Is it high time to innovate for brown-field markets?

Green-field opportunities have traditionally been the focus area for innovators. An opportunity for them to demonstrate how things can be made to work better, look better and do things that were difficult to imagine. This is especially true for installations involving heavy infrastructure. It is significantly easier to adapt new ideas, concepts and products when you are setting up a new plant or process from scratch. On the other hand, there is inherently a high inertia towards trying something new in brownfield installations.  This is because brown-field installations were originally designed for particular modes of production, with established practices and technologies, incumbent customers and competitors, supporting and specialized infrastructure, deep-rooted business relationships, and sometimes extensive government regulation. This reality has dissuaded potential “brown field” innovators, especially in the automation OEM market.

Things have changed. With the economic downturn and a paucity of green-field opportunities, industrial product OEMs are, albeit reluctantly, looking to find some opportunities in existing installations. They are not finding it easy, however, and especially for emerging markets, they are really struggling.

There are a few aspects to the challenge of innovating in brown-field markets.  First, the innovation has to fit and co-exist with the existing technical infrastructure. Sometimes the interoperability problems can be really overwhelming and overshadow the benefits.  Unless strongly supported by economics (ROI) and a strong intent, this alone can stall innovation.  Consider the case of someone trying to innovate HVAC control systems to make them energy efficient in brown-field buildings (in India).  The reality is that the engineering is so non-standard that it is impossible to think of a one-for-all solution.  New products and processes, designed for mature, established markets, must be gauged in terms of their overall potential in order to fit within the complementary systems that make up the rest of the infrastructure.

Second, Economics plays a even more significant role in brown field innovation. Benefits are incremental in most cases and ROI terms tend to be longer. There are efficiencies built over a long period of time in running plants in a certain way – which is tuned to optimum.  The benefits of having a trained work force and existing physical assets often used well beyond their amortization—thus providing incumbent competitors with extremely favourable economic terms.  Anything changing this optimized environment must provide especailly compelling advantages.

Third, and perhaps most signficant, there is the human factor of resistance to change and unwillingness to take risks in operational installations. Most operations managers tend to be production focussed and do everything that they can to maximize production, sometimes sacrificing long term efficiency and cost, and taking a short and mid-term view only.

Is there a reasonable method to ensure that sustainable and economically viable innovations are possible?  Can one really make a difference? Is there a business case?  We believe there is indeed a business case and product innovators have to take some realistic bets.

  • For a starter, one should be ready to get their hands dirty; it is not enough to model and design solutions sitting in air-conditioned development centres. Problems have to be understood closer to where they are happening and solutions thought of accordingly.
  • More often than not, there is not a one-size fits all solution for all problems, even the ones that look similar. One the ground, existing systems may not be standards used and there may be inter-operability issues. Engineering must be done based on the use case and for the purpose.
  • While the innovation process may replace some of the engineering systems and processes, the change must avoid disturbing the core operations. This will help in easier adoption and avoiding change related issues.
  • Brownfield innovation, more often than not, demands local presence and closer ties with an ecosystem that understands and supports the need closely.

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