Platt Perspective on Business and Technology

Innovation, disruptive innovation and market volatility 14: 3D printing as a working example of disruptive innovation mainstreaming

Posted in macroeconomics by Timothy Platt on July 17, 2015

This is my 14th posting to a series on the economics of innovation, and on how change and innovation can be defined and analyzed in economic and related risk management terms (see Macroeconomics and Business, posting 173 and loosely following for Parts 1-5 and Macroeconomics and Business 2, posting 203 and loosely following for Parts 6-13.)

I devoted Part 13 of this series to a discussion of standardization and customization, and what they functionally mean from a manufacturer’s and from a consumer’s perspective. Then at the end of that posting I acknowledged a major area of this discussion that I had not explicitly touched upon there, but that is coming to take a central role in the determination of what standardized and customized mean: 3D printing.

I have been following 3D printing for quite a while now, and have commented upon it at least occasionally in this blog. See for example my series Commoditizing the Standardized, Commoditizing the Individually Customized, and its:

Part 5: post-assembly line production and the emergence of a new personalized production capability 1 and
Part 13: the biological and medical 3-D printer and emergent custom manufacturing capabilities,
• Plus other related postings which can be found throughout the rest of that series at Business Strategy and Operations – 2 and Business Strategy and Operations – 3 as postings 364 and loosely following (for its Parts 1-15.)

When people first started using 3D printing technologies, just a few years before I began writing about this manufacturing phenomenon, the only materials available for use in it were certain plastics that had properties appropriate for the layered accretion assembly processes involved but that were not necessarily appropriate or effective for end-product functionality or use. Items produced were essentially all limited by manufacturing constraints for their user value and I add for their durability too as a result of that. And the detail resolution of 3D printing was limited too, as was capacity to make moving parts that would mesh together smoothly and with tight engineering tolerances. 3D printing was used primarily for producing early-stage prototypes and models, and yes – as a marketing gimmick. Then interest in this potential manufacturing option, and growing demand for it led to rapid innovative change.

3D printing began to come of age, and with:

• Capacity to manufacture products more rapidly and at lower per-item cost,
• Capacity to 3D print using a wider and wider range of materials,
• And capacity to manufacture more functionally capable finished products, and without requiring extensive post-printing processing steps.

My above cited customization oriented series came out almost exactly two years ago, with its essentially proof of principle examples of how this technology could be used, in addressing medical product and other manufacturing needs. Now in July, 2015 (with this posting actually written in late May of that year), high precision durable metal and plastic artificial replacement joints are being routinely manufactured and on a customized-fit assembly line-like basis, and with expectation that these replacement joints should routinely last for twenty and even thirty years of active use in the surgical patients who receive them.

As a perhaps best known example of that consider ConforMIS: a business that has essentially built itself around advanced 3D printing as a customized manufacturing process for artificial replacement knees, where their customization data obtained about the individual patients who are to receive their implants is derived from standard magnetic resonance imaging (MRI) image files.

What we see on the market now is still only a beginning, where 3D printing is just now becoming a standard, essentially assembly line-like option, blurring the line between standardized and customized products. And with this, I turn back to reconsider some of my earlier comments from Part 13 of this series on customization per se, and how:

• Consumers see customization at least as much as a function of novelty as of anything else, and with novelty usually the primary determinant there.

When 3D printing and similar customization processes and options become routine and when they become taken for granted and both by manufacturers and by their marketplaces and consumers, customization per se is going to lose much of its original, and even much of its still remaining meaning.

• Customized and individualized, to be more specific here, will no longer be seen as interchangeable terms, as individualized becomes a basic and even expected standardized option.

