Today’s technology changes like IoT, sensors, wearables, 3D printing, robotic, AI and machine learning are enabling far reaching changes in they way we communicate, consume and live. Because those technologies all force each others impact, they introduce new types of challenges and opportunities for business and for society at large.
One key indicator is that conventional boundaries between industries are eroding. Also, the relationships between suppliers, producers and consumers are blurring more rapidly than many decision makers are prepared for. The classic value chain construct has long been the foundation of business strategy, but the rise of digital enables parties to connect outside of the value chain and deliver more efficient, effective products and services. Relationships between companies will be more fluid and prices of goods and service more volatile. There is one certainty, however: Trustworthiness and a clear articulation of purpose, will become more important to business.
How, then can you then as executive lead your business – whether large or small, to play a pivotal role in the next industrial revolution?
How can you build on your existing strengths while developing the digital excellence and skills needed? How can you decide on the balance on optimizing your core vs. experimenting with the new? Can you balance technical acumen with human leadership?
There are a few principle that can help senior executives navigate the uncertainties of the next few years or decades.
Rethinking your Business Model based on your Strengths.
Meanwhile leaders across industries have come accustomed with messages about disruption by new entrants or startups, leveraging technical advantages and efficiency potentials faster than inflexible established companies of a given industry. The industrial revolution will accelerate this sequence and hit especially those industries hard, which did not witness similar shifts in decades or centuries.
Industries like power utilities, constructing or manufacturing at large have operated essentially in the same, supply chain oriented business model since early 1900. Automakers or transportation companies will face a shift away from fixed car sales or rail-way fairs to provide mobility on demand. Manufacturers of tools, hardware, instruments, and heavy equipment are adding sensors and connectivity to their products, enabling predictive maintenance, security and frequent upgrades. The healthcare industry is moving as well to its own adaptation of IoT through the adoption of wearables and remote care. similar is true for media, entertainment, engineering and financial services industries.
A constant check on your business canvas, how you connect your supplier network more agilely, how can move more of your business to a services based model or how you can use the collected data to provide new values and services will keep you open for new opportunities and reduce the risk that you will be taken by surprise by new entrants or models.
Does Rethinking your operating model mean, you giving essentially up on your past to create a totally new business? No, typically the opposite is true.
Understanding and mastering your strengths will allow you to add new, focus on your core and experiment new ideas, products, services, suppliers etc. No company can allow business model innovation to become a game for all or nothing. Don’t bet on one idea, but “go-all-in” with your commitment to constantly renew and experiment.
Design for Customers
The next industrial revolution is build on large-scale digital technology. But it would be a fatal mistake to think that is only effecting data, processes and automation. Technology is already impacting significantly human relationships. Producers and customers are much more closely connected directly and through platforms and communities. Through sensors and data analytics producers are constantly connected to the sales relation, but to the constant usage of the product or service and have a lifetime impact of the “value of ownership”. New generations require full transparency and corporate responsibility and a purpose in the product or service or in the company as such. And customer are connected to product design and services all the time.
For many companies this represents a dramatic change, as they were mislead for decades by understanding customer centricity as customer service or complaints management. Banks, insurances, power utilities and telecommunication providers are cleaning up their user interfaces to offer a bidirectional communication platform with value adding services – faster, friendlier and more effective. Manufacturers extending their shopping capabilities online and combine it with physical experience shops or virtual spaces.
When you design for customer-centricity, you translate your desired relationship and mutual commitment into the look and feel of your enterprise.
A true omnichannel customer experience connects every touch point: all face-to-face contact, every retail environment, all online activity, anything connected through a smartphone, and all the other myriad connections between you and your customer. In the new infrastructure of your business, there are far more touch points to work with. Customers live in an interactive world. Their behavior is aggregated into data you can consult to make business decisions. Your behavior, in turn, is more evident and transparent to them than it has ever been before.
Automated online and physical interfaces, whether chat-bots or tangible robots, need to be appealing and will be judged on providing value and the consistant, genuinely emphatic manner they will be representing – very much as humans do.
Focus on Purpose and Outcomes, not Products
The modern technology platforms will allow way more companies than in past to operate with enterprise grade infrastructure and capabilities. To differentiate your company, you need to develop a clear purpose: a value proposition, more effective than anyone else’s, that applies to everything you do. This means looking closely at the reasons people come to your company, the outcomes they expect, and the ways you can deliver. When you are clear about what your company is, and why you sell what you sell, people will trust you to deliver what you promise.
Start thinking about your company as producer of outcomes, rather than goods and tools.
Start thinking about your company as producer of outcomes (operating hours of machines, increase in customers, …), rather than goods (electrical power, cars) or tasks (managing your taxes, invoices or health records). The mobility industry is going through a dramatic change realizing, that increasingly customer are looking for the outcomes (I need to get to the opposite side of the city) rather than the tools (buy car, ticket, taxi, bike). The large German car manufacturers are experimenting with mobility and sharing models, as they realize that pretty soon the majority of the revenue generated in mobility will come from data and mobility services rather than the sales of cars.
Ask yourself whether your company truly has an outcomes focus or is still stuck in a physical product mind-set. Are you judging success according to the meaningful differences you make to customers in terms of satisfaction, quality of life, and productivity?
Redefine Excellence for Mindset and Technical Acumen!
More enterprise start to realize, that excellence in the digital age is defined differently. Many generations long successful business were sounded on strong executional capabilities. They still matter, and are core to drive operational efficiencies.
Successful transformation into the new paradigms though is more based on mindset, culture, collaboration and creativity, as well as a increased technology acumen in the company.
No matter what industry you’re in, you live in a programmable world, and software will be key to your competitiveness. This is a matter not just of recruiting people with software expertise, but of raising the skills of everyone at your company. They need not just the technical training to use digital tools, but insight into the patterns of technology.
Make it as normal to celebrate results of experiments, whether success or failure, as you celebrate successful deal closing or cost savings. Install agile organizational structure, so the wonderful open brains you want to attract for your company can get their mindset to work and impact your culture – in a work environment that is inspiring and enabling. Install a leadership understanding biased to set direction, coach and challenge the teams and enable a fruitful environment, that than the managerial style based on scorecard current executives might been grown up and become success full.
And make no compromise in hiring for top quality. The increasing degree of change, grade of uncertainty and speed will require powerful impactful experts in each functional node, not just at the top of the company. And yes, reconsider your compensation system, whether you really pay for value to the company for future success, rather than organizational level and financial responsibility for current revenue, based on past innovation.
Note. This article uses excerpts of articles found on HBR and strategy-business.com without quotation. Please contact me for original links.