It costs too much to grow?

Autodesk UK recently announced the results of a survey of “more than 100 senior decision-makers, primarily working for mainstream manufacturing companies in the UK” that highlighted a problem I thought we had long overcome: the impression that design solutions are expensive and complicated, and that it takes quite a while for them to provide a return on investment.

The survey found that increasing margins (48%), improving quality (30%) and accelerating speed to market (29%) are the three most important drivers of business growth.

One unexpected outcome is the level of caution surrounding investment for growth: 62% of the respondents identified cost as the most important barrier in achieving growth, while 58% selected market conditions. To rephrase it, 62% of the 100 or so people interviewed see the cost of growing as a barrier to … growing. It’s possible, in a booming market or as the inventor of a groundbreaking product that requires no infrastructure to produce, to grow without investing for that growth — but it’s highly unlikely that a company can grow without changing something about the way it conducts business. It needs to invest in marketing to generate demand, in sales reps to close the deal, in manufacturing facilities to produce goods and in services capacity to support those new users. In an ideal world, this is an orderly process as the market moves from one step to the next but it’s usually chaos that’s hard to predict. The entrepreneur needs to take a leap of faith that an investment will pan out and have a backup plan to reverse out of the investment if demand doesn’t pick up.

But back to the world of design software. The survey yielded a few more interesting insights:
• 83% of respondents said that their investment in design technology solutions would have to go up by more than 10% to ‘improve margins’.
• 37% said that an increase of over 50% would be required to deliver ‘accelerated speed to market’ and 33% thought that a 50% increase would be the minimum needed to attain ‘reduced product development costs’.

One interpretation of these results is that these companies believe they need a massive overhaul of their design strategy to see benefits. But I would argue that incremental change is far more approachable, yields measurable results more quickly and is less disruptive to a business that appears to be very stressed as it is.

Our industry focuses so much on the needs of the large automotive and aerospace industry players that we forget: these smaller manufacturers are probably 5-10 years behind the curve in understanding and embracing the technology we all take for granted. The challenge to us is to review our marketing materials, company presentations and, yes, blog entries to provide clearer information on the business benefits of today’s tools.