It is indeed possible
The way is to simply change your business model and go beyond vertical integration, embracing an asset-light, flexible business model based on financially sound principles to better respond to market demand. This allows you to reach a much higher strategic approach in doing business with customers over the long run because you can constantly anticipate and satisfy their demands.
We call it agile positioning
Agile positioning ensures a long-term, healthy financial business model. Customers in the renewable energy industry, for example, do not have to invest in new factories, because The Switch supplier network is there to offer capacity and resources. Nothing is based on false assumptions or outdated forecasts. This is the lean way to do business – and one with a true entrepreneurial spirit. Moreover, agile positioning makes vertical integration, the hallmark of the wind power industry in particular, even more obsolete.
Recently, the Japanese Prime Minister Shinzo Abe pledged to support a 30 trillion yen ($302 billion) investment in Japan’s electricity industry over the next 10 years, which represents a 50% increase from levels in the past decade. Japan also aims to capture a total 26 trillion yen worth of energy technology sales at home and abroad in 2020, up from the current 8 trillion yen.
The Prime Minister endorsed proposals to deregulate an industry that produces power mostly from fossil fuels. He wants to boost competition among generators and make it easier for wind and solar energy to be distributed to consumers. His push to liberalize power markets is a bold attempt to increase competition and bring in new market players.
As a good case in point, YASKAWA Electric Corporation of Japan (“YASKAWA”) and The Switch just entered a strategic partnership, which is a great example of agile positioning and how to react fast to market changes with short time to market. Thanks to this, now permanent magnet generators and full-power converters are readily available to the booming Japanese market, not only in wind power but also for combined heat power, marine and industrial applications.
Being located in one of the most conservative and closed markets in the world, YASKAWA chose the agile positioning business model to bring the best technology to its market without any investment, factories or overhead. This gives YASKAWA the opportunity to move from fixed costs to controllable overhead – ultimately lowering risk and helping the company stay at the forefront of change, despite industry, technology or market disruptions.
This is a practical example of how the agile way of thinking can really bring a breakthrough into a new market, even if it is conservative.
Carlo Cecchi, Director Business Development