The optimal org size is shrinking. Will manufacturing follow?

May 9, 2015


Traditional manufacturing companies are associated with large manufacturing facilities, manufacturing equipment and significant initial investment to take business off the ground. It is still true in many aspects. At the same time, manufacturing is changing. It becomes smaller, more agile and global. In addition to that, changes in IP ownership reshaping manufacturing industry. Similar how open source software changed the landscape of web development in the last decade, we can see new open source hardware is changing some fundamentals of manufacturing business too. What does it mean for future manufacturing companies?

The blog post "The billion-dollar, one-person startup" by Roy Bahat speaks about shrinking of optimal organizational size. It starts from a twitter chat bringing examples of software companies, investments and number of employees. Well… I’m not sure if we are going to see virtual no-employee startup with $1B valuation any time soon. At the same time, I found the discussion around this interesting. Here is an interesting passage that caught my special attention:

In the 1930s, the economist Ronald Coase theorized that companies exist because the cost of doing business inside a firm is less than the cost of doing business with parties outside of the firm. Trust, shared culture, more information, and other factors made it so you were more likely to trust an accountant who worked for your company than one who worked for someone else.

So, if the cost of doing business with outsiders falls, firm sizes might shrink – dramatically. As the quality of outside services goes up, and their way of doing business becomes more transparent to customers, and many companies who work together share a common culture (including communication tools, norms of behavior, and other patterns), companies might use outside partners for functions they’d have previously run themselves

Those companies can focus on what they do best – and that advantage might be delivered (as it was in the cases of Instagram and WhatsApp) by a tiny team. Maybe, one day, by a single person.

It made me think about surge of new hardware companies. While hardware is still hard, new manufacturing businesses are small, agile and relies on a network of providers – designers, freelancers, specialized shops, contract manufacturers and other service providers. If I will follow the same logic of the improved efficiency when doing business with outsiders, in the future we can see much smaller manufacturing companies focusing on what they can do best – innovate and develop new products and business models. If my assumption has some grounds, then we can see a growing number of small manufacturing organization operating in the network of diversified suppliers and manufacturing shops.

What is my conclusion? The manufacturing business is transforming. Large companies won’t disappear any time soon. However, I can imagine a growing part of small, agile manufacturing companies relying on an eco-system of suppliers and contract manufacturers. It will impact engineering and manufacturing software and will demand a new type of design, engineering and management tools. Just my thoughts…

Best, Oleg

Image courtesy of cooldesign at

PLM One Big Silo

June 9, 2014


Silos is an interesting topic in enterprise software. And it is a very important topic for product lifecycle management. Why so? Because, PLM is heavily relies on the ability to work and communicated across the organization and extended value chain. Accessing information in multiple departments, functional domains and application is part of this story. Silos is clearly one of the biggest PLM challenges. At the same time, silos can be also a good thing. They are reflection of org structure and sort of order we can use to navigate inside of organization. posted PLM/ERP article – “Demolish the silos in PLM”: Why Dassault’s Bernard Charles believes in the 3D Experience. Read the article and draw your opinion. My understanding – Dassault System is combine multiple technologies and product belonging to different organizational domains to improve communication and information access across silos in organization.

Dassault System is not alone in the try to crush silos. Article is referencing other PLM companies’ effort to interconnect people and products. I liked the following passage:

The main idea behind DS’ 3DExperience is to provide the IT tools needed to break down the silos and connect the development work not only to software, electronics and manufacturing, but also to the end-customers. No doubt there are similarities and touch points between what this solution aims to do and Siemens PLM’s Industry 4.0 concept as well as PTC’s broader ALM, MES and SLM/IoT scope. The difference is that Siemens PLM places a higher priority on the engineering side of product realization, whereas PTC presently zooms in on the aftermarket and product-as-a-service concept.

Interesting enough, web is also got infected with the problem of silos. Large web 2.0 platforms are very similar to enterprise software silos, which put a lot of questions about availability of information across the web. There are quite lot of debates these days around the topic of web openness and information access. I’ve been reading Aral Balkan’s article – How Web 2.0 killed the Internet. The article contains a lot of controversial opinions about development of Web 2.0 and the way Open API used to support the development of huge centralized systems such as Facebook, Google, LinkedIn, Twitter and some others.

The thing that made me think the most was the question about Openness and Open APIs. Here is the passage from the article.

