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The greatest opportunities tend to come with a cost, and in moments of great disruption, you can either invest in them or let the times steer you away from the opportunities to be gained. Tom Hazzard and Tracy Hazzard took that massive leap of faith with 3D printing. Now, they are reaping the rewards of that crucial decision. In this episode, they talk about 3D manufacturing costs, going through their own genesis story where they saw how not buying a 3D printer would cost them a great opportunity. They go into how bringing 3D manufacturing in your facility changes your production and design processes, helping you work efficiently on your business. Being in the 3D print industry where everything shifts by the minute, thinking about how you can be disruptive instead of being disrupted has become even more crucial. Listen in on this short yet important episode for more insights.
Watch the episode here:
Listen to the podcast here:
3D Manufacturing Cost: Investing in Opportunities Gained Versus Being Disrupted
In this episode, we’re going to talk about 3D manufacturing costs. We’re going to talk about opportunity costs because sometimes we have to look at things from a different perspective. We have to look at them from their perspective of, “What am I going to gain by taking advantage of researching or evaluating this opportunity? What am I potentially going to lose if I get disrupted?” I think the big question is not if you get disrupted. It’s how soon you’re going to get disrupted because that’s what’s happened to most industries, businesses and retailers, look at it everywhere around us. The disruption we all knew was coming, for instance, in mass-market retail, we were seeing store traffic declined. We’re seeing retail decline and all of a sudden, there’s nothing. It dried up overnight. How do you take advantage of those opportunities? How does that not become a complete loss for your business? You didn’t take it seriously. You said, “That will happen someday.”
We’ve experienced a lot of different large businesses and industries in the United States over the several decades of our careers and seen what happened to companies that were in denial about how things were changing in their industry. Pretty much every industry, there are early adopters. There are people that embrace change, see the opportunities there are to gain by shifting and changing the way they do things. Others that become dinosaurs, they resist change. They don’t want to accept the reality that they’ve got to adapt or they are going to be disrupted. It’s unfortunate. I think the 3D printing industry is no exception to that.
For those out there who said, “This 3D printing thing is a fad. It’s not going to happen. There’s no tipping point. It’s not going to come.” Yet now here we are in a place where 3D printing is a logical solution to get our PPE printed, to get all of these things accomplished. We want to look at that and say to ourselves whenever these things come on and we hear disruption in the word, instead of tuning out, we start to say, “What if they’re right? We lose everything and our business shifts and change underneath us. What would we wish we knew? How can we look at it from that perspective?” That means what today should we start researching? What should we leverage? What should we start looking into? What should we start listening for?
A couple of the things that HP has given us, which I’m grateful for, because they’re an interesting case study. They given us two case studies, which are downloadable for the episodes. One is about How SmileDirect is using the HP Multi-Jet Fusion technology to scale their business model. It’s not about what machine they’re using. It’s about the scaling of their business model and how they’re using that. They disrupted and are disrupting dental industry. Things are going on there. It’s interesting to see this case study and look at what a disruption model might look like.
Another one that they’ve given us is about customized eyewear. We’re talking about personalizing and customizing, not a full disruption of an industry, but creating a segment within one and opportunity carved out for a need that’s not being met because so much eyewear is mass-produced. As we’ve learned through our own eyewear exploration that there are few companies that control that. Looking at that, I think these are some of the ideas that we want to plant in your mind. We don’t want to look at what’s the cost of bringing 3D manufacturing into our facility. What’s the cost of 3D manufacturing? We’re looking at what is the opportunity for utilizing it and what’s the potential loss if things are disrupted. I wish I knew about it and I wish I had access to it.
I think those are two great examples. I think you need to be considering it, but at what point do you invest and maybe experiment in new technologies and how you can be disruptive instead of being disrupted?
A lot of times, we set our metrics in such a way that we’re looking at the part cost of something. What about the supply chain disruption cost? Do we need to have access to that? Do we need to build core capability on it? Do we need to get a deeper understanding? Do we need to buy a printer now so that we have some in-house understanding of how things can work so that tomorrow we can see how we could flexibly shift? How we could buy a whole fleet of them if necessary, whatever it is so that we can take advantage of the learnings that we created to understand what it might be like. A lot of times, the cost-effective bottom line balance isn’t there now, but we’re planning for the future. We’re not planning for yesterday.
We’re not always taking something that worked before and basically saying, “How can we be more profitable with it?” That’s a different model. That’s a value-add engineering. That’s your VA. We want to look at it from a different perspective. We’re looking at the future cost of things. The future costs of doing business, the future cost of loss of business and how can we be prepared for that now? Sometimes we need to use a service bureau. We don’t need to be doing it ourselves. We can use 3D as a service or products having products outsourced until it becomes realistic for us to do things in-house. There’s a whole host of ways to get around the cost of 3D printers or the cost of what you want to build in to start 3D manufacturing. There’s a whole way around that, but it starts with exploration and thinking.
