Source | INC : By Greg Satell
Completed in 1928, Henry Ford’s River Rouge plant was a marvel of its age. It was almost 100% vertically integrated, even producing its own steel, and by the 1930s over 100,000 employees worked there, producing nearly every component for the cars that Ford built. It was, at the time, considered to be a key advantage.
Nobody makes factories like that anymore though. It wouldn’t make any sense. In today’s economy, it would be impossible for any company to be competitive in more than a handful of the thousands of components that go into a modern automobile. That’s why firms today focus on building global supply chains.
While this has become a standard concept in the “old economy,” many digital businesses still struggle with it. Because so much of the high value work is based on talent, they assume that there is a competitive advantage in focusing on honing proprietary capabilities, but in a networked world, far more value can be unlocked by widening and deepening connections.
Automation Is Shifting Value To New Areas
The first Automatic Teller Machine (ATM) became operational in 1966. By the 1970s, they became commonplace and by the 80s they seemed to be everywhere. Bank tellers, it seemed, had outlived their usefulness and the death knell rang for physical bank branches. Who would need brick and mortar in an increasingly digital world?
Yet somehow, just the opposite happened. In fact, there more than twice as many bank branches today than there were in the 1970s. The truth is that automation always shifts value from one place to another, often onto a higher plane. For example, we don’t usually go to a local bank branch to facilitate a transaction any more, but to solve a problem or get advice.
Today, we’re seeing automation change the dynamics of a number of industries. Retail stores are being transformed from a place to drive transactions to one where we go for service, consultation and to pick up things we bought online. Factory work is shifting from manual labor to a place where workers operate robots.
The truth is that the work of humans is increasingly to collaborate with other humans in order to design work for machines. That means that we have to develop new skills and compensate differently if we are going to extend capabilities into the new areas where value is shifting to.