A recent research paper published by the Institute for the Future in Palo Alto, Calif., titled “The Future of Open Fabrication,” says 3-D printing will be “manufacturing’s Big Bang.” as jobs in manufacturing, many overseas, and jobs shipping products around the globe are replaced by companies setting up 3-D fabrication labs in stores to print objects rather than ship them. http://bits.blogs.nytimes.com/2011/11/13/disruptions-the-3-d-printing-free-for-all/
Of the Manufacturing IndustryRadical Change:An industry is amongst an radical change when the core assets are threatened and the core relationships with the industry environment (consumer, supplier, government) are changing.Activities (The recurring actions company performs that attract and retain suppliers and buyers)Threatened because these activities are replicable by smaller players developing unique end-productsNow, mass-products, standardization, is not required.Assets (Durable resources, including intangibles, that make company more efficient at performing core activities)Basic manufacturing assets are threatened – now there is “additive” manufacturing. Changing radically the typical “subtractive” measures of manufacturing which are costly and require mass materials (and more wasteful)However, Knowledge and IT resources are not threatened. These are encouraged and continue to be improved upon**If laws prevent 3D printing b/c of copyright infringement, the industry’s trajectory can radically change.
To be a player in the 3D printing industry, it requires significant education for firms, but little education for consumers/end users.“Because there are more than 200 different types of parts from a massive amount of suppliers, operations at MakerBot are challenging and the operations team here at MakerBot works hard to get things here on time and sometimes our suppliers meet their delivery dates and a lot of times they don’t. We’ve had issues where we order something and the first batch is perfect and the second batch is junk that we have to send back and start over with another supplier. Also, sometimes we go back to order more of something and find that there aren’t anymore and we have to get them manufactured from scratch. This isn’t a new phenomena, we’ve been dealing with this from the beginning.”
Relative AdvantageHow improved an innovation is over the previous generation.CompatibilitySTILL A VERY NICHE PRODUCT. So early adopters will generally be the current users of this product.Complexity (or Simplicity)If the innovation is perceived as complicated or difficult to use, an individual is unlikely to adopt it.There is a learning curve associated with 3D printing, but smaller companies are making it easier for the hobbyist to quickly learn.TrialabilityIf a user is able to test an innovation, the individual will be more likely to adopt it.(For example, MakerBot participates in Earth Day activities and allows users to test their machines and produce their own objects)ObservabilityAn innovation that is more visible will drive communication among the individual’s peers and personal networks and will in turn create more positive reactions to the innovation.
Research & Development/Testing:Research will always be paramount to the 3D printing industry. However, with the advent of online communities of proficient designers, manufacturers, and hobbyists, the R&D aspect to building 3D printers within the open source realm will diminish since the power now resides in the hands of the community. Designers:As R&D decreases since the power resides in the community to test and research new printing options, Designers and Builders become more valuable. Only those who have the skill set to build and make the changes by the community will be able to reap the benefits of this new community.Printing Devices:The devices themselves in actuality have little value since the open source nature of the industry allows anyone with the skill set to build a new printer by themselves. This is seen with the advent of Ultimaker – a distinct competitor to MakerBot, but used the exact build specs for the original MakerBotThe availability of these open source designs means that variants of 3D printers are easy to invent. Distribution Channels:These become less valuable as the community can create and design their own printersTech Community:This is the most valuable link in the value chain. The community now has the power to dictate improvements to the original device, and removes the specific R&D efforts for the company. While the designers and builders must keep up with these changes, the value added to the industry inherently is how open it is now to improvements made by the mass public.This is a very outside-in approach: The mass tells designers/manufacturers what they want to see
