The Acceleration Economy is Upon Us. Are You Ready?

Change comes at you fast.

Every year more and more change gets packed into the business cycle. Yet the decade since 2008 stands out for the scope and the speed at which change has occurred.

Every company, in every industry, and across every geography is being transformed by three powerful forces—customer expectations; emerging technologies; and globalized innovation and competition.

First, from aerospace and healthcare to consumer-packaged goods, customer expectations translate into ever increasing demands for faster delivery, lower prices and an always-on service relationship. This means businesses must respond with products and services that not only meet but anticipate the next level of customer expectations. Product-price-service mismatch and slow delivery can cripple any company. Speed is the new competitive differentiator.

Second, it seems cliché to highlight technology as creating change. However, the current crop of emerging technologies is driving a new super-cycle of digital transformation that will have a profound and lasting impact across the business landscape. Data is everywhere. More and more software and sensors are hooked to cloud services harvesting new and greater streams of data. Companies are in a race to deploy AI and machine learning to interpret the data to create valuable insights, better services and new products. The promise and the peril of emerging technologies is either a potent challenge or a richly rewarding pursuit.

Third, globalized innovation and competition may be the most powerful force hitting businesses today. The world is a highly interconnected and globalized space. This means things are made and sold everywhere, but also that innovation and competition can come from anywhere. Businesses that create and maintain deep and lasting partnerships throughout their value chains will be best positioned to spot changes, pick-up new ideas and fend off global rivals.

These three forces challenge companies as never before to be more nimble, adaptive and innovative in delivering products, services and experiences on a globalized scale, and optimized for their customers’ exacting expectations.

The world is different. Are you ready? 

Welcome to the Acceleration Economy.

We define the Acceleration Economy as a world of challenges and opportunities. A place where the critical issues of innovation, design, production, quality, and productivity are managed head-on, and at high speed.

The Acceleration Economy is a place where companies collaborate across deep networks and bring new products to market faster; where disruptive change is met with innovation; where new ideas strengthen competitive advantage; and where technological adoption secures a lasting market presence.

In fact, digital transformation is the source of competitive advantage and disruption in the Acceleration Economy. Celestica just completed a major study led by IDC entitled, “ Surviving Supply Chain Disruption – Digitally Transforming from Innovation to Execution,” as part of our focused efforts to understand how companies can best prepare for and stay ahead of the competition in this new world. Among the most pointed findings: fully two-thirds of supply chain executives surveyed recognize that they must embrace digital transformation, or their businesses will fail.

The Acceleration Economy requires five new guiding principles in order to meet customers’ accelerated expectations, leverage emerging technologies and compete at a global scale:

1. Transform or risk irrelevance. There is no going back. Companies that will triumph in their industry segments will do so based on new and digitally-enabled products, services, infrastructures and supply chains that their competitors cannot immediately match. Those that don’t will struggle.

The IDC study concludes, 35% of supply chain executives believe a current digital transformation-enabled competitor would have gained a competitive advantage in their markets within the next year and 32% felt it would be an external digitally enabled competitor. Extend the timeline to 5 years and it's 62% and 56%.

2. Extend innovation. Few companies have R&D resources and capabilities sufficient to meet all their future needs for new products. To accelerate and succeed companies must first eliminate silos: today’s supply chain has to be dynamic and flexible, seamlessly integrated with engineering, manufacturing, planning and execution. Through close collaboration with strategic partners throughout the value chain, companies must maximize their innovation capabilities and shorten product development cycles. 

3. Expect to be challenged. Technological innovation quickly becomes available to all players in an industry. While that is good news for challengers, it is often destabilizing for incumbents. 

As IDC points out, new technologies are a catalyst for supply chain evolution. New technologies emerging in the supply chain and connected factors such as cloud, mobile, analytics, blockchain, 3D printing, and advanced security are together pushing the current capabilities of the supply chain – and creating openings for digitally-native competitors.

4. Put quality and efficiency hand-in-hand. Customers want innovative, high quality products, but faster and at a lower cost. Digital transformation means quality and productivity are not in conflict, and both can be delivered to bring a product to market.

5. Make flexibility an imperative. Supply Chains need to keep pace and be sufficiently agile to capture fleeting upside opportunities or to mitigate fast-moving risks. 

Data from IDC strongly indicates that new technology has surpassed growth, cost savings and customer retention as the leading driver for change. Manufacturers now view new technology as the biggest driver, which reflects the perceived untapped potential of these technologies and the enormous opportunities that digital transformation presents.

Digital transformation can accelerate if it becomes a single-minded priority. For manufacturers the choice is clear: build partnerships and alliances that strategically leverage best-in-class innovation and collaborate within multi-tiered supply chains while collecting and analyzing data flowing from the full product lifecycle. Adapting to this new environment will ensure the ability to meet the ever-quickening expectations of customers with improved efficiency and higher quality.

Those companies that prioritize digital transformation across their business will succeed in the Acceleration Economy.