Product variants are growing while their life cycles are shrinking. This is good news mixed with a generous splash of the bad. Consumers love the shiny new technology being put within easy reach, but think of what this is doing to their wallets and the environment. As an example, some estimates suggest there are 600 million smartphones, thanks to their shrinking lifecycles, waiting to be recycled in the US alone.[i] Instead of trashing them, could they be put back into the hands of consumers? Could we shift from the last-century cradle-to-grave model to a responsible cradle-to-cradle model? The need to do this is urgent. Because, as you read this, another 100 million phones in the US, using Industry 4.0 technology, will be trashed this year. Add laptops, tablets, dish washers, cars, headphones, etc., to the waste pile and we are looking at staggering numbers. This begs a simple question: Does “smart” mean “doing more things” or does it mean “doing more with things”?
Truly smart factories product design implies thinking about the longevity of products and physical systems and driving environmentally sustainable businesses. Enterprises must bring as much attention to product resilience as they do to business resilience. Old-fashioned product lifecycle management needs to rise a couple of notches, to 4.0 levels. This is more easily said than done because of business compulsions. Some years ago, Volkswagen, for example, shortened its product lifecycle in the US from 7 years to 5 to bring new features and design elements to the market quicker.[ii]
There are many ways to do the same thing, as demonstrated by Tesla in the auto industry. Their products can be updated/ upgraded, without having to send them back through the manufacturing lifecycle. Last year, Tesla provided owners with Over the Air features that improved range, autonomy, braking, acceleration and safety. These have made Tesla vehicles the most advanced in the auto market.
Another way to build product resilience is to embrace the restorative and regenerative principles of a circular economy. Some industry leaders such as Ericsson, Rio Tinto, Whirlpool, Ikea and Boeing are turning this into a high art. Boeing’s product designs are such that 90 percent of their airplanes are recyclable by weight.[iv] Boeing began its journey toward responsible manufacturing in 2008 with the goal “to achieve 90 to 95 percent recyclability of the world’s fleet by 2012 with the materials recovered…directed toward high-value commercial manufacturing applications.”[v] Ikea is doing likewise, starting with intelligent product design that allows them to, say, adapt a baby cot to evolving customer needs—turning it into a toddler bed, storage solutions or a sofa.[vi] Fundamentally, the longevity of physical products and systems are being enhanced. The next challenge is to extend this thinking right across the ecosystem, from the supply chain to distribution, logistics and reverse logistics.
Product longevity acquires significance with the consumer’s proclivity for ownership on the wane. Today, consumers are swiftly moving from traditional ownership-based consumption to the more cost-effective usage-based consumption. It is in the interest of manufacturers to extend product life while simultaneously creating new services to increase service-based revenues. By extending product life, and platformizing it, manufacturers can lock consumers into their services. Over the next few years, we will witness a growth in the rent/ subscribe business model and a shrinking of the traditional buy/ own model. Industries like automobiles, healthcare and fitness, grooming, pet food, groceries, gaming, education, white goods and media, will lead this change towards the rent/ subscribe model. Keep an eye out on developments in these industries to stay on top of the trend.
For industries dependent on information technology, the goal is to design cyber physical systems where the actual shell of the physical product remains static and the software or content inside is updated, retaining it for prolonged use. This is real “smartness”, of the kind that results in genuinely better living and long-term business sustainability.
Manufacturers create different models to match the spending power and preferences of consumers. Cars, for example, come as SUVs, minivans, sedans, hatchbacks, pick-ups, etc., in dozens of colors and fuel variants. Similarly, mobile phones come in various storage sizes, colors and camera variants. These models open the doors to wider markets, but imagine the manufacturing footprint they leave behind. Lowering choice can contain this waste and inch us closer to a circular economy.
You have perhaps guessed where this is going: The upside to standardization and reducing choice can be redone by designing a product that caters to a wide range of consumers requires next-level thinking and design capabilities; it calls for experience in product and service lifecycle management; it depends on re-tooling manufacturing lines; and re-drawing supply chains. Success using this approach will depend on the heavy lifting done upstream in the design and experience departments rather than in downstream manufacturing. Tesla has achieved this. I can routinely upgrade my Tesla over the air because the super set hardware is already under the hood. The question is: How and when will your organization follow this path?
President – Digital Transformation, Strategy and Innovation,