To answer your fourth question on the impact that 3D printing will have on space research competition, my view is that the impact will be minimal over the next 10 years. At the same time, the ISS is one of the most compelling use cases for 3D printing that I’ve come across so far. My diverging views on competition vs. usefulness from 3D printing are driven by cost. Over the past few years there has been a significant amount of hype for 3D printing space, but not much has come to fruition in terms of companies adopting 3D printing for manufacturing (https://techcrunch.com/2016/07/10/whatever-happened-to-3d-printing/). The key limitations for 3D printing so far have been the lack of precision, as both you and Amar mentioned, as well as the cost of the raw materials, and the time that it takes to print. That the ISS first started with 3D printing in 2014 and has only printed limited items like a wrench further indicates that there are still kinks to be addressed.
I believe it is important to separate out the two key issues that the ISS is facing today in maximizing its ability to conduct research – high costs and long delays in receiving or repairing supplies and equipment. 3D printing is unlikely to fix costs in the medium term, but it can have a major benefit to the issue of faster responses to tool needs. That is, 3D printing is a compelling use case for the ISS because of its remote location and the importance of resolving technical issues quickly, not because of its future promise for cost reduction. Even though it may take a long time for the printer to produce the tool, as in the case of the four-hour wrench, the process will still be significantly shorter than the alternative of sending it to the station. As you mentioned, “cutting out the middlemen on Earth” is a valuable improvement to the operations of the ISS, and will likely become a requirement for the next leg of space travel toward Mars. Further, the high cost of 3D printing may actually work in ISS’s favor over the medium term, as it will not reduce cost as a barrier to entry for other organizations that may be seeking to enter this generation’s “space race.” While 3D printing will not help significantly in the goal to reduce NASA’s Advanced Space Transportation Program’s costs 100-fold by 2025, I would argue that this feature does reinforce the competitive moat that ISS holds today.
Thank you for highlighting such an important topic! Like ABW said in the comment above, I had not realized that these large pharma companies had joined forces on fighting HIV, and I find this collaboration really encouraging. The question you pose on the “responsibility” of private companies to influence public policy is an interesting one – I have typically taken a more cynical view on this question. I would argue that private companies’ involvement in public policy is more often driven by a profit motive, as in the case of tobacco lobbyists and ongoing fights on whether the tobacco industry will be required to cut nicotine levels in cigarettes (https://www.bloomberg.com/news/articles/2017-08-03/big-tobacco-won-t-let-the-fda-cut-nicotine-without-a-fight). Fortunately in the case of ViiV Healthcare, even if the major pharma companies backing its HIV-related efforts are driven by a profit motive, the end results should have a positive net impact on society.
But to answer your second question, what worries me about the ViiV Healthcare’s ability to shape public policy is that none of these major organizations seem particularly focused on fighting for it, based on your point that their reaction to taxes has been “muted.” My concern is that ViiV Healthcare is a smaller organization with multiple stakeholders and backers that are being pulled in many directions. This shared responsibility may ultimately dilute the degree of individual responsibility or urgency that each of these funders may feel toward ViiV Healthcare, which could ultimately lead to a stagnation in progress in the face of isolationist policies. In response, ViiV Healthcare should aim to develop its own dedicated lobbying efforts and greater presence in the UN, to increase its defensibility.
This was a really interesting perspective on how companies can temporarily change their entire operations, function, and standard practices to dynamically response to unexpected changes – thank you for highlighting it! To answer your first question, I agree with Diana and Whitney’s points that it would not matter if the company pursued this strategy with morality or profit-seeking as drivers. The outcome of maintaining operations for the community in a tragic event is a net benefit, even if the company’s actions were motivated by the bottom line.
However, I would also argue that it is not clear this strategy was profitable for the company, despite preserving top-line growth. While the company projected positive sales growth for the week of the hurricane, I would estimate that H-E-B likely faced heightened costs in transforming its delivery network, such as using additional helicopters or car fleets to maintain production, as well as changing orders to the suppliers with little advance notice. Alternately, if H-E-B did keep costs down while adding in these incremental steps, I would be really interested to see how the company achieved this.
