Digital Transformation for the Agile Business Model

Change is constant, and for some businesses these days, it can be sink or swim. Businesses will not get the results they want if their best plans forward lack a vision for the future. To help, there are consultants and other methods to help get businesses going in a stabilizing direction. Sam Gupta of ElevatIQ, a digital transformation consulting firm, leads a chat on the importance of an agile structure for #USAMfgHour on Twitter.

Business Model Focus

There already are pressures to handle the demands of today as well as the uncertainty of tomorrow. While it can be tough to envision what will be necessary for the future if a business is not adapting its process or the way it interacts, it could get lost in the shuffle. Gupta says it’s important for businesses to not lose sight of their business model. So, what are the key components of the business model?

“One of the biggest pieces is identifying your customer or potential customer base and finding ways to attract them to your business,” said Dan Bigger of Chenango Valley Technologies, a custom contract molding, and tooling company.

“I'm not sure about all the components, but I would say determining and clearly defining your target market is key,” said Noah Katzenstein of Artus Corp., a shim and gasket manufacturer.

“Digital transformation reduces redundancies, increases efficiency of data entry, and accurate analytics. It also can reduce physical labor load,” said Michael Hicks of Portland Pattern, a metal fabricator and pattern tooling company.

“I think a business model includes revenue source, customers/audience, products/services, and means of accounting/bookkeeping,” said Rebecca Hart of Drive Source International/Dynamatic, manufacturer of eddy current drives, clutches, brakes, and controls.

“To have a strong business model you need to identify your best-fit prospects,” said Dave Meyer of BizzyWeb, a growth marketing agency. Also “clarify what your product solves for them (people don't buy drill bits, they buy holes, and they don't buy holes, they buy what the hole fixes) and show how you fill their need.”

“Understanding your customer's needs (offer a solution to their problem), knowing what channels/platforms to reach them, developing a relationship that can then evolve into a community, and constantly going back to the drawing board to evaluate your SWOT,” said Kyle Windham of Wear Active, a medical supply distributor.

According to Gupta, a business model has several components: 

• Customer segments
• Value prop including product and service bundles
• Revenue streams
• Channels 
• Customer relationships 
• Key activities 
• Key resources (people, machine, knowledge, IP)
• Key collaborators
• Cost structure

Thinking about all the above points and value. “Mission and vision would be slightly more tactical,” said Gupta.

How does digital transformation help with business model flexibility?

“Digital transformation allows businesses to automate certain fundamental departments in their workplace, which could save money and time. Added time and money = more opportunities to turn your weaknesses into strengths,” said Wear Active.

“As digital information is fluid (can change instantly), it allows the business model to change as needed,” said DSI/Dynamatic.

“EXPAND YOUR REACH,” said Artus.

“Being digital allows flexibility and ability to react quickly to things that change. There is always a need to stay ahead of potential issues,” said CVT.

“I like to say there's no growth without measurement - and it's hard to measure without the right digital tools,” said Meyer. “Are your processes mostly manual? Your automated, process-oriented competitor is coming to eat your lunch - probably while you're looking for a lost Post-It.”

“To me the idea of an agile business model ties in nicely with my consulting philosophy of creating self-sustaining global thought process that maximizes their use of technology as part of the solutions recommended,” said Felix Nater of Nater Associates, a workplace security and violence prevention advisor.

“Digital transformation is a process of converting your manual process to digital, so it's not necessarily limited to a tool. It's anything that helps in becoming more agile and flexible with your business model,” said Gupta. Examples are faster tooling, faster reconfiguration, easier repackaging of products, better control on pricing and discounts, faster restructuring of products and services, superior understanding of performance, and decision-making based on data.

Why do manufacturers need business model agility?

“Remember 2020 - and the reasons why we are all here? Agility,” said Ruby Rusine of Social Success Marketing, a social media specialist company.

“Things change and rapidly,” said CVT. “If you can adjust quickly to what your customers and market need it allows for expansion to changing markets and needs as they happen.”

“Business model agility allows businesses to respond and adapt quickly to any changes that may affect them (e.g., a pandemic),” said DSI/Dynamatic.

