The Fourth Industrial Revolution is paving the way for a new form of industry built on new sorts of intelligence.
In one corner are the sexy e-business models such as Google, Baidu, Facebook, Tencent, Airbnb, Uber, Spotify… They are highly valued on the stock exchange, with two-figure annual growth rates (although the profitability of some is dubious), they have the appeal of no historic legacies to live up to, and are well versed in cannibalistic dealings in oligopolistic markets.
In the other corner are the traditional and undeniably successful companies such as VW, ABB, Schneider, Yaskawa, Mitsubishi… with a proven track record of sustainability but waning sex appeal. They have plenty of experience, a long-term outlook and are supported by considerable investment in infrastructure. This enables them to compete in extremely active markets governed by clear regulations (and fiscal frameworks) while guaranteeing their commitment to creating shareholder value – and meeting the needs of their other stakeholders to help create a society with fewer inequalities.
This defence of “tradition” makes no secret about the need to embrace the cornerstones of what is known as the Fourth Industrial Revolution (data management, the internet of things and additive technologies) paving the way for a new form of industry built on new sorts of intelligence.
Industrial companies aiming for a successful digital transformation must, however, take on board three crucial management skills in which the new e-business models are streets ahead:
1. Ability to interact with customers
Put customers "inside the factory" and make them part of the process of producing customised products and services tailored to suit their needs. This means – and this is where the greatest reluctance is found – changing the organisational metabolism and forcing the evolution of decision-making systems which must, in the future, be necessarily multidisciplinary and focused on the business process.
The company-customer interaction itself will generate knowledge that makes it possible to anticipate customer behaviour. The monitoring of these data is outpacing traditional sales forecasts.
Demand management is a complementary factor, and sometimes a substitute, for implementing a competitive strategy defined beforehand. This new paradigm of good governance makes it possible to manage uncertainty and make supply match demand even in turbulent scenarios.
2. Ability to adapt by means of agile and flexible responses
New IT and production technologies being applied to supply chain management make it possible to redesign logistics and industrial networks and recover proximity. The increasing distances between today’s production centres and stocks must be offset by developing business ecosystems equipped with the best data broadcasting and connectivity mechanisms with new rules.
Customised responses must have greater priority than reducing unit costs
Agile, customised responses must have greater priority than reducing unit costs, and the ability to create dynamic relationships is more important than static relations based on long-term contracts.
The criteria of customer-supplier relations based on transaction principles, in which the stronger party is at an advantage, are being side-lined by other relational criteria based on the ability to create value and deliver new customer solutions.
With regard to this skill, three lines of action must be developed:
- Innovation in organisational forms and processes
- Innovation in the supply of goods and services
- Innovation in new business models
The first two are inherent in the previous points. The ability of a “factory” to learn to interact with customers is, in itself, a sort of innovation embodied in the design and governance of processes, the way things are organised and how decisions are taken.
Likewise, innovation can be seen in new relational systems between the members of supply chains that prioritise the ability to create value by means of new solutions more than the transaction and bargaining capabilities of their members.
The great challenge facing the industrial sector is the generation of new business models
However, the great challenge facing the industrial sector is the generation of new business models. Technological developments make it possible to introduce new services into tangible products that increase or alter the final value proposition: in other words, the servitisation of industrial goods.
In addition, the digitalisation of industry offers new forms of consumption and marketing that move beyond the transfer of ownership and focus on pay-as-you-go systems such as renting, subscriptions and the payment of fees.
The new industry is also extending its spheres of action and identifying great opportunities in the renewables sector, smart transport sector, circular economy, optimisation of natural resources and the management of smart cities and households.
In other words, if industrial companies quickly and effectively adopt these management skills, in which the new e-business models are so adept, they will not only regain their prominence but will also be able to successfully attract business interest.
In addition to these management skills, companies also need to strengthen their ability to explore new forms of collaboration that create shared benefits and prioritise the sustainability of medium and long-term results over individual "quick wins."
Only then industrial companies will be able to successfully address, like they used to, the great challenges facing today’s society: climate change, the depletion of natural resources and an ageing population.
Join the Do Better community
Register for free and enjoy our recommendations and personalised content.