Last year while conducting research to understand customer loyalty in the automation market, we ran across two growing customer groups, both facing daunting complexity, screaming loudly for something simple and different, but not able to get what they need. Clear demand, but insufficient supply. A growth market unable to grow.

Think of it this way:

You may be making a new cancer drug, roofing material, specialty beer or a rocket to the moon. You may be heating water or air to keep people comfortable in a campus of buildings. You may be routing cars or trains or elevators. No matter the job, to get the work done, you need machines and people to run them. Technologies like sensors, switches and computers tie the machines, systems and people together into a cohesive process.

Conventionally, automation technologies stop and start, slow down or speed up, sort or mix,  alert, or measure or track how long machines and/or people are able to work without interruption. Automation systems tie machines together across vast process networks. The automation-enabled productivity quest in high-volume, low-mix manufacturing businesses is widely documented and plays a real role in driving global economies and trade. At a manufacturing plant-level, automation can be the difference between competing and losing, because it can offer scale and quality as demand grows.

However, the market for controls, sensors and computers to run machines is constrained by the false assumption that only large, repeatable and linked processes can benefit from automation, and associated upgrades.

In fact, our research found a major new trend in today’s changing automation market that is clarified by thinking in finite terms, or what we are calling the Finite-Rules:

1. Automation is as important in smaller scale, discrete work as it is to large companies and processes; just in different ways. As a result, automation is coming online in the middle and small markets, in developing countries, and in decentralized global organizations but in much smaller bites. In these markets, a single smart machine might address one bottleneck while at the same time, do two jobs like sort or move work through a process. To do so, the machine must be smart enough to be able to be recommissioned quickly to do different jobs, and to do all jobs efficiently.
   
   To illustrate: We spoke with a specialty chemical company manager who starts and stops his production lines an astonishing 30-50 times each day in order to alter formulations to flex to demand. For him, only the smartest, most portable multi-functional machines will do. He invests heavily in technologies that “plug and play” and that know what to do next with adaptable software. Not surprisingly, he’s built his processes without much support from automation companies, instead, relying on a design process rooted in trial and error. Each time he stumbles on a new sensor or software technology that might speed the process or the change-over or lower the energy or waste required, he tries it, and if it works, he keeps it. However, when a technology is too complex (in any way), he puts on the back burner. In niche businesses, smart automation is ultra-flexible, multi-functional and right-sized, so it is hard to find.
   
   
2. Automation is as much, if not more, important in non-production environments. If you heat with geo-thermal, run a data-center requiring back-up power, or manage the flow of stock to a small chain of retailers, automation benefits are in high demand, but associated complexity can be a major barrier. A smarter machine must also be a simpler machine in every way: it must not require special support staff, special attention or cost more to maintain. It must adapt to existing infrastructure and make it more valuable. It must be smaller, use less energy and last just as long. In Finite-Rules, automation is a path to sustainability, but only if it is sustainable in and of itself.
   
   To illustrate: We studied a civil engineering company, turned design-build-operate OEM, bringing clean water systems to rural Australia, where sources for water and energy are limited. Since their machines operate mostly off-grid, automation technologies provide the backbone to link and coordinate disparate but vital functions: waste recovery, autonomous power and the core water treatment systems. Automation technologies also allow the system to be lighter, smaller and more densely packed so that they can be portable. And automation technologies provide a flow of information for remote management via satellites. But since most current commercial platforms are designed to tackle just one function (energy, waste, processing or communication), this designer/OEM spends as much time sorting through compatibility issues as they spend on system design. In small scale systems, smart automation compatibility is critical but this too, is hard to find.
   

Finite-Rules thinking applied to the automation market makes the market much larger than most prognosticators would suggest, but it makes each automation task much smaller. It sees technology as the lever that allows machines to do more work while using less energy, space, creating less waste, and perhaps most importantly, by being able to flex to changing demand.

Computers and machines are coming together. It might be better to say that one day, all machines will ultimately be computers, but only if they are smaller and have a longer useful and re-usable life.

We believe the biggest challenge is a cultural one, but not in the way that you might think. We’re not concerned that users won’t adopt smart machines. All the evidence suggests that they will and are. Instead, we’re concerned that suppliers depend too heavily on large-scale complex systems for their revenue and profit and can’t see opportunity in smaller scale.  Many depend on inherent complexity and field an army of de-mystifiers as an important revenue stream.  The war will be won, however, with ultimate and real simplicity. To do so, the whole of the automation market needs to be re-oriented towards an overall goal of sustainability though more flexible, more reliable, interchangeable, smaller and smarter systems. When this happens, we will see automation will play a real role in solving problems of resources, capital, liquidity, public debt, re-investment and quality of life.


About

This essay is part of a larger series reflecting major market swings and their consequences, as understood by the research and consulting firm FiveTwelve Group. We focus on global, regional and local issues, and new opportunities in the 21st century. This series is call The Finite-Rules. Read them all at http://www.fivetwelvegroup.com/blogs/index.cfm?Action=Displaykeywords&keywords=finite%20rules .

Finite-Rule thinking finds that there is value to be earned both in periods of growth and in periods of decline (because both are better understood as periods of change), and that a company must be able to successfully play on either end of the curve.