An Open API is simply a limited, revokable license to access and consume a certain subset of data and/or functionality that belongs to a closed silo. It is a visitor’s pass. The terms of the pass grant you limited access for a specific time. The terms can be altered — and routinely are altered — at the whim of the API owner. This is a painful lesson that many developers learned, for example, while working to add value to the Twitter platform by building Twitter clients. They were unceremoniously dumped after expending their energies to help Twitter build up its closed silo.

These two articles made me think about demolishing organizational silos, enterprise software, and future trajectories of PLM development. The term silos is misleading. There are organizational silos and application silos. The first (organizational silos) is something that needs to be demolished to improve communication and process transparency. However, the second one (applications) is something that will be built-up to connect people, applications and data. So, there is a high probability to have PLM One Big Silo built to solve the problem of communication and streamlining of product development.

The thing that raises my concern are related to open API. Enterprise software companies might have different reasons to product data compared to Google, Facebook and Twitter. However, fundamentally these APIs are controllable by vendors that can turn them off and on depends on the strategy, competition and many other reasons.

What is my conclusion? To build an open system is a very complicated task. I can see a shift towards creating of huge monolithic vertical silos. So, PLM One Big Silo is a very possible future for customers looking for smoothly integrated systems and aligned experience. However, my belief is that future will belong to open systems, which will bring an additional level of innovation and flexibility. Long term commitment of vendors for Open API is an important indication of software trajectory. Just my thoughts…

Best, Oleg

PLM Implementations Challenges and 3 Organizational Lenses

June 4, 2014


It is not unusual to hear people speaking about PLM implementation and changes that need to be done in the organization. Very often, PLM vendors or implementers are calling this process business transformation, which is literally supposed to make a change in everything that related to product design, engineering, manufacturing, support and services.

So, to implement PLM is hard. I can admire the power of some PLM technologies. At the same time, to make customer implementing and using them takes time and energy. PLM vendors understand that. PLM service companies aimed to make implementation successful by understanding organizational specifics, adapting business processes and configuring PLM software.

It made me think about how PLM implementation challenges can be mapped on some fundamental organizational behaviors. Organizations are often inspected with 3 fundamental lenses: (1) strategic (2) political, and (3) cultural.

PLM and Strategic Lens

The strategic lens is the most often applied perspective. Under this lens, managers are looking how to optimize work and meet corporate goals. This lens is responsible for processes and procedures. This is a place where all benefits of PLM can shine. However, very often, the application of PLM strategic transformation is triggering significant organizational turbulence in everything that related to processes and procedures. People dislike the change as well as tend to spend lot of time discussing how to make an optimal strategic process alignment. It drives lots of confusion and can derails PLM implementation.

To map existing organizational processes can be a good starting point to overcome challenges that PLM implementation can face with changes of processes and procedures. A good approach can be to apply changes in the specific processes without changing whole organization in a single shot.

PLM and Political Lens

The political lens looks at the distribution of power and influence. This is one of the most complicated part. This is a part where organization is distributing power and authority. The major challenge for PLM is related to the need to cross organization silos. Organizational silos are distributing power by separating data, people and responsibility. It is also separating IT stack and data ownership.

To bridge organizational silos can be a good way to optimize organizational behaviors and establish "political contracts". PLM can be a factor that consolidate people and help them to turn organizational silos into "cylinders of excellence".

PLM and Cultural Lens

This is probably the most unclear thing. It reflects underlying attitudes and beliefs. In many situation it reflects how culture and history of the company can affect their decisions. This is where you can expect lots of historical "PLM pitfalls" to happen. You need to understand the motives of people in power in order to be able to understand and predict their decisions. It will help you to influence them and increase PLM adoption.

What is my conclusion? Don’t ignore fundamental organizational structure and mechanisms. Strategic, Political and Cultural lenses can give you a good model to survive PLM implementation and make it successful for organization in all aspects. Just my thoughts…

Best, Oleg

PLM Implementations and PLM Egoism

November 13, 2012

PLM implementation requires the change. I’m sure you had a chance to hear about it more than one times. The idea behind that is somewhat simple – PLM implementation eventually going to change the way you are doing business, your product development processes, intercommunication between people, systems and, of course, the way you are making decisions. The theme of "change" during PLM implementation is reflected online quite well in PLM blogosphere. Jos Voksuil, my long time blogging buddy, is probably one of the most prominent supporters of "change" during PLM implementation. Navigate to the following blog – The state of PLM – after 4 years of blogging to read more about how Jos sees PLM technologies and implementations these days. Here is my favorite passage about PLM implementation and change.

