage employees. Most companies screw up engagement by either focusing on a “warm fuzzy” approach to make sure everyone feels valued or an information approach to make sure everyone is told about what is being done. True engagement requires creating a virtuous circle that empowers employees to participate, puts together the information they need to act effectively, and sets in motion initiatives that ultimately fuel them to participate even more, closing the circle. This engagement facilitates internal investment upskilling current employees, reducing turnover, and strengthening the company.
Action #4: Embrace change! Successful companies constantly look for effective and profitable ways to align with trends rather than defend the status quo. They try to take advantage of all trends – the ones that make them uncomfortable as well as the ones they like. Change always creates opportunities for those who discover unmet needs and fill them in ways that provide an ongoing advantage.
The pandemic created three massive upheavals – health, economic, and social – that intensified the world’s risks and opportunities. The best companies understand the five forces and engage the four actions to thrive in an era of increasing turmoil. These companies will grow and prosper during our unprecedented times.