Slowly, but surely, we come to the realization that the AM competition is not about the hardware.
Developing the most advanced hardware - 3D printers and printing technologies - is not the equivalent of business success, and is only a questionable route to success and winning in the AM competition. Hardware success only goes so far.
Then what is the route that leads to success and winning in AM?
This is a trillion-dollar question that invites reckonings, postulations, and propositions. Maybe sitting at the digital upstream ensures the command of subsequent downstream activities? Or running a platform means that the value created on the platform is yours to capture? How about the standards, and qualifications to the standards, that seem to have given some companies exclusive access to customers and profit?
The proposition
My 20 years of organizational experience and strategy work points to the following proposition: the companies that control or constrain customer workflows will be the winners of the AM competition, and be rewarded with higher profits than their peers.
To win the AM competition, your company needs to embed your products and services in customers’ existing workflows and processes. Alternatively, you design new workflows that are superior in speed, cost, or quality, and persuade your customers to replace the existing workflows with yours. When this is done, it will seem as if your customers cannot work without your products or services lining up their businesses.
I would try to avoid the words “control” and “constrain,” which might not seem suitable to describe a commercial relationship, but that’s what it is fundamentally - reliance and control or constrain are two sides of the same coin. How many of us can work for a day without Microsoft Office or Google Search? That’s why Microsoft and Alphabet have been in good business.
In my view, the key determinant of competition outcomes is the relationship between you and your customers. Under this consideration, the industry of your business does not give you privilege to, or exclude you from, winning in AM. Industry classification is among the easiest ways to differentiate between companies, but is almost useless in the grand confluence, convergence, and co-evolution of AM. In fact, if you look at AM through the lens of industry classification, you are likely to be misled, or fall behind the competitive reality.
In other words, your company’s inborn industry matters less than whether you can regulate, change, or take charge of your customers’ workflows, regardless whether your initial engagement with your customers is through hardware, software, materials, or services. So your strategy - how you compete - matters. In fact, in AM we are witnessing a new industry taking shape that is not based on the strict classification of products and services. The creative players with solid, strategic goals are the ones to prevail.
Positioning along the value chain
To illustrate, below are examples of how some companies strategically position themselves along the control vs. constraint dimension (on the y-axis), with the positioning of their original industry along the value chain (on the x-axis). As you see, companies join the AM competition be it their main business in software, hardware, platforms, or materials.
I acknowledge the popular view that digital platforms and upstream software companies are usually in favorable competitive positions, if they can survive and stand out among their peers that are usually many. This positional advantage exists, thanks to the current regulatory environment that still allows the unrestricted competition and flow of resources along value chains. However, a company’s power to capture value is fundamentally an extension of its competitiveness. Industry classification does not define competitiveness, or the effectiveness of a company’s strategy.
What is a workflow, really?
Next I will clarify the concept of “workflow”, which may seem obvious. “Workflow” describes the processes and steps that we get things done. It has become popular in recent years along with the term “digital workflow.” These days, it has attained a general meaning to include all our work processes, which continuously alternate across the physical and digital realms. It is a modest word with a straightforward meaning.
However, it is probably not that simple if winning customer workflows, and the failure to do so, results in divergent competitive positions. In the broader business circle, more companies are talking about managing customer workflows, from the office software giant Microsoft to the 2D printing legacy in transition Xerox. So your customers’ workflows seem quite important for your own business. This gives rise to the question: What is workflow, really? What do you control, when you are in control, or constraint, of your customers’ workflows?
To think through this question, we have great company with us. Since Frederick Taylor, for over a hundred years, economists and business experts have ruminated over work processes. They give us vantage views of what workflow means to a company, and why controlling or constraining your customers’ workflows puts you in a winning position.
Coincidentally, foundational economic theories, as well as Nobel-winning economists, tried to understand what companies are, and came to the conclusion that companies are essentially bundles of transactions - workflows and processes. Organizational experts extended the enquiry to understand how processes - what they call “organizational routines” - affect how companies compete. The core insight is that, organizational routines are integral components that guide decisions and activities that make a company competitive. Similarly, business strategists view company processes as the unassuming foundations of a company’s competitiveness. Operational experts further enlighten us as to how workflow management affects productivity, costs, and quality.
Paraphrasing all the above, I would say, in a general sense, companies are bundles of various workflows, through which decisions are made and products or services delivered. It is no exaggeration to say that companies are themselves workflows.
Why this translates into profit
So what do you get, when your customers rely on your products and services to run various sorts of workflows, be it product design, resource planning, manufacturing, or customer services? One side of the coin says that you have highly competitive products and services that empower your customers’ businesses. The other side says, your customers rely on you to some extent, which gives you power in setting prices and shaping behaviors. That makes a profitable business.
In the last three decades, the business community has consistently sounded the importance of “customer focus”- focusing on and providing for what your customers need. Empowering your customers’ business is the ultimate path to giving your customers what they need.
This brings me full-circle on my proposition. The current competition in AM, at the dawn of the birth of a new industry unlike anything we knew before, is not a mindless chase. AM being an industrial technology and business, the key is to embed your products and services in customer workflows, which supports the business of your customers. As your customers adopt your products and services and rely on you for their business success, you gain control or constraint power with your customers. This translates to pricing power in the long run. So the route of workflow control/constraint is one about the relationship between you and your customers. It is the same old game that has played over and again.
The smart companies are already moving
So it sounds as if I am telling you nothing new. And nothing new may be what it is. We already saw creative plays by AM companies in hardware, materials and services to bind their customers with their products and services closer than ever before.
Carbon extended from hardware to printing materials, printing software, and process automation to own the whole production workflow inside customer organizations. Materialise Medical is not only used in design, but also in workflow qualifications, thereby controlling and constraining the medical processes at clinics and hospitals. Material companies usually constrain customer workflows, as qualifications are material-specific. And why would BambuLab, the hardware maker, create a universe of design and part sourcing in MakerWorld? All share a goal of workflow alignment.
Conclusion
The insight is not new. What is new is where it applies. AM companies still compete largely on build volume, speed, and material range — the specifications that fill datasheets and win attention at trade shows. Those are hardware arguments, and they will not determine who is still standing when this industry settles.
If you want a test for your own company, it is a simple one. If your customer replaced you tomorrow, how much of their process would they have to rebuild? If the answer is that they would buy a different machine, you are selling hardware. If the answer involves requalification, retraining, redesigned parts and a renegotiated supply chain, you are inside their workflow — and pricing power follows from that.
Before events unfold, the above proposition from me has to stay as an uncertain position. However, decision making is risk taking. Focusing on the hows of winning workflows is a risk I would take.
Ling Xiao, PhD