Article Published: August 20, 2014
Article Published: August 20, 2014
By Dmitri D. Shiry, Managing Partner | Deloitte – Pittsburgh
As a result of the Pittsburgh area’s economic transformation, which started in the early eighties, advanced manufacturing has emerged as one of the cornerstones of our region’s economy.
But what makes manufacturing companies—both within and outside our region—poised for continued success? A recent study by Deloitte, Cracking the Genetic Code of High Performing Manufacturers, suggests it will be those companies that currently have specific game-changing capabilities which they will continue to invest in for the future, and provide an ongoing and widening competitive advantage when compared to their peers.
At the beginning of the last decade, the manufacturing industry was in its infancy with regard to rapid globalization.
Since then, as competition has increased, so too has the need to evolve and deepen the understanding of what high-performing companies do to improve their global competitiveness. The question of why some manufacturers consistently deliver exceptional performance and move ahead, while others stay put in their positions or even fall behind, requires a new approach to understanding high-performing manufacturers’ competitive capabilities and strategies.
The “DNA” of manufacturing companies is made up of
capabilities, and many important questions around competitiveness can be answered by unraveling the DNA of high performers. Broadly speaking, an organization’s capabilities reflect its strengths relative to its primary competitors in the same target markets. These capabilities can be difficult to replicate, which can give companies an edge in creating innovative products or services to attract new customers and build customer loyalty.
Fundamentally, capabilities can be differentiated into 4 distinct classes, where each class represents certain value drivers that are embraced differently (and sometimes in the same way) by high-performing manufacturers when compared to their competitors. They are “qualifiers,” “game changers,” “creating advantage,” and “being challenged.”
“Qualifiers” are capabilities for which high performers and other companies do not significantly differ: capabilities that high performers share with all other manufacturers.
“Game changers” are capabilities in which high performers stand apart from the pack and in which they likely will continue to lead. With regard to current competitiveness, high performers are significantly better than their counterparts today on game-changing capabilities. The distinctiveness of high performers arises from a set of game-changer capabilities where other manufacturers are simply missing the boat; they are neither very good at these capabilities today nor are they placing much emphasis on them for the future.
“Creating advantage” capabilities are those in which high performers currently hold no significant advantage over other companies in current performance, but which are viewed as much more important by high performers than by other companies with regard to future competitiveness. These capabilities are referred to as “creating advantage” capabilities and are important because high performers in the process of building their future competitiveness are separating their performance on these capabilities from that of other manufacturers. If successful, and over time, these capabilities are also likely to become game changers for high performers, further differentiating them from their competitors.
“Being challenged” capabilities are those in which high performers currently hold a strong lead, but where they may lose ground as other manufacturers catch up and close the gap. Low performers place as much or more emphasis on “being challenged” capabilities as do the high performers with regard to future competitiveness.
Viewing manufacturers through the lens of these 4 types of capabilities—“qualifiers,” “game changers,” “creating advantage” and “being challenged”—reveals a clearer picture of manufacturing competitiveness.
Dmitri Shiry is the Managing Partner of Deloitte—Pittsburgh. He has more than 33 years of experience serving global manufacturing companies in the process and industrial products sector.
He currently serves as an adjunct professor in the University of Pittsburgh’s Katz Graduate School of Business.
More information on “Cracking the Genetic Code on High Performing Manufacturers” can be found at www.deloitte.com in the Process and Industrial Products website or by calling Deloitte Pittsburgh’s office at 412-338-7200.