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“Doors.” This is the way one of my best friends used to answer his phone at his first job after graduating with his bachelor degree in mechanical engineering . He worked for a major auto manufacturer, and he was a program manager on the door seal system for an in-production vehicle. When you think of how important it is to most people that their $20K+ car’s do not leak, it was not such a small task for a 21 year-old who just a few weeks prior was making sure the keg wasn’t leaking. (Honestly, he was more of a shotgun the beer kind of guy, but that is for a different post.)

Like in most product companies, more senior people were responsible for how these parts would fit together into some form of assembly, and assemblies fit together to create a complete product. Enter a few MBAs with command of finance, marketing, and a lot more, and pretty soon you had an industry with decades worth of experience of how supply chains, legislation, and market forces affect the center of the universe….the product.

This wasn’t a bad system. In fact, it was perfect for product-based industries, and it was refined over decades of experience. Mechanical products built on laws of the physical sciences, eventually sold to consumers who learned and crafted opinions based on observations from that world. The perception based behaviors formed in the world defined by mechanical/physical sciences matched perfectly.

So what’s the rub….why doesn’t the guy just keep on worrying about his seals and the world can go on? Well the pesky consumer is making things interesting. The thing is, the current day consumer is actively redefining where the center of demand sits. With the help of digital tools that are spreading through the consumer and enterprise markets like wildfire, consumers are demanding that EXPERIENCE is the new center of the target. They have started to observe MICRO-CUSTOMIZATION (and RE-Customization) via experiences in consumer electronics born from the computer science world. This new learned behavior is shaping a new bull’s-eye.

What tools could be shaping such a massive shift? Ah, this boring stuff that the IT eggheads have been rambling on about: Cloud Computing, Big Data Analysis, Ubiquitous Networks, yadda yadda. Mash this up with those newfangled marketers going on about: Social Media, Digital Natives, and the likes.

Are our product based firms really facing radical change due to these market shifts? Yes and No.

Yes – consumer expectations are really changing. This consumer change is beginning to drive market shaping forces, most notably recognized by industry collaboration that has never been made before. Communication technology, for instance, is now being embedded in many different products placing communication companies (chip manufacturers, carriers, and service providers) in much different parts of a value chain. Partnerships that used to be only in the IT Department’s datacenter are now being made in the product engineering conference rooms, and in some cases, the boardroom. Or further yet, consumers are expecting that information that was created in one aspect of their life seamlessly is available in other parts.

Well that was the “Yes”, markets are definitely being affected, meaning strategy must be adjusted. The good news for firms is that structural components that need adjusting is are often within a company’s skills sets already. It really just depends on how the firm defines the “system” that is its product. Fifteen years ago, when my friend started as a leader of seals (it would be so much cooler if it was the other kind of Seals…military or the kind at the zoo….), the system that industry cared about was clearly defined as a car. Done. Now the system needs to be a bit more inclusive to include the consumer’s life….how the product nicely fits into his/her digital life. That means the new strategy must focus on the consumer’s EXPERIENCE, and structural enablers of the strategy must span several industries.

So which kind of system do you get excited about?

• Part
• Assembly
• Complete Product
• Industry
• Industry meets Industry

The world needs excitement for every one of those systems, but I’m betting the most change will be at the edges of industries for the next ten years, and beyond. To me, those who clean up the messiness on the fringe where industries begin to meet one another, will find the most reward in the end.

No regrets!

Gregg