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Paradigm Shift in Iron and Steel Industry

• satyendra
• May 15, 2013
• 4 Comments
• Challenging technologies, Competitive priorities, established technologies, paradigm shift, steel industry, technology diffusion,

Paradigm Shift in Iron and Steel Industry

Very often something happen which changes the fundamentals, and causes a shakeout and major upheaval and results into new processes, technologies, and products. This shakeout and upheaval is known as ‘paradigm shift’. Paradigm shift is a major change in the concepts and practices of how something works or is accomplished. It very frequently happens when new technology is introduced which radically alters the production process. It takes place when a significant change happens, normally from one fundamental view to a different view. In most cases, some type of major discontinuity occurs as well.

A paradigm shift is often a change in the perception of how things are to be thought about, done, or made. A paradigm shift can replace old processes, technologies, and products with new ones eliminating industry connected with the old processes, technologies, and products. Reacting well in time to key paradigm shifts have a lot to do with the long-term success.

Paradigm shift is a popular, or perhaps, not so popular shift transformation of the way the humans perceive events, people, environment, and life altogether. It can be a national or international shift, and can have dramatic effects, which can be whether positive or negative, on the way the things are being done today and in the future.

Normally, industrial paradigm shifts or movements refer to things on the scale of the 19th century industrial revolution, for example. Innovations feed off each other such that they emerge in a steady stream before reaching a point where society or industry as a whole suddenly experiences major change at an accelerating rate.

In practice, however, innovation too is subject to the interaction of technology, regulatory systems, and socio-cultural change, in turn causing changes in society as a whole. When there is appearance of a set of major drivers for change across these three elements, due to the convergence of circumstances, then the innovations take pace which brings about a paradigm shift across the entire industrial ecosystem.

Although the idea of paradigm shift has been around for quite some time, the concept was fathered, defined and popularized by American physicist and philosopher Thomas Samuel Kuhn. Kuhn contested that paradigm shifts characterize a revolution to a prevailing scientific framework. They arise when the dominant paradigm, under which normally accepted science operates, is rendered incompatible or insufficient, facilitating the adoption of a revised or completely new theory or paradigm.

He wrote during the early 1960s of paradigm shifts and explained how ‘series of peaceful interludes punctuated by intellectually violent revolutions’ caused ‘one conceptual world view to be replaced by another view’.  He wrote a book in 1962 ‘The Structure of Scientific Revolutions’. In this book he described paradigm shift as a change in basic assumptions within the ruling theory of sciences. As per him, the successive transition from one paradigm to another paradigm is the usual development pattern of mature science. He gave scientific paradigm its contemporary meaning when he adopted it to refer to the set of practices that define a scientific discipline during a time period.

Thomas Kuhn explained that a scientific revolution occurs when scientists encounter anomalies which cannot be explained by the universally accepted paradigm within which scientific progress had been made hitherto. When enough significant anomalies have accrued against a current paradigm, the scientific discipline is then thrown into a state of crisis. During this crisis period new ideas, perhaps ones previously discarded are tried. Eventually a new paradigm is formed which gains the acceptance all around. This shift of scientific discipline from one paradigm to another is known as paradigm shift. This shifting of one paradigm to another paradigm is known as the cycle of paradigm shift and is shown in Fig 1.

Fig 1 The cycle of paradigm shift

Paradigm shift is a basic theory. It is a conceptual framework within which scientific theories are constructed. It is notion of a major change in a certain existing pattern. It is a radical change in personal beliefs, complex systems and organizations replacing the former way of thinking with a radically different way of thinking. During paradigm shift one conceptual view point of the world changes to another conceptual view point. It is a revolution, a transformation and a sort of metamorphosis.

A paradigm shift is visible when a significant change had happened normally from one fundamental view to another fundamental thinking. The shift has dramatic effect whether positive or negative on the way the life as it is lived today. In this shift, today’s dominant viewpoint is changed to another viewpoint. Paradigm shifts normally bring irreversible changes. The transformation in paradigm shift can be gradual or sudden but ultimately it changes the way of thinking or way of doing things. During paradigm shift, series of peaceful interludes punctuated by intellectual violent revolutions happens. It just does not happen on its own but rather it is helped and driven by the agents of change.

Paradigms are important because they define how we perceive reality. As such, everyone is subject to the limitations and distortions produced by their socially conditioned nature. These shifts have become much more frequent in the past hundred years, as the industrial revolution transformed many social and industrial processes. The shifts have accelerated in last two to three decades and these processes are likely to become even more commonplace in the future as our rate of technological advancement increases.

A look at recent global trends gives the sense that shifts in industrial paradigms have suddenly started happening all at once. However, it is identified that the potential for a paradigm shift is there around 15 years earlier, but it is only now after all of the conditions for such acceleration are in place.

A paradigm shift occurs when the three elements of technology, regulatory systems, and socio-cultural change in mutually interacting ways. While progress can occur in technology on its own, the paradigm, which is to say the reference frameworks (the frameworks for thoughts based on ‘common sense’), remain unchanged in the absence of regulation or impetus from regulatory systems and a basis for encouraging or accepting change in the wider culture.

