A Manufacturing Business Model
Steve Jobs, Steve Wozniak and Armas Clifford "Mike" Markkula, Jr. along with a few others did something very good for the world in the late 1970's. They made computing available to a much larger population of customers than was being served at the time. They identified a huge collection of likely customers who simply did not have a place to buy a computer. Then, they designed and built a computer that these potential customers could afford. How brilliant is that?
At that time, the computer industry made computers that only wealthy companies could buy, and then only if those customers could see their way to making a profit on that purchase of that computer. Industry vendors would wine and dine clients, write proposals and offer engineering services and multi-year service contracts. If you had an idea for the use of a computer in your mom-and-pop store, you might hear somebody say "Go away." Fortunately for these vendors, many companies still need big computers; but most of them did not cash in on the wider market.
Is there a lesson in all of this? I think so. Make the utility of your product available to everybody. If you don't, somebody else will.
There are other manufacturing industries that confine
themselves to rich customers. One of them is the robotics industry. Customers for useful robots quickly discover that they can either buy toys or very expensive
machines. If you need to ask how much it costs, you can't afford it. You may not be able to find out how much it costs. If they show up at all, the sales people
will show up in business garb, holding attache cases and offering proposals that include engineering services and service contracts. You cannot find a robot at
Wal-Mart that will sharpen your chain saws or climb a tree with that first safety rope.
The automation industry is certainly not the only one due for a change. Drones that do not carry much can be seven-horse-power hang gliders. Electronics and programming are light in weight. Remote-control flying observatories have many valuable uses.
There is an understandable inertia in such industries. They feel that they need all the money they can get for their product and if they can tack on services also, so much the better. Usually, they are not about to let their customers know that it is possible to make less expensive machines.
The automation businesses are in a good position to make robots more automatically and use robots to make robots. The human labor content could soon be made to vanish from the product, but who will do it?
One of the best ways to start a large, new manufacturing business is by finding a product utility that is being kept out of the hands of waiting customers. These opportunities are sometimes less than obvious. Look at businesses that serve only wealthy customers and ask yourself how costs could be lower for some version of the product. Would such a product have some usefulness? Can you dream up activities or very small businesses that would use this new product? The mere fact that nobody consciously wants the product yet is not the problem. Once you know why they should want such a product, you have identified the target market. We always need more affordable functionality. We always need useful tools to be widely distributed and available to as many people as possible. Now, do the facts justify the risk? If so, go out and change the world.
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