What factors drive the dynamics of this, and determine when it would make more sense for a manufacturer to pursue a more set model and build approach, or a more individualized model and build approach? I only start that discussion here by noting a few of the key due diligence factors that would enter into any such analysis. And I begin that with the absolute fundamentals, noting that ultimately it is the paying customer who determines what constitutes product value and where it is to be found. It is, after all, the customer and more generally the marketplaces that customers collectively form, that provide the revenue that make participating businesses succeed. So this is really a question of what paying customers and product end users see as offering value to them, and it is a question of where standardized or alternatively customized products might offer higher value to them. And with that in mind, I offer my starter list:

• Consumers expect and want businesses that they buy products from to offer a reliably consist product so they can know precisely what they are getting. (From a manufacturer’s perspective this means consistency of production and of quality control.)
• At the same time, consumers want to receive quality for their money, and for both functionality and appearance, and at a good competitive price. (From a manufacturer’s perspective this means producing competitive products and both for their costs to manufacture and their costs to consumers while still leaving them with a profit.)
• And consumers want both proven reliability, and for many types of goods and products they simultaneously want new and cutting edge too – which can become contradictory and at times even seemingly mutually exclusive requirements. (From a manufacturer’s perspective this means businesses establishing themselves as reliable proven sources of products and even of new types of products that do not individually have their own performance track records yet – so their end user customers can feel confident in trying and using even their newest and most cutting edge offerings.)

And this brings me back to standardization and customization – and consumers and end-users want both options, with their preponderance of preference for one or the other depending on context and situation.

• Does a product in question have to connect into and work effectively in a larger context where standardization would be needed to make that possible?
• Or would this be a more stand-alone product where considerations such as interchangeability and connectivity do not hold relevance?
• How long would standardized and customized options of a product type be realistically expected to last, and how important would the consequences be of early product failure?
• Standardization and customization are not always all or none options. Which features of a more customized option would be standardized and which of them would best be customized and even highly individualized?
• I am asking open ended questions here, of a type that only becomes overtly significant in the specific product design and manufacturing, and marketplace and consumer context.

Let’s consider my artificial replacement joint example from above, and ConforMIS and their custom-produced, individualized artificial knee devices. I write this at a time when that company has only been in business for a few years, and at a point in time when customized replacement joints that are individually manufactured for specific patients is still a relatively new and novel idea – and at a point in time when no one can know from actual in-patient experience how these devices will last under the stresses of normal day to day wear. When an artificial knee is put in place, the expectation for more off the shelf alternatives is that if they are selected with care and surgically implanted with skill, they should last for twenty and more years now. New here means less of a track record and correspondingly greater uncertainty – unless these devices have sufficient levels of already-established and validated features in materials and in basic design employed so as to form a basis of past performance reliability from that. What balancing value does the prospect of an individualized, custom-produced fit hold in this, that would give these replacement joints greater perceived value over their more established alternatives, and despite their newness from how they are made? How good a fit to the individual patient is already available anyway, with long-tested alternative products? These and similar questions collectively constitute a core due diligence exercise that both patients and their families, and surgeons and their practices need to consider when evaluating new products and types of product. And generalizing past this one area of examples – artificial replacement joints, these questions illustrate the types of questions that can become important here, and certainly when the outcomes of a product selection made can be very consequential – as is the case if a knee replacement fails.

• I write this as 3D printing and customized and even highly individualized products and manufacturing, are approaching a tipping point in becoming truly mainstreamed. The issues that I have been writing about here do not for the most part apply when a technology or approach to manufacturing is only being directed toward producing gimmick or fad items of no expected consequence or durability. But they do become important when and as such a technology comes to be used for more general and for more consequential manufacturing applications.

And as a final note in that regard, I point out that along with being used in manufacturing products such as specialty design candy – which several companies are now using 3D printing for,

• This technology is also being used to produce working prostheses such as artificial hands (such as the dextrus: see The Open Hand Project), and
• Complete working vehicles such as the Strati automobile, as manufactured by Local Motors,
• And custom shoes and a rapidly increasingly diverse more and more. 3D printing really has reached a mainstreaming tipping point.

I am going to continue this overall series discussion in a next installment where I will turn to a set of issues that I made note of addressing at the end of Part 13. In my next installment I am finally going to circle back to the beginning of this series and its Part 1: considering businesses and outside investors and their dynamics. And my goal there will be to reconsider this series’ overall discussion, or at least key elements of it from the perspective of a wider stakeholder perspective than just that of the marketplace and consumers, and of manufacturers and their leadership. Meanwhile, you can find this and related postings at Macroeconomics and Business and its Page 2 continuation.

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