The value chain for a 3D printing industry shows that “Builders,” and ”Tech Community” are the steps that provide the value.The R, C and CA of the 3D printing industry needs to be around these activitiesResearch & Development/Testing:Research will always be paramount to the 3D printing industry. However, with the advent of online communities of proficient designers, manufacturers, and hobbyists, the R&D aspect to building 3D printers within the open source realm will diminish since the power now resides in the hands of the community. Designers:As R&D decreases since the power resides in the community to test and research new printing options, Designers and Builders become more valuable. Only those who have the skill set to build and make the changes by the community will be able to reap the benefits of this new community.Printing Devices:The devices themselves in actuality have little value since the open source nature of the industry allows anyone with the skill set to build a new printer by themselves. This is seen with the advent of Ultimaker – a distinct competitor to MakerBot, but used the exact build specs for the original MakerBotDistribution Channels:These become less valuable as the community can create and design their own printersTech Community:This is the most valuable link in the value chain. The community now has the power to dictate improvements to the original device, and removes the specific R&D efforts for the company. While the designers and builders must keep up with these changes, the value added to the industry inherently is how open it is now to improvements made by the mass public.This is a very outside-in approach: The mass tells designers/manufacturers what they want to see
The RepRap project began as an academic project in robotics with the end goal being self replication of their additive manufacturing device.RepRap Research Foundation, a non-profit group created to help advance early research in the area of open-source 3D printers.Because of the free and open source software (FOSS) aims of RepRap, many related projects have used their design for inspiration, creating an ecosystem of many related or derivative 3D printers, most of which are also Open Source designs. The availability of these open source designs means that variants of 3D printers are easy to invent.New marketplaces are enabling “peer-to-peer” to become the default way people exchange Thingiverse is a website dedicated to the sharing of user-created digital design files
When core activities are threatened, reconfigure old assets in new ways and extract value out of old resources. Don’t be confined by tradition or “what we’ve always done.” Always focus on Internal Expertise and Value add along the value chain. Need to focus on the R,C,CA.
The significance of the Replicator is that it is the first 3-D printer to break the $2,000 barrier, with higher resolution and a lower price than MakerBot’s Thing-O-Matic, which was released last year. In addition to being cheaper, the Replicator can also make bigger things, as large as a football (up to 8.9 x 5.7 x 5.9 inches).The Replicator is an early product in an emerging area, so it’s logical that a newer cheaper model will be available soon. It’s also fair to imagine that if the Replicator is a commercial success, then large, well-funded competitors with names like HP or Brother can’t be far behind.
Stratasys has as “Coming Soon” watch on their site – perhaps they’re also moving into this small build volume for individual use?
Speed has been quick – from 2009 to 2012 went from zero to over $8M worth of product sold. While the firm is still private, I could not determine the profit level over the past three years, but as indicated from its rapid production of new units as well as the doubled employee base, this is indicator that the company needs employees to meet the demands of its sales.
Animation #2 = Potential MB Trajectory if firm cannot navigate the challenges presented earlier
If it doesn’t position itself as a leader in the movement to push 3D printing into individual use, it could be swept away by competitors using the same design (which MakerBot broadcasts) as their own
Trends in Manufacturing• Robots and information systems replace workers in the more mundane, repetitive task areas• Demand for information and automation systems in manufacturing is soaring ▫ Systems need to deliver high-quality, reliable and repeatable solutions, improving their processes• From Traditional Engineering and Construction to Architecture and Medical industries are looking for these types of efficient and cost-effective solutions
Industry Transformation• Transforming raw materials into finished goods, efficiently and cost-effectively, does not have to be on a large scale• The ability for the masses to copy and reproduce physical objects individually is the next important transformation of the manufacturing industry• Significantly reduces shipping costs
Radical TransformationCore Assets CORE ASSETS1) Subtractive vs Additive Manufacturing technq.2) Knowledge Changes Threatened Not ThreatenedCore Activities Threatened Radical Change1) Replicable on Smaller CORE ACTIVITIES - “Additive” vs “Subtractive” (and Local) Scale manufacturing techniques Creative Change2) Customer relations - Activities replicable on change smaller scale Threatened Progressive Not Intermediating Change Change
Critical Success Factors• User involvement ▫ Ability to retain and develop a large user base regardless of peripheral industry served• Acquiring New Customers ▫ Through branding and being a pioneer in the industry• Innovation ▫ Continually improving upon design and capabilities of product
