Blog 5: Strategies for the future in the Steel Industry – What’s great and what’s missing?

I found the BCG article “Twelve Forces That Will Radically Change How Organizations Work” very comprehensive and complete in how it covers various aspects an organization should look into for its future strategy. It even touched upon wellbeing and purpose which are intangible factors often overlooked. I was born and raised in different steel cities of India and after reading the article, I was intrigued at how steel industries are planning their future strategy. The reason I was intrigued was because steel (or rather mechanical) industries are different in their operation, organization structure and technology. I could not directly relate the article I read to this industry even though I have grown up observing this industry (from afar though) and spent 2 months interning in the Information Technology Division within the industry. I interviewed my father, who has spent close to 40 years in this industry to understand what is happening and here are some of the pros and cons I could get along the lines of future strategy. In class, we exchanged the importance of process improvement after the Back Bay Battery Simulation. Given how the demand for steel has risen and fallen cyclically over the years, process improvement to reduce costs has been key for steel plants. Steel organizations are different in India because it still is one of those industries where the Gen Z and the millennials have not captured much of the workforce and a significant part of why the organization is doing well comes from the Baby Boomers and their experience. Employee retention is not a very big issue because steel companies in India have been one of those job providers who emphasize on job security, employee wellness and purpose, innovation, automation and many more forces that the article talks about. What I could understand about what these companies do to survive through the steel glut is that they focus on two things – differentiating their product by producing a special kind of steel whose market is not so threatened by competitors, and constantly innovating and automating their processes for improvement. To cite examples, Bhilai Steel Plant, India was relatively more profitable because it manufactures rail tracks whose market did not get so threatened during the steel glut in the last decade. Essar steel is one of the few plants that is home to all three kinds of steel production processes in the world. Therefore, their strategy of survival has more room for leeway even if one of the processes get affected by policy changes or inflation. I was genuinely impressed with the interview response I received. I wasn’t expecting many points in the article to have been covered by the steel industry.

Innovation in the steel industry has reached the level of using the newest methods in Artificial Intelligence and Robotics. However, I see that happening on the mechanical and hardware front. During my time interning there, I noticed that software is looked upon just as a commodity for everyday use and the other side of it has not been exploited because steel industries are still not viewed as the best place to work by the Gen X software professionals in India. As a result, the industry, at least in India, does not seem to be using Data Analytics for operations, supply chain and process improvement, which could benefit them greatly in reducing costs that are not just focused on production. While the BCG article can be applied to most of the corporate companies, the steel industry in India is a bit different in the way it is structured and run. It is a lot more siloed and distant from imbibing software. One of the reasons I have noticed is that there is a personality difference and contrasting work ethics between the professionals in the steel and software industry. However, I see a lot of merit in both category of professionals to join forces for a much more comprehensive and stable future strategy.