Digitisation is ushering in a dramatic change to the infrastructure underlying industrial civilisation, and if you want to be a leader of the “next industrial revolution”, you must act now, write Norbert Schwieters and Bob Moritz for Strategy+Business.
No matter who you are, where you live or what industry you work in, digitisation is changing everything.
When it comes to industry, advances in robotics, machine learning, digital fabrication (including 3D printing), the industrial internet, the internet of things (IoT), data analytics and blockchain (a software platform for making digital transactions) are already allowing early adopters to reach a new level proficiency and take advantage of new opportunities.
It is not too late to prepare for the future – a future that will see the erosion of conventional boundaries between industries, a blurring of the relationships between suppliers, producers and consumers, and the end of the classic “value chain”, where trustworthiness and a clear sense of purpose will be key.
In fact, it is not too late to become a leader of what Norbert Schwieters and Bob Moritz describe as the “next industrial revolution”. And here are ten steps to help you do just that:
ESTABLISHING YOUR STRATEGY
1) Rethink your business model. “You are not in the same industry that you were in before; soon, that industry may not even exist,” write Schwieters and Moritz. You must be flexible and rethink your business model to take advantage of the opportunities presented by new technologies.
There are many examples of industries where this is already happening. For example, the healthcare industry is using the IoT, in the form of wearable technology, to provide data that can enable healthcare professionals to diagnose problems earlier or improve follow-up services.
2) Build your strategy around platforms. In the new industrial system, the platform will replace the value chain.
GE and Siemens have both announced their intention to build their own platforms, Predix and MindSphere respectively. MindSphere apps, developed in collaboration with Microsoft, will be available on the Azure cloud in 2017.
What role are you going to play in this platform-based world? Will you be an “enabler”, like GE and Siemens, an “engager of customers” using the platform to provide products and services, or an “enhancer”, developing new technologies on the platform and selling them to enablers and engagers?
If you want to be an enabler, you must first digitise your own company, then work on improving your technologies and reducing costs.
3) Design for customers. In this new world of the industrial internet, producers and consumers will be more closely connected than ever before. You can collect customer data that will help you provide a better service but your behaviour will also be more transparent to customers. You must access every point of connection, ask what customers want and need from your company and build a customer-centric operation.
For example, if a customer is placing an order online, you must make sure that the process – from choosing what product to purchase, then receiving, and potentially returning the product – is frictionless.
EMBRACING NEW PRACTICES
4) Raise your technological acumen. If you want to prepare your company for increased digitisation, you can’t just hire a few software-savvy individuals – every member of staff must be comfortable with the new technology. You can’t just provide training in how to use specific digital tools; your staff must embrace the industrial internet and be encouraged to consider how to take advantage of the opportunities it offers.
Design your workplace so that staff have the opportunity to learn – from the new technology and from each other.
“As people throughout your company become more comfortable with the industrial internet, they will develop a collaborative culture of innovation.”
5) Innovate rapidly and openly. Leading in the next industrial revolution means innovating. The Industrial internet will allow you to rapidly prototype and manufacture new products in small batches before distributing them to a handful of customers for testing before you roll them out worldwide.
Encourage the participation of of other organisation connected to your platform. Siemens, for example, is making a billion-dollar investment in Next47, a collective of early-stage startups to work on AI, autonomous machines, decentralised electrification, connected mobility and blockchain applications.
6) Learn more from your data. Collecting data is important, and will become increasingly so, but spotting patterns in the data you have collected is vital if you want to make use of it. Schedule regular meetings where members of the analytics teams working across your company can discuss their findings and how they could affect your business.
7) Adopt innovative financing models. You cannot innovate without capital, and that will not change as the industrial internet expands at a pace. What will change is the way in which companies raise capital.
Industrial companies will follow Silicon Valley, financing investment through equity and venture capital rather than through debt. Amazon, for example, is able to fund the constant upscaling and upgrading of its platforms and innovation in areas such as cloud computing and warehousing using money raised from the stock market.
MAKING A BETTER WORLD
8) Focus on purpose, not products. New technology will play a major part in the future of your business but your customers will remain the most important factor. What attracts customers to your company? What outcomes do they expect from your company? How can you deliver those outcomes?
Your company must have a clear purpose. When you are clear about what you do and why, customers will trust you to deliver.
9) Be trustworthy with data. “Shared data is the fuel of the next industrial revolution,” write Schwieters and Moritz. With the expansion of the IoT, the amount of information you have about your customers is going to increase exponentially, and your business will stand or fall depending on how well you protect that data. Trust is everything. Make risk management, cybersecurity and data integrity systems a priority.
PricewaterhouseCoopers’ most recent survey of CEO opinion revealed that just under two-thirds of CEOs believe how their companies manage data will be a differentiating factor in the future.
10) Put humanity before machines. “If people are shut out – of jobs, creative opportunities, income and customer satisfaction – embracing technology will backfire,” write Schwieters and Moritz.
As technology takes centre stage, you must have respect for human beings. Remember that human beings have qualities that machines do not (at least not yet): empathy, intuitive judgement, authenticity, the ability to care, connect and make unpredictable choices.
THE NEXT INDUSTRIAL REVOLUTION
It is impossible to know exactly what this brave new world will look like, but the only way your company will prosper is if it prepares for change, and these ten steps are a good place to start.