Every now and then a revolution occurs in business – whether it be a product, a process or an approach. This is a good thing. This keeps the business world moving forward and growing. Recent examples include the Swatch watch, the Smart car and the arrival of the world’s cheapest car. And we are increasingly going to see China developing breakthrough business models which will revolutionise the ways we can do things.
In 1985 Nick Hayek created the Swatch watch when Swiss watch making was flooded with cheap imports and debt. He reduced the number of components from 90 to 49 and speeded up production and the Swatch was born.
In the 1990s he went on to redefine the business process to make cars. He teamed up with Mercedes Benz to create the Smart car which was capable of being built 2 hours faster than others. The factory is based in Southern France, laid out in large cruciform that houses integral supplier’s facilities that directly feed the main assembly line. The systems partners were responsible for about 70% of the engineering development from the start. The IT was outsourced to Andersen Consulting. Orders are received from shopping malls for short delivery to maintain maximum flexibility. It is anticipated that the suppliers will recover their 1.7bn DM investment during the 1st 6 years.
Tata the Indian truck manufacturer, are working on a $2100 car, to be supplied in knock down kit form to be built and serviced via the vast network of local Indian garages. This breakthrough decentralised automotive supply chain model makes a car an affordable commodity and develops a win-win franchise opportunity for people regionally to create a local enterprise and serve local pre and post transactional requirements.
The vibrant, aggressive Chinese market is likely to continue to be the seedbed of several iterations of disruptive business models for years to come… For hundreds of years up to the 1820s China, like the US today, controlled 29% of global GDP and they were really the only economic superpower.
From 1949-1976 during Mao’s government, China lost a generation of entrepreneurs. Deng changed this and this enterprise has once again been let loose by relinquishing central control and providing the infrastructure and investment to support start up and growth. From 1978 – 1991 the number of local enterprises increased from 1.5m to 18m and China has a vibrant, aggressive market where only the most rapidly evolving businesses survive.
So the challenge is for your business to keep up to speed and up to date with these emerging business models – and to think about how you can create a revolution, identify a breakthrough business model… So what’s your plan?