Exploration, thinking and discovery. Oftentimes when looking at the opportunity cost, one thing that is all too often overlooked is time savings and labor savings. People are looking at capital expenditures, getting a machine, using it and experimenting. Certainly, there are investment costs, but the opportunity is speed to market. That’s a lot of times when you’re being disrupted, you’re going to find yourself much farther behind the competition. No amount of money and time you throw it is going to help you catch up fast enough. You’re going to be me too. You’re not going to be an innovator and on the front edge of this.
That ties perfectly into the episode that we’re reusing here, we’re repurposing and have re-edited into this episode for you because that’s exactly where we were. We’re sitting at that at that point of, “Do we invest our time and money into something that we don’t know if it’s going to pan out or not?” That’s where this episode first aired and first addressed, 3D manufacturing costs and 3D opportunity cost.
I hope you enjoy this episode. Let’s go to it. It’s still relevant and I hope you agree with us.
3D Manufacturing Cost: Investing in Opportunities Gained Versus Being Disrupted — originally aired on August 16, 2017
We’re going to talk today about the opportunity cost of 3D printing. The previous podcast got us thinking about the opportunity cost that we went through when we decided whether or not we were going to 3D print it all. We sat there and Tom wanted a 3D printer really badly. Tom didn’t really care about the opportunity cost, he didn’t care about the financial consequences. He just wanted it. We’re going to tell the story again. It’s been a long time since perhaps we told our genesis story of how we started 3D printing. We’re going to quickly go over it.
I was very pregnant and very pissed off. I was pregnant with my third daughter. I was very pissed off because we had a client who didn’t pay us. We were very cranky because we were flying on an airplane all the way across the country for a very freezing cold Thanksgiving with our family back East. Tom kept pulling out the Make Magazine and he was all excited about the latest 3D printers, “We should buy one for our business.” I was like, “We just got stiffed $4,000.” There was no way I was buying a $4,000 printer. He kept up at it. He kept saying, “We should do it.” What he sold me on was what I would call the opportunity cost. The fact that we believe strongly in our business and skill building and being ahead of innovation and understanding innovation and how it’s applied for our clients. If we don’t try this, we’re missing the opportunity. That’s how he sold me on it because I kept pushing back saying, “What are we going to use it for? What are we going to make with it? Our clients don’t need this type of prototyping. It’s not a service we are going to provide today.” When you look at it from that, you miss the opportunity of it.
The opportunity being, we’re doing this every day now, is that we have clients who are developing products. The old way of developing product is you draw it on paper or you draw it in CAD in the computer and you think you understand three-dimensionally what it is and how it’s going to look and how it’s going to feel. Until you physically have it, there’s something missing and oftentimes, when you finally get something in 3D, let’s say you had a model maker build it or you sent it out or whatever, you get it back and it’s not what you expected and you end up making changes. We very quickly print things here in our office and experience something, “That wasn’t what I thought it was going to be.” You have this quick iterative process that speeds us up.
I’m impressed with the fact that we are actively using it with clients. I certainly didn’t expect us to be, but our client base diversified to smaller products, which most of them were very large in the past. At the time at which we were evaluating it, the opportunity, we just didn’t have a lot of smaller products we were doing for clients. They were ingredients in a bigger product we might have used it for. We are doing that because it’s diversified so much for us. I say still, we probably don’t use it more than 10% of the time with our clients. Even still analyzing it, you would be like, “Do we really need a 3D print tech in our office? Do we need a 3D printer?” All of those things, you may still say that the cost benefit analysis would come out saying, “No, it’s not.”The early adopters in the #3Dprintindustry are people that embrace change and see the opportunities there are to be gained. @hp @zbyhp Click To Tweet
You’re disregarding again the opportunity cost of how it’s changing your process, speeding things up, things that may not be completely measurable and tangible. Not diving in and buying a 3D printer, that’s why it came to my mind again when we were talking about the cheap 3D printers, is that not doing anything just because of cost seems the wrong thing when there are so many cheap 3D printer options out there. In buying one at that rate, you’re starting and you’re evaluating that opportunity for yourself and you’re starting to see whether or not those intangibles are making sense for your business, for your personal growth, for your skill building.
For us, we were evaluating our business and what we’re going to do going forward. Of course, once I convinced Tracy, we saw 3D printing as a big opportunity and we didn’t want to be behind the curve. We wanted to be on the front side of that curve. That doesn’t mean that now it’s not worth doing if you’re new to 3D printing. I think it’s even more worth doing because I think there’s a lot of more proof of application. In various areas, there’s proof of people using it in areas that have made it more tangible and are making it more competitive in terms of if you’re in that marketplace and you’re competing against them. They’re utilizing it, it’s speeding up their process, it’s helping them. I do think there’s even more tangible and applied reasons to buy one now.