I believe PLM requires a change in an organization not only from the IT perspective but more important from the way people will work in an organization and the new processes they require. The change is in sharing information, making it visible and useful for others in order to be more efficient and better informed to make the right decisions much faster.

During my long flight from Boston to Europe yesterday, I read “Ending the Cults of Personality in Free Software.” This write up resonated well with my thoughts about PLM implementation and change, because personality reflected significantly in everything related in design, engineering and product development. If you are long enough in CAD business, you probably remember that very often the decision about what CAD system to use was almost religious among some engineers and designers. You can see lots of similarity these days related to the decision about Integrated vs. best of breed PLMs. Another place where discussion is heating up is related to the conversation about open vs. close PLM platforms. It takes literally years for some large organizations to decide about what PLM platform to use. One of the best way to observe it is to attend customer presentations during PLM vendor forums. You can learn many stories about organization, history of product development decisions and endless PLM roadmaps.

What is my conclusion? I found PLM implementation discussion very similar to some technological disputes. The potential danger is the ego factor. When it comes, ego factor is going one way – up! Sometimes ego may lead to a something very positive and sometimes ego can be a significant destructive factor. Time is a good validation for many egocentric decisions. This is why ERP and PLM implementations are often cyclic with 5-7 years of people’s lifecycle in an organization. When PLM implementation fails, ego might provide a bad guidance. My recommendation to PLM people is to develop "ego-detectors" :). Another piece of technology to decide about on a long transatlantic flight. Just my thoughts…

Best, Oleg

PLM and freedom in business

April 11, 2012

business-networks-300x199.jpgIf you think about PDM and PLM, you will discover a lot of “controlling” functions. Examples are easy. You need to control documents, revisions, bill of materials, changes. Later, you need to manage and control processes. We’ve been living this type of environments for many years. Today I want to talk about something that I can consider opposite to ‘control’ – I want to talk about ‘freedom’. Wait… Bear with me for a moment and don’t kill me :).

I was reading Bryony Cole blog – The change toward human freedom in business. The blog pointed to a lecture of Thomas Malone (author of The Future of Word book) and his MIT lecture. I put a small fragment of Malone speaking below in my post

The interesting aspect mentioned in the same article is related to decentralized organization. Here is my favorite quote:

Malone’s ‘future’ describes an organisation built on decentralised decision-making. Leadership has moved beyond ‘command and control’ to ‘coordinate and cultivate.’ Technology is a key driver. These concepts are very much coming to bear in the organisation in 2012. He shows an awesome video at around 35 minutes about an audience of people ‘co-piloting’ a simulated plane through a set number of targets. The point being ‘it may be possible to have much more decentralised control than we usually assume is possible. If we do that, we may be able to take advantage of much more of the true energy and potential of the people in our organizations, than today.’

The idea of decentralized organization made me think about what role the future PLM systems will play in supporting of such a type of teams. The technology of controlling and process organization needs to change. The immediate requirement that come to my mind is related to the higher level of flexibility. The current function of PLM will be more focused on how people communicate around product rather than how people control the information about the product. The collaboration between people based on the usage of the online system will cause a change. In a “previous version of PDM”, we have been thinking how to protect people from making changes in the data controlled by somebody else. These days, the importance will be shifting towards “informing people” that somebody else is working on data collaboratively. The level of granularity will go beyond the level of “controlled documents” as a result of increased technological potential.

Another interesting quote to mention: Malone’s prediction that ‘technology will impact communications so much that employees will make sensible decisions for themselves instead of just following orders from someone above them, who supposedly knows more than they do, in a management hierarchy‘ is here already.

What is my conclusion? The technology matters. What we considered as futuristic projects 4-5 years ago, now becomes a reality. The scale of systems like Google and Facebook, makes us reconsider some fundamental behaviors of the systems we built for the last 10-15 years. PDM and PLM are an example of these technologies. A different level of flexibility in communication and information will become very important element of this change. Just my thoughts…

Best, Oleg

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PLM, Organization and Information Silos: Good, Bad and Ugly

October 2, 2011

Earlier this month, I posted What is the biggest PLM challenge? Since then I had multiple conversations on twitter, blog and LinkedIn groups. Discussing a potential level of changes in the organization, I came to the topic of “information silos”. I found this topic interesting. Information silos – is it good or bad? Is it a problem at all? What PLM vision need to be applied to handle it? I wanted to quote one of my readers:

…It is about maintaining a trade-off between what is local and what is global in a company. The problem in my view is one of terminology. If we say “silos” we immediately think “bad”. This in turn promotes actions to minimize silos, which is harmful if driven too far. We need to conceptualize the organization in a different way. My take is “work practice” or similar constructs. An organization would be seen as a constellation of workpractices, each contributing to the overall goal of the organization. This would provide a perspective where trade-off, silos, business processes, etc., could be discussed from a more productive point of view.

