How to strengthen the competitiveness of our industrial companies

How to strengthen the competitiveness of our industrial companies

Industrial companies are facing new challenges which are arising from the increasing complexity of the competitive scenario. Factors are numerous: the introduction of new technologies that augment the capacities for differentiation and personalisation of the offer; a progressively specialised client segmentation; the appearance of new competitors from new economies; and, the development of talent and of innovative business models which generate sources of competitive advantage. 

More and more, there is a widespread feeling about the need to promote the competitiveness of our industrial companies as an impulse for the development and transformation of society. Fortunately, there is less and less need to explain the virtues of industry as both a generator of wealth and as a critical element in the reduction of social inequalities. We should congratulate ourselves on this, but it does not mean that we should stop making an enormous collective effort to make companies better adapted to the new realities of international competition.

Industrial companies are aware that the competitive scenario in which their activity is carried out is becoming increasingly complex and that this can be the result of a variety of factors, amongst which are: the inherent complexity in the competitiveness of the sectors; a heightened importance of the strategy-technology relationship; continued globalisation of the value chains; the continual appearance of new players either from the sector itself, or from unrelated markets; a greater trend towards the disruption and fragmentation of the industries in niche markets with their own business models; and, the challenges presented by the generation of industrial eco-systems in many countries.

Most of our clients speak highly of their virtues of quality, service and flexibility when we ask them how they are different from their competitors. Unfortunately, we need to point out to them that these virtues are not differential characteristics, but essential qualities without which it would be impossible to continue competing. Even when we have a solid base in these managerial qualities, they are not enough to ensure a sustainable project for the future. Our industrial projects need to be in a state of ongoing transformation.

The design of projects for industrial companies will be greatly affected by the intensification of competition, by increased cooperation with all the members of the industrial eco-system, both nationally and internationally, and by the shortage of skilled workers for the new era. Additional factors to be considered are the disruption of traditional industries by more focused industries with specific shared needs, the need for efficiency in ‘time-to-market’ as a source of competitive advantage, and the ongoing ability to adapt to the new setting which will require agility and speed to generate competitive advantages.

Basque industrial companies are faced with a difficult scenario and a constant challenge. Nonetheless, it is also a world full of opportunities, where the abilities and skills which have been developed over many years, can be put to optimum use. We must bear in mind that the survival rate of business projects has decreased in recent years, and this is a tendency that is foreseen to continue in the future. Furthermore, throughout our history, our industrial eco-system has shown itself capable of overcoming difficult periods. We have consolidated an industry with potential for development by means of continually transforming and adapting it to the needs of a new industrial economy that is emerging with great vitality.

Throughout my career as a business strategy consultant, I have learnt that there are no magic ‘fix-alls’ to guarantee the long-term viability of a business project, although there are a series of common guidelines and attributes. I would like to point out those characteristics of industrial strategies which can be applied to an important number of organisations, obviously with the necessary adaptation to the specifics of each business project.

One of the basic competences of our industrial companies will be the need to intensively segment the market, while identifying groups of niche markets that have similar needs. Furthermore, mechanisms for effective management of relationships with suppliers and for dealing with complex, specialised solutions will need to be devised. In short, the trend in coming years will be an escalated personalisation of supply within the appropriate framework of operational standardisation.

Albeit with some honourable exceptions, our companies display insufficient anticipation of the future needs of their clients. Most of them have supplied clients that introduce their product into the assembly lines of the companies that maintain contact with the end client, and, as a result, a deficit in commercial intelligence has arisen. Disregarding market prices wherever possible, a large part of the future competitiveness of our organisations, hinges upon their capacity to produce disruptive solutions adapted to identifiable segments. In addition, key factors in the future development of our industrial companies are such elements as the design of innovative business models within which the profound transformation regarding the space and role of the consumer can be catered for. Moreover, the capacity to adapt to the specific needs of each market/client as well as the establishment of mechanisms of co-operation with other players to meet these requirements of personalisation.

Some readers might be wondering why, in my description of the characteristics common to industrial companies, I did not begin with technology, advanced industry or 4.0 manufacturing, all of which are headlining daily in the media and in working fora. Although I am aware of the enormous importance of these elements, I consider that linking them to the market and to clients is even more critical for both our companies and the development of their strategies for the future.

Beyond a shadow of a doubt, our industrial companies must take advantage of the enormous benefits that are to be found in the field of technology. In fact, one of the greatest sources of competitive advantage in future will be the capacity to integrate these emerging and consolidated technologies in industrial models and in the service of companies. We, therefore, must set up mechanisms for the quick adoption of digitalisation (critical for future business), automatisation, etc., which not only transform the operationality of companies, but which generate innovative business models adapted to the needs of specific client segments.

We must guide and educate companies, in particular, those who are sceptical of fleeting trends about the advantages of new technologies for their business model, and about the mechanisms of their incorporation resulting in the speedy and successful integration of such transformation processes. The most relevant aspect of this process is to provide the products and services with intelligence, as an element of differentiation.

The growing revitalisation of international competition compels industrial companies to develop strategies of ‘glocalization’ which pushes us to keep monitoring global trends, future activities of industries, and keys to competitiveness. These, and other relevant aspects, must continuously be adapted to local conditions which are heavily conditioned by greater personalisation of the offer. Any company that does not incorporate these key factors of internationalisation of their activities will be facing an unfavourable future competitive scenario.

This reality, which is still sometimes defined as a trend, compels companies to have a new dimension of multiculturalism as an essential characteristic of their identity. We need to enhance the cultural tradition of companies by generating mechanisms of management that guarantee the participation of professionals from different areas in the key activities of the company (beginning with the directorships). Additionally, cultural blending in companies will spawn opportunities for competitiveness in this new international dynamic, thereby enriching the very identity of the industrial companies around us and adapting them to the new reality.

We cannot overlook the fact that business projects are designed by people. Industrial companies have to strive harder than ever to set up Communities of People within their organisations. We must attract and retain talent so as to be able to face decisive battles in future. Sadly, though, due to a combination of pressures, such as the dearth of vocational interest in science and technology, the declining birth rate and the challenges of cultural fusion and enrichment, this will be no easy feat.

The structure of these Communities must facilitate the creation of a ‘Cause’ at the heart of the organisation: An ambitious and challenging project for the future which will involve all participants, and will set up the framework for ongoing innovation to facilitate suitable targeting of intra/entrepreneurship. Moreover, this ‘Cause’ will integrate radically different competences and ways of thinking and behaving, by embracing experimentation and risk-taking as critical elements of business management. In order to guarantee their future viability, industrial companies must be attractive for new generations.

While I have placed these four critical attributes for the future of industrial companies in the spotlight, I must also mention a few others, namely: the need to generate strategic thinking in companies; the need to strengthen the bottom line to be able to successfully compete in the future; the challenge to improve productivity (lean manufacturing is more important than ever); the need to co-operate and work in networks to properly manage business models; and, finally, the establishment of a connection with the wider community by means of shared value with people, amongst others.

The current scenario that business companies are facing is certainly challenging, but also fascinating. We are in immersed in a process that is part of a larger process: The Fourth Industrial Revolution, which some are calling Digitalisation. As in all revolutionary processes, new opportunities are being created which we have to consolidate. Let us hope that Basque companies play a lead role in this process.

Sabin Azua

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