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Achieving differentiation in business

Automation guru and futurist Jim Pinto visited Australia recently and spoke to Miguel Gonzalez about how Australia’s per capita achievements are a good sign in these times of change, where differentiation is difficult to achieve.

Youve said that in terms of technology, there is basically no difference between vendors and their products. How can they achieve a differentiation?

A vendor may have hardware products and the software that goes with them, which gives them a certain advantage because it simplifies the configuration. That, however, is a differentiation that everybody has, it’s [what I call] ‘much of a muchness’. ‘Much of a muchness’ means everybody has most of the functions; vendors have to find a way to keep ahead.

Differentiation is also a marketing function where you go and ask the customer what they’d really like. If I give you everything you need it may be too much, but too little is not enough. In the market you have an S-shaped curve where there is a point that is ‘much of a muchness’—but if you add a new curve, you have new productivity and differentiation; during this curve you have a bigger lead. It eventually levels off and the lead becomes smaller, because everyone has the same again.

One of your recent columns discussed how automation vendors stock has gone down. Why is this?

Each [automation vendor] has its own characteristics. ABB, for example, is very well-managed and very global. Global knowledge is an advantage, and it’s not just better technology, but also better implementation and sales channels. That local knowledge allows them to integrate with the Australians, the Indians and so on.

In business management, Americans and Europeans are probably the best; the Japanese still have their own approach, and so do the Germans who want to do everything their own way. Other Europeans are a bit more flexible, and Americans are the most flexible.

The emergence of Chindia, the combined power of China and India, [should be important to Australians]. What can a country like Australia, with a big territory but a small population, do to remain competitive and be on the winning side of this new world economy?

Vendors and end-users can share information between their subsidiaries. With customers like Rio Tinto, something that Schneider Electric has learned in China or India can be Australianised and brought here. That’s a very powerful synergy.

The traditional American-German-British-French power is going, going, gone. In the old days everybody used to have products from those countries, but that’s not the case anymore. Is it because the Chinese or the Indians are smarter?

Just like we have per capita income measured, I’d like to see statistics on per capita intelligence. How many inventions does Australia come up with? If 100 million people have 10 big inventions and Australia, with only 20 million, has eight, it’s a high intelligence per capita.

What are the next technological inflection points?

Wireless. What is Citect doing? I/O processing; an input here, measuring the output there. All of those things they’re measuring have wires that eventually come to the Citect machine, and you have ten or a hundred thousand. There’s a cost attached to that wire, and it’s too expensive if I want to add another point. With wireless, I can easily add a little sensor and pick up the temperature of this or that, for example.

The big inflection point that comes with wireless is a different way of dealing with multiple I/Os. Wireless will give you millions of points, and you can’t deal with them the way you do now. Current systems are hierarchically deterministic; if this is on, that is off, and if that measurement is high, this is what you need to do—all of the architecture of SCADA is deterministic.

With a million points you can’t be deterministic because they’re not all wired together, and you don’t know exactly where it’s coming from. If I leave some sugar outside, in ten minutes there will be bees or ants coming for it. How did they know it was there? One finds out and then it tells the others, and they come. I can’t tell you which ant found it, it’s non-deterministic.

What about the wireless standard discussions?

They’re nonsense. It’s funny, like two kids fighting because they’re both looking for an advantage. While they’re discussing the standards, somebody is taking the thing and actually doing something with it! The discussion of standards is, in my humble opinion, a waste of time. The wacky wireless wars. They’re fighting about nonsense, but they do it very seriously!

Thousands of engineers are graduating every year in India and China while the west struggles with a skills shortage. Does this reflect how emerging countries value different skills?

It’s asymmetric motivation. If we found a $5 note on the ground, who would get it faster, you or me? If there were two dogs, one big and one small, and a nice juicy bone, which one would get it? The big dog might not be so hungry. Sure, he wants the bone and he will take it if he can, but if the little dog is hungry, he’s motivated. The other one is not.

Motivation is hard to define. What is yours; need, an interest in what you do? Each person is different. In general, people in India and China are motivated. The advanced countries, not so much. Young people want to be football players, not engineers. Would you rather be a movie star? Yes! A doctor? Not really. It’s a human thing, and I’m not saying there’s something wrong with Americans, Europeans or Australians. If you’re hungry, are you motivated? Of course, but things are always changing. The little dog wanted the bone more than the big one, but if you feed him a few more bones, he might not care anymore. The big dog can have it.

Has the purpose of automation evolved?

Not really. Its sole purpose is to improve productivity. Do what you do, cheaper, better, faster, with no waste and fewer human beings involved.

The only reason for automation is productivity, not because it looks cute. In everyday life, there’s vanity; I could buy a $3 watch or a $3,000 one, and the productivity is the same. In factories, there’s no vanity. Why would I want to show off? Whoever makes things cheaper, faster, better is the winner.

And what can we as a country do to be winners?

Knowledge and innovation. Do something that nobody else has done. It’s an exercise that requires new thinking. Change is not immediately recognised; previous obstacles have been taken away, but if you still do things the way you used to do them, you’re still thinking in terms of those obstacles. It takes time for people to accept change, except that we no longer have the luxury of time as everything moves faster and faster.

What was the last automation news that surprised you?

When I heard Citect say [at the Citect CONNECTS User Conference at Port Douglas in August] that they had done 500,000 I/O points and they were considering one million and planning for five, that was a great surprise, hearing about this scalability. I asked [Citect global CEO], Chris Crowe: can you scale up to 50 million and he said “no, there are no factories with so many points.

Of course there are, or there will be—the old hierarchical deterministic structure is dead, that’s not how things will work in the future. The deterministic PLC is rigid, and multiple I/O with a different system has to be the way. You can make it cheaper, faster and better, very robust so it can never fail.


Founder and former president and CEO of Action Instruments, Jim Pinto is now a speaker, writer and industrial automation commentator, analyst and consultant. An electronics engineer by background, Pinto has authored two popular books for the industry, published by ISA in 2003 and 2005. His popular eNews is widely read, and his website offers commentary and news. Pinto has significant experience in the comparative study of American, European and Japanese Business cultures, and serves as an international consultant in strategic business planning, marketing, sales channel development, technology planning and acquisition strategy. He features every month within the pages of PACE magazine with his ‘Pinto’s Pointers’ column (see page 8 of this issue). Pinto currently resides in San Diego, California.

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