Including what we’re seeing as actual 3D printed end-use consumer products, which I think a few years ago a lot more people would have scoffed at the idea of that because, “They’re just prototypes or they’re just little plastic things.” You have what’s going on with the bespoke designs that are 3D printed end-use products. What we’re actually doing with some of our clients and making 3D print end-use products, in short initial product runs that are sold on Amazon, so they can test the design before they spend tooling dollars and make sure that, as you always say, the dogs will eat the dog food before you go and spend a whole lot of money.
Then you go as far up as Wiivv Wearables and Feetz that are making actual end product. I saw a thing about Feetz, I think it was Long Beach or something like that. They were in Long Beach, DSW, The Shoe Warehouse, doing a pop-up shop. There’s a really good example of retail integration too. In our marketplace, had we seen that four years ago, I would’ve absolutely gone, “We’re doing it.” There would’ve been no question in the operation cost.
I want to talk about this because it also reminded me of a conversation I had with Walter O’Brien, if you’ve ever seen this TV show, Scorpion. I’m a big fan, I like the show. Scorpion is about an elite, very smart, very high IQ individuals who are teamed up to solved problems. A lot of them are like world saving, of course on the show and actually in real life. It’s based on true story, based on a real man, Walter O’Brien, who I met. He has 194 IQ, which is incredible. There’s a tale in there about IQ versus EQ. That’s what he talked about at this conference that I met him at and was able to interview him personally about. I think you would not believe that the man has low EQ. EQ is Emotional Quotient, IQ is your Intelligence Quotient.
When someone has a high EQ, less of their brain is working on that relationship and emotion, their communication skills. It can be learned is what he’s proven, that you can be trained to be more connective. It is an actually very efficient way. High EQ people do better in the world, because relationships power a lot of what happens in the world now. Developing those skills are extremely important to high IQ people. That’s what he does within his organization for all of his people. They have what they call super nannies, Katharine McPhee. She plays the super nanny on the TV show, Scorpion. Which is basically that she helps them communicate better because otherwise, a lot of people would stop communicating with these people that are so in the weeds of the math and the tech and the science, in their high IQ. It’s efficient, how to be more efficient in getting accomplished what you want to accomplish.
I was really nervous. That was probably the most nervous I’ve ever been interviewing anyone in my entire life. Even more than interviewing John Travolta. It was totally different. Interviewing Walter O’Brien, I was nervous because I was like, “This is intimidating. I think I’m a smart person, but this is a really smart person. How do I ask questions that don’t sound stupid?” That was very intimidating to me as I’m preparing for this, which I only had ten minutes to prepare to talk to him too. When I was interviewing John Travolta, I had two days. They told me earlier, the day before I was going to interview him the other night. I had almost two days to prepare. I didn’t have a lot of time so I had to come up with my question off the cuff.
Finally, at the very end of the whole question and answer, which was about the design process and how to stay ahead of innovation and curve of innovation, how do you know something is worthwhile doing. As we were talking about it, I said to him, “In your analysis of everything that you’ve gone through and done, what would you say is the most common problem that people have and the reason why things aren’t successful?” I mentioned to him that I had done some study of reports out there in Entrepreneur Magazine, Inc. Magazine, Fortune, those type of level, Harvard Business Review, and analyzed what they said the failure for startups were. Whether it was money, team, market, product, a whole bunch of things like that. What I learned was that product market fit was the biggest problem. It’s 54% of the problem is product market fit. Either you had the right product but the wrong market or you had the wrong market but the right product. The fit didn’t match.
This is what I say to him and he said, “Actually, I believe that it’s timing and it has to do with opportunity cost.” For most people, they take too long to get to market because they don’t tangibly analyze the opportunity cost, they miss the proper calculations. The things that we sometimes see as intangible are actually measurable in terms of like they would be able to figure out how to measure them. We think of them as somewhat intangible, but there’s a cost of not doing something that may make you fail at a higher rate than anything else. Then the other flip side of that is people jumping in too soon. They’re too soon for it. Had we dove in four years ago and went whole hog to a 3D print business, we might have been successful but likely for the market that we wanted to be in was too soon.
We knew that, we tested it. We anticipated it would be a risk and we were testing out product market fit because that’s what I know how to do, that’s what we do in our business every day, it’s why we have a better hit ratio than anyone else in the design area for consumer products. It’s because we’re always testing out whether or not it’s a fit for the market that we’re going after. When we see that it’s not, we have time to make adjustments to make it fit and/or we have time to kill it and do something new because of what we learned. We fail fast. We have removed a lot of that opportunity cost analysis problem from the market fit standpoint, but it doesn’t mean that we aren’t sitting behind too long.
