Why manufacturing transformations fail
If you lead a manufacturing business, you already know the statistic. 70% of transformation programmes fail. In fact, research dating back to 1985 confirms it, and nothing since has changed the number. What’s less understood, however, is why it keeps happening, and what a CEO can actually do about it.
Over the past 50 years, manufacturers have invested in four areas: strategy, information technology, operational technology and operational excellence. Each has delivered some improvement. However, none has delivered the value that was promised.
- Strategy: mergers, acquisitions, new markets, supply chain redesign
- Information Technology: ERP, CRM, e-commerce, mobility
- Operational Technology: automation, robotics, process control, MES
- Operational Excellence: lean, Six Sigma, the Toyota Production System
The pattern repeats across all four. Money is spent but the value isn’t realised. What we have found is that this isn’t a problem with the technology, it is a problem with the interoperability.
The real barrier is organisational, not technical
Manufacturing technology has never been more advanced or more connected. Management, however, has barely changed in 150 years. Consequently, that gap is where transformation programmes go to die.
Inside most manufacturing businesses, four domains operate as separate silos: Strategy at C-suite level, Operations running the plant, IT holding the data, and OT running the equipment. Each domain, moreover, has its own targets, its own language and its own idea of what success looks like.
The supplier ecosystem, in turn, mirrors the problem. Strategy consultants, ERP vendors, automation specialists and OT integrators each occupy one domain, and rarely speak to the others. As a result, a manufacturer typically buys from all four separately, then wonders why the pieces don’t add up to a working transformation.
Add system complexity, since no single supplier can see the whole picture, together with a procurement model that’s peer to peer rather than joined up, and the outcome is predictable. In short, four silos, working alone, don’t produce a transformation. Instead, they produce four disconnected projects.
The changes The Quorum Principle brings to your business
The Quorum Principle starts with one question: which five suppliers have the most impact on your strategic objectives? For most manufacturers, that shortlist includes a strategy advisor, an ERP provider, an automation partner, a hyperscaler and a systems integrator.
Individually, those five already know their domain well. However, the value isn’t in any one of them. Instead, it’s in bringing them into the same room, under a single mandate from the CEO, working towards one shared objective instead of five separate ones. We call this the Combination Lock.
TQP delivers this through four stages, moving from mandate to mission:
