Will you commercialize your competitive advantage ?
I was discussing bits from Dr. John Gattorna’s most recent book “Transforming Supply Chains” with someone who is from a reading club for Supply Chain enthusiasts that we collaboratively founded last year. In a chapter on Digital Strategies, Dr. Gattorna cites the example of Ocado’s warehouse automation tech setup.
“Ocado, has designed itself what has been called a “hive” warehouse – a huge chessboard like grid, populated by 1,000 robots the size and shape of a washing machine. Each of the bots has a central cavity and set of claws it uses to grab crates and pull them up into its interior…..humans do the packing an unpacking, while in the middle, robots sort and rearrange the vast inventory 24 hours a day. “
I looked up their videos online. Here is a link to one of the interesting videos on their technology:
But here is the interesting part
And this is the one that led to a very interesting discussion….that eventually led to me writing this article. Dr. Gattorna then mentions:
” Ocado’s development has caused so much interest that they are now selling their system to other retailers.”
And this is where the other readers thought that this did not make sense. Why would you want to lose your competitive advantage by commercializing your “innovation”. And my take ?
In the innovation race, the true advantage is the early inventer/adopter advantage
The same question is asked about the Deep Learning technologies behind Amazon Go…that Amazon has decided to commercialize.
When you are working on innovation, it is essentially a race. And the advantage of being the one who “gets there first” is huge ! Very huge ! Because the general timelines are not applicable in case of innovative technologies. So if Ocado decides to commercialize their technology 4-5 years after the first implementation, they have already perfected how to leverage it optimally in their warehousing operations.
As I consistently say, the secret mantra of perfect implementation is not just the technology but the trio of people, processes and technology. In case of innovation incubated in-house, like Ocado’s technology, it provides years (sometimes a decade) of “exponential technology years” (just coined it 😉)advantage- which essentially means that they are able to assimilate that technology with their vision 10-20 times faster, since they built it from scratch.
By the time Ocado decides to sell the technology, it has already gained at least 15-20 years of “exponential technology years” advantage. Other organizations will take many many actual years to make the technology work perfectly- and by that time, Ocado would have futher refined the tech. The “exponential years gap” will always persist.
Now does it make sense why I keep saying that the time to start working on innovation and transformation was yesterday ?
Views expressed are my own.