I followed up the same topic on the round table during Autodesk Forum in Moscow. During the discussion, we found some interesting facts. Few participants mentioned that one of the challenges during PLM implementation is that PLM improve the transparency of processes and corresponded information in an organization. You can say – this is a really good thing. However, I’ve heard people faced organizational resistance. Information and process control is a power in every organization. So, people responsible for it don’t want to lose it. At the same time PLM streamlines processes it reduces the power of “gate keepers”. This is the ugly truth.

What is my conclusion? PLM is not only about technology. It can (actually does) change the way organization works top-down and bottom up. To manage this change is an important part of every implementation. However, PLM technologies nee to allow to make this change more transparent and less painful. Just my thoughts… I’d be interested to hear more about your experience. Speak your mind.

Best, Oleg

Collaboration Trends or Why I Stopped Using Google Wave?

January 11, 2010

We tend to use word “collaboration” very often in Product Lifecycle Management and related fields. Collaborative Design, Collaboration Product Data Management, Collaborative… I want to discuss how I see the world of collaboration can probably change in the future. The following four trends are my take on what will happen in the area of collaboration.

1. Infrastructure maturing.
This is obvious and not. In my view, the biggest collaborative infrastructure move for the last few years was introducing of “Unified Collaboration”. However, I think, this trend will continue and Cisco, Microsoft and others will provide more and more infrastructure solutions for the market.

2. Device-less. Collaboration will need to lose religious connection to the specific device. Growing cloud computing and improvements in the multiple device will disconnect collaboration from the “collaborative device”. We will collaborate using mobile phone, PDA, Tablet, via Internet, on multiple devices in your office.

3. Going beyond applications. The context will become The King Of Collaboration. However, you need to have rich set of information in your hands in order to set up context for collaboration. Such set of information in PLM can come only from multiple applications – requirements, analyzes, design, manufacturing planning, etc. Collaborative tools will need to go beyond a specific application to be really useful in the future.

4. Collaboration – not social. I think the name for “social” inside of organization is “collaboration”. It will take some time to understand it, but this is really true. In place of social networks, friends, connections, etc. will come organizational structures and collaborative work. However, lots of social nets practices will be adopted for new collaborative organizations.

5. Growth in enterprise search. I think, enterprise search will need to learn from success of web search. Today is still not happening. However, as much as organizations produce more and more data, search will become an important function. Today search is the commodity and very primitive in organization and new collaborative application will have to change it.

Now, how it related to Google Wave? The Alpha preview of Google Wave was announced last year on I/O conference and got a lot of visibility, discussions and speculation. It was the fist time, after introducing of Google Mail, people have tried to get Google Wave invitation even for money. Few month later after initial I/O demo, Google released about 100’000+ invitation and, in my view, satisfied the need of researching communities. Now, the ugly truth is that despite huge expectations related to how Google Wave can improve and change people collaboration, for the moment, it doesn’t happen.

What are top failures of Google Wave, for the moment?

1. Isolation. Google Wave is terrible connected to the outside world. The technological promise is in place, but practically it still not happened in beta/alpha versions. It will take time to develop all connections that allow GW to become part of your day-to-day work.

2. Another application to run. This is related to previous point. But, today, you need to run it, follow this application, etc. This is like another mail. Somewhat you need to spend more time to work on…

3. Documents and other Google App integration. This is a place where Google needs to learn from Microsoft, in my view. Microsoft’s folks did a great job integrating SharePoint and Office Apps. Google Wave need to do the same with Google Apps. This will be part of their mutual success.

4. Inbox management. This is similar to mail inbox. And need to be improved. I still don’t know how, but feels like we cannot drag old email inbox problems into new collaborative world :).. This is a place to innovate.

So, what is my conclusion today? I think we will see growing interest in collaborative platforms and application in coming couple of years. However, organization will hardly accept “yet another application to collaborate”. The platform trend will be very strong and will require certain integration and “collaboration” inside of organization. The ideas of social networks, enterprise 2.0 will be proliferating in the organization and mature in the way of open collaborative platforms.

Just my thoughts.
Best, Oleg


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