Automation Vs Industries

Automation Vs Industries

  • Reading time:4 mins read

By Rohan Gopal

Since the turn of the 21st century, with the advent of umpteen innovative start-ups, there has been a growing risk for previously well established industries. We have been witness to ubiquitous incidents around us in which previously unassailable market leaders have entirely vanished from the scene. This scenario seems like a schadenfreude.

Disruptive innovation

Of late, a new term has emerged- ‘disruptive innovation’. The term, coined in 1995, has found its way in the popular business lexicon and has become a very integral part in today’s dynamic business environment. Companies can no longer be sleeping at the wheel even after reaching the pinnacle. Aided with technological developments, many newbies are emerging, providing affordable and efficient services. They start by capturing the lower segment in any industry and gradually making their way up and toppling the incumbent. Moreover, to add to the woes of the big players, the covid crisis is further exacerbating this issue. With industries moving online, the new entrants seem better enabled and prepared. There cannot be a more apt example than the rivalry between online streaming giant, Netflix and the former undisputed champion of the video rental industry, Blockbuster. Blockbuster never saw Netflix as a threat. Blinded by hubris, blockbuster ultimately vanished from the scene while Netflix embraced the change and made use of the innovations. And this is precisely what has been happening over the last 2 decades in the business world. This oversight by the industry leaders is creating space for new players to get a foothold in the sector. Another classic example is of the steel industry which has witnessed the entry of mini steel mills. Once dominated by the integrated steel industries, mini steels made a major foothold and structurally transformed the entire industry. These small companies found a way to melt down scrap metal recycled from cars and manufacturing waste, which was up to 20% cheaper than what the integrated mills were spending. The mini-mills targeted the lower end consumers. The big players remained unbothered with this and continued to manufacture for the top end consumers. This pattern continued until suddenly, mini mills had taken over. Not one integrated steel company had built a mini mill. It took more than 40 years before the mini mills matched the ​revenue of the largest integrated steelmakers. But after getting a foothold at the bottom of the market and taking one step at a time, they eventually reached the top.


Apart from the disruptive innovation, the industry players have encountered yet another blow in recent times. This risk has been posed by the entry of automation. Many are of the view that automation would lead to massive job losses as machines and robots take over, especially in the IT sector. Artificial intelligence has further pronounced these underlying fears. The fact that enormous sums of money are being allocated towards the research of artificial intelligence, provides no breather to the industry. However, many are of the view that albeit automation would remove people from a particular industry, it may open opportunities in other sectors. So, a structural shift in the employment may occur accompanied with a period of unemployment in the short run. However, over the long term, industries and workers alike, are set to benefit from increased automation. So, it is possible that the fears related to the automation may remain unfounded.

These risks highlight some serious points for the business world, especially the well established entities. Hubris and oversight can drag even the most well established businesses. It is imperative for the industries to carefully adapt and evolve to the changing requirements of this dynamic world.