San Francisco, CA March 6, 2017
Company

Competition is the engine of innovation. Competitive pressure has resulted in countless advancements in every industry that have made our world safer, more convenient, and more productive. Most of these advances are enabled by creative applications of new technologies.

Today, competitive pressure is pushing enterprises towards powerful drone-enabled innovation. Companies in insurance, construction, quarrying, and mining are exploring drone technology for a wide variety of applications.

There are a few common ways to approach drone adoption. Some companies choose to start using drones to make incremental improvements to existing business processes. Others are taking a strategic view, and incorporating drones as part of a larger initiative to reinvent the way data are collected, managed, and used across their business. The latter of these approaches is certainly more ambitious, and with that ambition comes a larger up-front investment of time and resources. But when successful, this holistic approach can create exponential growth.

Let’s use competition between two hypothetical aggregates companies as an example to illustrate the difference between an incremental and exponential strategy. We’ll call these hypothetical companies “Traditional Rock and Stone” and “Innovative Aggregates.”

Traditional Rock and Stone: Incremental

Before using any type of drone technology, Traditional Rock and Stone’s standard stockpile survey process took 5 to 10 days between a surveyor physically climbing a stockpile and the final volume estimate with topographical map. The company decides to begin a small-scale project to see if they can increase the speed of a survey. They equip one quarry manager with a drone, who uses it to conduct the site’s annual stockpile inspection. The volume figures produced by the drone are incorporated into the same Excel spreadsheet used for past surveys, and the revised process reduces that quarry’s survey time to 24 hours. That improvement leads Traditional Rock and Stone to roll out drones for their next annual stockpile survey across all their sites. The resulting economies of scale reduce their total cost per survey up to 50%. They decide to invest this savings into more frequent surveys, so that they can more accurately manage their stockpiles.

After a year of exploring drone technology, Traditional Rock and Stone has managed to double their stockpile survey frequency. This results in more efficient allocation of resources that enables Traditional Rock and Stone to improve their profit margin by a few percent. The next year, they will expand the area they survey with drones to include pits, leading to another incremental increase in efficiency and another 2% profit margin improvement. This places pressure on competitors, which look into their own initiatives to keep pace.

Innovative Aggregates: Exponential

Rather than work on just a single facet of site inefficiency, Innovative Aggregates takes a high-level view of their organization and identifies an opportunity for company-wide improvement. Drones are just one element of their strategy to revamp operations. They want real-time insight from their worksites to be accessible and utilized by every worker and process that could benefit from it. Their interests are in analytics that can bring together multiple sources of data to drive business impact for many operations across the organization.

They settle on four distinct processes they want to improve. In addition to stockpile volume analysis, Innovative Aggregates wants to optimize haul roads and fleet efficiency, improve site safety by monitoring highwalls, safety blocks and berms, and plan and analyze blasting operations with more frequent and more accurate data. Rather than patch together disparate products to address these processes separately, they start building the foundation for a holistic system that can support all of their desired applications, and can easily integrate more in the future.

Once the system is in place, Innovative Aggregates can manage all operations from a common cloud-based digital system. Their drone-collected data can be integrated with other site data from machines and geospatial systems. They can compare data across their sites to see which are operating efficiently and which need improvement. The power of many innovations coming together at once entirely revamps their operations, creating an exponential increase in their bottom line. They may not have seen as fast of an uptick in their bottom line as Traditional Rock and Stone did, but when their work does come to fruition, the drastic company-wide efficiency improvements enable them to beat the product price of their competition, while saving on other costs across their organization. This results in a far better margin, and the opportunity to develop new lines of business leveraging the new technology, allowing them to expand their market.

The holistic strategy may take longer than the incremental strategy to set up. But once it’s up and running, the impact is immediate, and enables continuous improvements that add to the multiplier effect. Hitting the market with an exponential advantage like this can change an industry. The company that invested in an incremental approach got a head start by sacrificing long-term strategy for a short-term advantage. Though that created a competitive edge, the advantage was short-lived. A piecemeal incremental optimization strategy forgoes the opportunity to build a foundation for long-term company-wide reinvention that can create (or destroy) market leaders.

Not every company is structured to enable this type of long-term thinking. Many are forced to focus on short-term gains rather than invest in their future. Those businesses may not be around in another decade. In the global and digitized economy, the only businesses that survive will be those that take the long view and build a foundation for exponential, data-driven growth.

Don Weigel

Don is VP of Product at Airware. Don is passionate about technologies that measure and model the world, and building tools that give people the ability to make better decisions about how to manage and improve it. Don has led development of numerous platforms for geospatial analytics, geolocation and mapping, navigation, vehicle telematics, and asset management.

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