3D Printing Industry Analysis Barriers to Entry (Medium) Government (High) • High technology turnover • Copyright Laws • High focus on quality • Idea of Ownership changing • Requires significant education • Intellectual Property changing • Requires high capital investmentSupplier Power (Medium) Consumer Power (High)• Few materials absolutely needed that Competition (Medium) • Wealth of free information designers can’t create themselves • Many niche players • Make many technological changes to (whole idea around open source) • Differentiation Strategy end product• Specific materials can present • Interest of consumers drives demand • Consolidation in the industry barriers (high cost, high lead (not Need), so highly unstable time, but only for end consumer) Substitutes (Low) • Very specialized products • Relatively low switching costs (as new tech increases, prices drop) • But you only need one device
3D Printing Value Chain • R&D, Testing • Designers, Builders • Printing Devices • Distribution Channels • Tech Community (Forums)
3D Printing Value Chain • R&D, Testing • Designers, Builders • Printing Devices • Distribution Channels • Tech Community (Forums)
MakerBot Industries• WHO ▫ Adam Mayer , Zach "Hoeken" Smith, Bre Pettis• WHAT ▫ Brooklyn-based company founded in January 2009 ▫ Producing open source hardware, specifically 3D printers• WHY ▫ Goal to bring desktop 3D printing into the home at an affordable price. ▫ Democratizing Manufacturing• HOW ▫ Smith was a founding member of the RepRap Research Foundation ▫ Demand for the kits was so great in 2009 that the company solicited MakerBot owners to provide parts for future MakerBots from their own MakerBots. ▫ Seed funding + Venture capital
Evolution of MakerBot • The RepRap ProjectOpen Source • End goal of Self ReplicationFabrication • MakerBot Industries • “As complicated as assemblingDo-It-Yourself Kits IKEA furniture” • Thingiverse Hyper- • “Peer-to-Peer” exchangeCustomization
MakerBot Industries• Resources ▫ Knowledge and Expertise from RepRap project ▫ Significant Funding (has increased the press coverage)• Competencies ▫ Engingeering/Robotics expertise ▫ Dedication to Open Source fabrication• Competitive Advantages ▫ First Mover with Thingiverse ▫ Knowledge and Data aggregator (Experts) ▫ Is the company to replicate (see Ultimaker)
MakerBot Fit in the Industry Small Build Volume Ultimaker MakerBot Hypothetical: Stratasys? New: 3D SystemsCommercial Individual Objet Use Use 24 Stratasys Choke Points: - Scale of Product Concept 3D - Supplier Prices - New distribution channels Systems - Retaining Ownership of Userbase Platform Large Build Volume (Thingiverse)
How Well is the Firm Doing?• Speed, Size, Scope 2009 2010 2011 2012Founded and $10M invested byReceived Seed Foundry GroupFunding $75,000 and joins boardCupcake Model Thing-O-Matic The Replicatorreleased Model released Model released750 Units Sold 2300 Units Solds 3500 Units Sold Distributed in 19= $562,500 = $5,520,000 = $8,400,000 Countries5 Employees 25 Employees 54+ Employees
Current Challenges Presented• Intellectual Property Issues• Nature of Open Source Fabrication - To share, or not to share?• Smaller Players leading the charge ▫ Open to large organization resistance to this movement claiming loss of tangible assets (loss of sales, lower profits, etc.) ▫ Policy makers will have to weigh on these tangible losses to the future potential benefits• Economic Implications ▫ If anyone can print what they need in-home, what happens to those goods manufactured in China?• Potential White Spaces ▫ Large build volume for personal use ▫ Span small scale commercial and personal need
How is Firm Navigating Challenges• Vulnerable to Open Source complications ▫ New Competitors “stealing” work ▫ However, first-mover with Thingiverse gives advantage• Completely replicable Business Model ▫ Including all “proprietary” technology and knowledge – but this is their mission• Has yet to be seen how involved MB is in Legal Copyright battles• No growth strategy ▫ Simply putting out newer and newer models ▫ Is there a limit to perfection from the mass? ▫ As demand increases, need to adjust distribution process
Trajectory of Firm + Industry Emergence Convergence Coexistence Dominance Sales Volume Traditional Manufacturing Additive Manufacturing Potential MB Trajectory Time
Trajectory of the Industry• 3D printing will not be used by “everyone to make anything” but rather be used by some to make the things they care about most.• This path will slow down mass production and give options to overseas manufacturers, but not significantly.• Goal: enable the manufacturing of ideas ▫ The 3D printing industry could anticipate on and respond to demand for any type of specific goods.
Trajectory of the Firm• Dependent on Strategic Choices: ▫ Be a key player in legal complications to the copyright of ideas. ▫ Position itself as a leader in the movement to push 3D printing into individual use ▫ Continue to innovate, Move towards bigger platform, Acquire New Customers