A techno economic paradigm shift is the embodiment of this new potential in a new set of ‘best practice’ principles that accompanies the diffusion of each technological revolution. The new paradigm is capable of transforming every branch of the industry and the economy, renovating products and processes, relocating activities, redefining markets, redesigning firms and gradually modifying the ways of producing and the ways of living.

Paradigm shifts are thrilling if one is riding the wave of changes occurring in the technology. How such change progresses is shown in Fig 2.

Fig 2 Paradigm shift and diffusion of technology

Paradigm shifts result in new products and new technologies which transform or destroy the old ones.  According to Utterback (Fig 3), when an invading product / technology first appears (T1), the established product / technology normally offers better performance or cost than the challenger product / technology, which is still unperfected.  Eventually, as the performance characteristics of the challenger product / technology reaches the point where it matches that of established product / technology (T2), incumbent leaders perceive the threat and invest heavily to sustain the established product / technology so as not to disturb the business models and leadership.  The resulting innovations due to this heavy investments cause the established product / technology to rocket past the invading product / technology with rapid innovations and improvements.  Eventually, by time T3, the challenging technology continues to improve and equals existing industry performance, on this path moves to ultimate leadership.

Fig 3 New product/technology taking over established product/technology during paradigm shift

Competitive priorities when paradigms shift

Even though a new paradigm may not have open competition, competitive priorities are still relevant for strategies to cross the gap between paradigms. In fact, competitive strategies exist across technological paradigms, since existing strategies are being threatened by the new technological paradigms. Each paradigm has its own life cycle of development, with a continuing sequence of competitive priorities leading to continuous improvements.  The performance of existing competitors impacts on the ability of the organizations with new paradigms from bridging the competitive market gap, i.e., developing a strategy and capabilities for the paradigm which outperforms existing paradigms.  Hence, in the context of paradigm shifts, it is important to understand that competitive priorities are critical in bridging the gap.

To cross the gap, the success of product / technology strongly depends on its existing capabilities and competitive performance.   This means that quality, and cost metrics are to first provide the new product / technology with a significant advantage over established product / technology. This is akin to advancing the price/performance frontier.  Accordingly, the need to focus on basic competitive performance suggests that quality, dependability, and cost are to be critical in bridging the gap. Flexibility appears to be a priority for maturing markets with more standardized technologies.  Such flexibility is seldom a competitive factor in new organizations.  Quality remains the most important priority and reliability remains entry level priorities. Cost then sets the new product / technology on a growth path.  The competitive priorities between new and established products / technologies are to be addressed in the same fashion as competitive priorities within the established products / technologies. Initially, the success of a new product / technology strategy depends on its competitive value, based on its quality and reliability characteristics first, and then its cost.  Once new products / technologies have been accepted, its competitive success hinges on a steady stream of innovation which sequentially and cumulatively improves competitive quality, dependability, cost and flexibility.

There are many examples of paradigm shift in every sphere of life. Adoption of settled life with agriculture by man in place of wandering life is one of the earlier examples of paradigm shift. During 1960s, invention of quartz watches replaced the mechanically driven watches. This has thrown out of gear the highly successful Swiss watch industry which was based on mechanical watches. This shift was a paradigm shift. Now another paradigm shift is taking place which is making even the wrist watches irrelevant. In cricket switch over from test cricket to 50-50 version and now to 20-20 version is a paradigm shift. Further examples of paradigm shifts are replacement of postal mails by e mails, replacement of landline phones with mobile phones and so on.

There are a large numbers of examples of paradigm shifts in the iron and steel industry. Some of major amongst them are (i) replacement of reduction of iron ore from charcoal to coke, (ii) replacement of wrought iron with steel, (iii) development of agglomeration processes like pelletizing and sintering for utilization of mines wastes, (iv) development of direct reduction processes, (v) In steelmaking initial shift from Bessemer converter to open hearth steelmaking and then evolution of oxygen steelmaking, (vi) development of electric steelmaking, (vii) development of secondary steelmaking processes, (viii) replacement of ingot casting with continuous casting, (ix) processes relating to reduction in the process steps such as thin slab casting and rolling, (x) processes related to environment protection and energy conservations, (xi) technologies related to automation, controls, and digitization of the processes and many more. Future processes which are likely to bring paradigm shift in the steel industry are the processes resulting into near zero carbon di-oxide generation and hydrogen steelmaking. The first unit adopting hydrogen steelmaking has been recently commissioned in Sweden.

The above technological developments have led to a paradigm shifts in the way steel is made, the price, quality and range of products generated, energy requirements, material usage and the by-products generated. The paradigm shifts have brought and bringing a considerable change in the basic structure of steel industry.

During the shifting of the paradigms, the established products / technologies become irrelevant. They lose their identity and soon disappear from the scene. The organizations which judge this shift in time and change over to the new products / technologies earlier than others become successful organizations and succeed in the competitive field.