THE CURRENT MARKET SITUATION: NOTHING NEW

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THE CURRENT MARKET SITUATION: NOTHING NEW

The renowned American organization scientist Henry Mintzberg has discovered that companies and their managers have been complaining of market turbulence and high cost and competition pressures for more than 30 years (Mintzberg 1998). Market turbulence is thus not a new phenomenon, he concludes, and companies should be able to cope with it.

However, there are only a few practical examples to back Mintzberg’s claim. Practical experience and research results differ not because market turbulence forces enterprises to adapt but because the speed of change adds a new dimension to market turbulence. The results of the latest Delphi study show that the speed of change has increased considerably in the last 10 years (Delphi-Studie 1998).

The five charts in Figure 1 show the primary indicators used to measure the growing turbulence in the manufacturing environment. The change in mean product life shows that innovation speed has increased considerably in the last 15 years. This change can be validated with concrete figures from several industries. A recent Siemens survey shows that sales of products older than 10 years have dropped by two thirds over the last 15 years and now amount to only 7% of the company’s total turnover. In contrast, the share of products younger than 5 years has increased by more than 50% and accounts for almost 75% of the current Siemens turnover (see Figure 2).

The Factory of the Future-0066

The Factory of the Future-0067

could be predicted based on past results. The forecast for the second half of the year, however, though based on the same procedure, was impossible due to the divergence of monthly sales volume in certain product divisions. Therefore, an enormous adaptation effort on the part of the company was required (see Figure 3).

The overall objective is to raise a company’s or factory’s transformability, the new determinant of corporate market success. Transformability is the ability to adjust rapidly to increased turbulence and recognize changing indicators early enough to initiate proactive adaptation measures.

The Factory of the Future-0068

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