I also particularly liked your recommendation that H-E-B should work even more with its suppliers up the supply chain to handle unpredictability, as I had the same thought while initially reading through your case study. Given our experience with the Beer Exercise as well as the Barilla case, and the effect that disconnects from end demand can have on the supply chain, it seems to me that H-E-B may be creating a bullwhip effect with its emergency protocols, to the extent that these decisions are not currently clear to their suppliers. To maintain supply chain efficiencies while addressing these important issues, H-E-B should also work with its suppliers to establish protocol for adjusting orders in the event of a severe weather event, particularly as they become more common with climate change.
Great article! While the industry as a whole is under pressure from climate change, I would venture that there will emerge a new class of “winners” in the space long-term – and that the key will be to pursue product innovation and leverage new engineering, scientific or production techniques. Specifically, if E&J Gallo aims to be in this camp, it should begin dedicating a portion of its land toward an “innovation lab” at which it can test some of the ideas that you proposed, such as bringing back ancient wine making strategies or berries with higher water retention. These wines can be used as pilots and produced in small batches, and the wineries can work with distributors to place these pilot wines in key retail stores or restaurants to gauge customer response, such that E&J Gallo can determine which techniques to pursue at scale.
On diversifying land as an option, I believe that creating a portfolio of different winery regions is likely a useful intermediate solution for wineries that are not bound by region specifications like E&J. However, I am skeptical of geographic diversification as a long-term solution. These wineries are still at the whim of changing climate conditions, and further requires a highly capital and labor-intensive approach.
In either approach (i.e., innovation vs. geographic diversification), E&J Gallo’s main goal should be to maintain consistency of the quality of the product. Both new geographies and techniques will add variability to the quality, which creates the risk that new products fall short of the “specifications” that customers expect to be delivered at the high end (taste, smell, color). A failure to maintain consistency of output could cause end buyers to change their alcohol consumption patterns longer term, even if wine is still in supply.
Really well written piece, Paul!
I believe the decision on whether to invest locally comes down to how the Australian government views its priorities – either as stewards of Australian taxpayer dollars first, or as an agent for driving economic growth. In my view, the Australian government should invest domestically as a means of supporting the national economy. Particularly important in this instance is that the equipment is being used for military and security purposes. I had previously looked into technology companies supplying to the United States government, and there are often limitations to where the government can source tools from, given the sensitivity of the task. In my opinion, a similar approach should be used for shipbuilding.
You also laid out several thoughtful solutions for bringing down costs of production. In my opinion, your suggestion to explore labor reform is the most important one, as a first step in addressing the key issue – namely, that there is a lack of competition. While I am not familiar with the Australian shipbuilding industry, it appears that there is currently little incentive for builders to invest in more cost-effective methods or reduce the amount of labor content. To the extent that the government can reform its union agreements, it should then issue RFPs or contractors for its next generation of ships that prioritize contractors with greater automation, and higher productivity. While I believe there is a higher standard for governments to source products locally – particularly for a military purpose – it should not have to come at an inflated cost.
Great article! To address your question on the impact of digitalization in this scenario, using automation and new technology does not compromise Shake Shack’s customer service. Shake Shack’s customer promise is to deliver a simple, high quality menu to customers at an affordable price in a moderately nice ambiance and with reasonable speed. The staff contributes to this value proposition, but I would argue that they are not a core component to the dining experience. Rather, to counter the first response comment, I would argue that the queue created by the in-person ordering process creates a bottleneck that actually hinders the customer experience in high-traffic locations, and may result in lost sales each year.
Adding in kiosks frees up Shake Shack to innovate their design space as well. Much like Ron Harrison of Marriott explained, once you understand how customers are using the space, you can redesign it to better maximize its value and productivity. With digital kiosks, Shake Shack has the opportunity to remove its standard POS in the form of the counter at which customers order, which can free up room for split-kitchens, additional tables, or new pop-up concepts that Shake Shack can use for innovations. In addition, Shake Shack is taking the right move by not only updating its customer interaction approach, but also by incorporating new technology into its internal systems. Specifically, having the mobile orders incorporated in updating the POS will enable Shake Shack to avoid challenges that the several of our TOM cases have shown when unexpected or rush orders are added into the system.