His voice has been in my head a lot that we are going to miss our opportunity in 3D printing retail if we don’t do something soon, if we don’t jump into the big plan that we want to do. It’s timed now. There’s enough of these applications happening in the world, that are enough success indicators that we should be doing something. It’s in my head that opportunity cost and that timing requires a leap of faith sometimes.
I’m sure it requires a leap of faith because nobody has a complete crystal ball to be able to tell, but as creative people, we do have a vision, we always are creating new things. We are less risk averse than a lot of business people who might be more conservative where they want to know, “There’s an absolute market for that out there. You can know that the dogs will eat the dog food.” You may have to take a leap. It makes it tough. There’s an opportunity cost to doing it too soon and there’s an opportunity cost to waiting too long. It costs you your opportunity.
I want you all to think about that. If you are reading this and you’ve been reading for some time and you’re not getting on a CAD program and you’re not buying a 3D printer and you’re not trying this out for yourself, I think you’re missing an opportunity. Now is the time. This is a good time to be doing it. The cost of 3D printers are coming down. I wrote an article for my Inc. column there. It was about the fact that the job right now in demand already are designers.
We’ve known this was coming in this area. We had a little bit of insight from a client, CEO of his company. Unfortunately, he passed away. Such a shame because he was a really good man and incredibly smart business person, very successful. He was at this high-level corporate meeting in New York where a bunch of marketing companies were brought in to say what the future of their businesses were going to be. It’s one of these high-level conferences or something and special speakers who were providing some insight into the future. The companies attending were all more traditional manufacturing companies.When you're being disrupted, your #3DPrintBusiness will fall behind, no matter the money and time you throw to catch up to the competition. @hp @zbyhp Click To Tweet
What they were told is, “All you traditional manufacturing companies are going to have to reinvent yourselves because in the coming years,” at that time, they were saying that it was fifteen years in the future. I remember when we spoke with Ken, this gentleman’s name is Ken, he actually speculated that it wasn’t even going to be fifteen years off, that many more actual consumer products are going to be on demand 3D printed locally. A lot of companies are invested heavily in manufacturing equivalent or factories in Asia or their business model is built around importing products. There’s going to be a major shift.
There will always be some products that will still be imported like that. One example that we know a lot about is furniture. If you’re going to build physical furniture especially out of materials like wood and things, you’re going to have a high labor cost of manufacture and that’s probably still going to be done somewhere overseas and imported for the most part. There are always exceptions for the most part. For smaller consumer products and certain materials that certain consumer products are made of, there’s going to be a lot more of that done in the US and locally all around the world. There’s going to be a bigger shift to local manufacturing.
There is already a bigger shift of what we call last mile delivery. In other words, you see that there are Amazon warehouses popping up everywhere, Walmart is doing the same thing. You’re within many miles of these stores in which they have the ability to deliver from there. That they’ve distributed their warehousing, localized their warehousing. Distribution of retail is changing right before our eyes right now, manufacturing of it is changing. The big point of this is that what Ken told us from these conferences, these marketing groups, they’re saying there’s going to be a huge demand in the future for designers and engineers because you’re going to have this huge increase in local manufacturing. You’re lowering the barrier to entry for smaller companies on smaller budgets who are going to be able to produce their own products because the cost of doing that with on-demand 3D printing is less and you don’t have to tool as much. Engineers and designers are going to be the growth jobs and in high demand.
I’m happy about that because then designers will get paid more for what they deserve. When there’s high demand and low supply, which there is at this point, prices will go up and pay will go up, which is desperately needed right now because it’s not cost effective. It’s not effective to be a designer in a Fiverr world.
I wanted everyone to be thinking about that opportunity cost. Whether it’s a student opportunity cost for your career in the future, it’s your opportunity cost of having one in your households, you’re exposing your family, it’s your job as a teacher to be exposing it and presenting the opportunities of the future to your students. It’s a business and you’ve got to analyze the opportunity cost of being on the edge of innovation, on the wave of innovation at this point because it’s not an edge anymore, that’s what we’re seeing very clearly. Thinking about all those things and thinking about not missing that opportunity cost, we’re way passed it being experimental. You have to think about can you afford the opportunity cost or can you not afford the opportunity lost?
That’s what we’ve been thinking about and we thought we’d present our thoughts to you and share that with you. We will have posts on 3D Start Point Facebook page and other places on social media. Thanks for reading. We’ll be back with another great interview episode. This has been Tom and Tracy on the WTFFF 3D Printing Podcast.
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