“To be adaptable to the unforeseen and things out of your control: supply chain shortages, shutdowns during COVID, price increases, winter storms, and more,” said Gina Tabasso of Dar-Tech, a specialty chemical and raw material distributor. 

“My guess is with so many changes; economic, political, social, etc., that it's important to be able to turn on a dime quickly and adapt to stay in the game,” said Kirsten Austin of DCSC, a warehouse management shipping and supply chain solution for distributors and manufacturers.

“Iterate, improve, and move forward,” said Meyer. “Small improvements make a huge difference over time: the story of the cross-country pilot who never course corrects might wind up on a different continent. Agility is being open and embracing change to stay on course.”

“To be adaptable to changing environments and markets,” said Amanda Schleede of Vital Circle, a web-based COVID-19 daily symptom tracking and contact tracing application. “Let’s be honest - did we plan for COVID a year ago?”

“You will lose your competitive positioning in your industry if you don't learn how to evolve by using innovative resources, tools, and other new methods,” said Wear Active. “It's like working out. Don't work out for a while and you'll surely lose the muscle. Keep improving.”

Manufacturers have greater risk exposure from macro-economic factors in their supply chain, said Gupta. “The more digitally they are enabled, and the more agile their processes are, the faster they can respond to business conditions.”

Riding the Waves of Change

What are key barriers to business model agility for manufacturers?

“Barriers include: old mindsets, bad management, no collaboration, lack of clarity, no focus on the customer,” said DSI/Dynamatic.

“Money, manpower, and time,” said CVT. “Upgrading things take money, finding quality people takes time, and getting things in place can take a lot of time. Ex) We added two new presses, and it took over a month to get them all in place and running.”

“Lack of - Personnel, time, and money - Access to essential tech - Internal communication - New industry knowledge,” said Wear Active.

“Inertia, fear of the unknown, status quo, laziness, lack of a vision of success, lack of funds, there are lots of barriers! Now. Do. The. Opposite,” said Meyer.

“The faster your business is internally the better it will be externally for your clients and future customers. This will build brand loyalty and trust,” said Wear Active.

“Mindset, fear, no prior experience in running a digital business, fear of losing money in making expensive purchases,” said Gupta.

How can business model agility provide a competitive edge for manufacturers?

“Everything is about speed,” said CVT. “Speed equals time and saves money. Speed to market for a product. Adapting to something new without skipping a beat. Reacting to customer needs and changes quickly.”

“Ask Cro-Magnon man how they fared against Homo Sapiens,” said Meyer. “One evolved and was agile, the other is getting pulled out of icebergs and tar-pits from 50k years ago. You don't evolve you're on your way out.”

“By its nature, agility is a competitive edge,” said DSI/Dynamatic. “How agile you are making the difference. Be quicker than the competitor, and you're likely going to get the sale before they do. Our business agility is in the hands of many people on our team, so perhaps we could have a get-together to talk about this very question!”

“Better control of pricing and discounts, better control on product and service bundle, faster and less expensive financial, marketing, and business innovations,” said Gupta. “If you are not digital, you are probably not agile. Which one step you could take today to make your business more agile?”

“I live in this space for my clients, so (this) was an easy chat,” said Meyer. “My biggest takeaway is to keep connecting with smart people who will challenge you to keep skating to where the puck is going. Iterate, improve, succeed!”

“Our business agility is in the hands of many people on our team, so perhaps we could have a get-together to talk about this very question,” said DSI/Dynamatic.

“The struggle for me is not really about being digitally agile. It is about too many tools to use - and that means to manage,” said Rusine. “I stick to a few for productivity's sake. No FOMO.”

Ultimately, it is up to a business’ top leadership to help set the tone, steer the path, and put the right people in place for an agile transformation. Small steps are better than none, and businesses can continue to improve from there.

About #USAMfgHour

Anyone who champions U.S. manufacturing can join in on a new conversation each week on Twitter using the hashtag #USAMfgHour. The chat starts at 11 a.m. Pacific Standard Time/2 p.m. Eastern. Share positive blog posts, helpful articles, news, important information, accomplishments, events, and more with other manufacturers and supporters from throughout the country.

Are you interested in hosting a #USAMfgHour chat? Contact organizers @CVTPlastics, @DCSCinc, and @SocialSMktg.