Tech is Destroying the Line Between Manufacturing and Services

Friday, March 01, 2013

Saul Kaplan, BIF

In his State of the Union Address, President Obama made a big deal about manufacturing jobs as a central part of his economic vision for the country. “Our first priority is making America a magnet for new jobs in manufacturing”, he proclaimed. I support the president’s aim and passion to revive manufacturing, but to accomplish it we first have to jettison industrial era thinking. The industrial era and the 7.1 million manufacturing jobs lost in the U.S. from 1979 to 2012 aren’t coming back. We must create new 21st century manufacturing jobs that leverage what America is great at, creativity and innovation. Manufacturing will grow in the U.S. when we accelerate the use of technology to increase productivity, enable new business models designed for mass customization and unleash the manufacturers in all of us.

Manufacturing Isn't an Industry Sector

To begin, we need to recognize that manufacturing isn’t an industry sector, it’s a capability with plenty of opportunity for innovation. We take industry sector definitions for granted. As if industries were clubs with exclusive admission criteria and secret handshakes only revealed to companies that agree to play by understood rules. The industrial era was defined by clearly delineated industries, making it easy to identify which sector every company was competing in. It was all so gentlemanly really, as if competition was governed, like boxing, by a code of generally accepted Marquess of Queensberry rules. Companies were all assigned a numerical Standard Industrial Classification (SIC) code (now North American Industry Classification System, or NAICS) identifying which industry sector they fit in to.

Those days are over. Industries don’t work that way any more, the industrial era isn’t coming back. Is Google a manufacturer or a service provider or both? Their acquisition of Motorola Mobility and U.S. production of the Nexus Q home media player suggest Google is serious about building manufacturing capability. Is Apple a manufacturer or a service provider or both? It’s hard to tell the difference between a manufacturer and a service provider and the distinction is limiting. Today the lines are blurring. Think iPod. Apple didn’t bring the first MP3 player to the market. It changed the way we experienced music by delivering on a value proposition that bundled product (iPod) and service (iTunes). Apple didn’t view the competition as other product manufacturers. Apple is a market maker not a share-taker.

Industrial-era thinking and NAICS industry codes force companies into characterizing their business models as being either product- or service-focused. This is a false choice. Making a product doesn’t define the market a company is creating or competing in. Describing a business as a manufacturer immediately constrains business model innovation opportunities. If we want to bring back manufacturing we have to start by changing our thinking about manufacturing.

Once we realize that manufacturing is a capability we can get on with democratizing it. We can all be manufacturers. In the State of the Union Address President Obama announced his plan for a $1 billion investment to build a National Network for Manufacturing Innovation composed of fifteen advanced manufacturing hubs. To bring manufacturing back to the U.S. we don’t need fifteen hubs, we need fifteen million makers creating stuff.

Everyone will have a 3D printer

It won’t be long before everyone will have access to a 3D printer. Talk about democratized manufacturing capability. Armed with a 3D printer, individual makers can create their own digital design for any imagined object or borrow a design from anywhere around the world. By simply pressing a button makers can set a 3D printer into motion rendering the physical object with layers of plastic or other material right before their eyes. What was science fiction ten years ago is reality today. It wasn’t long ago we listened to the whir of a dot-matrix printer spitting out documents from our computers, now a 3D printer renders any object we can dream up the same way. With the magic of 3D printing capability we are all manufacturers, constrained only by our imaginations.

I agree with President Obama that our national mantra should be to make more stuff. I just think the effort should be less top-down and more bottom-up. The maker movement is already in full swing. If you want to witness it first hand just go to one of the 60 community Maker Faires being held around the world in 2013. Maker Faires are all-age community gatherings of makers. They are part science fair, part county fair, and part something entirely new. 165,000 people attended the two flagship Maker Faires in the Bay Area and New York in 2012. If you go, prepare to be blown away by an infectious passion to make things, creativity to hack and reassemble the parts and a do-it-yourself (DIY) fire in the belly that won’t be stopped.

A maker movement is already happening across the country. Imagine if instead of looking for top down solutions in a small number of manufacturing hubs we encouraged the bottom up maker momentum emerging in every community. Less push, more pull. We can all be manufacturers.

Saul Kaplan is the Founder and Chief Catalyst of the Business Innovation Factory (BIF). Saul shares innovation musings on his blog at It’s Saul Connected and on Twitter at @skap5.