Open Innovation - Guided and Predictable Transformation
The innovation paradigm has changed from closed to open innovation, providing a significant boost to the industrial research and innovation processes. Open Innovation contributes and improves one's entrepreneurial knowledge. Industrial sectors are keen to exploit and access knowledge outside their boundaries to accelerate their innovation processes.
WRITTEN BY AVNISH SABHARWAL
PUBLISHED APRIL 15, 2023
“If you are not failing every now and again, it is a sign that you are not doing anything very innovative.”
— Woody Allen
Digital has emerged as a key driver of differentiated and disruptive value creation. It has enabled low-cost digital startups to lock horns with well-entrenched industry players; for example, by offering financial services without being banks, taxi services without owning taxis and lodging without being hotels. Who could have imagined, for instance, Paytm emerging as one of the largest payment platforms in India so quickly, with the potential to disrupt traditional banks that have dominated the landscape for decades? A report by Innosight predicts that 75 percent of the companies listed on the S&P 500 Index, between the period 2002–12, will be replaced by tech-savvy companies by 2027.
These new breeds of organizations are the future of commerce, nonprofits and even government. The secret to their success? They have built business models that can keep up with—as well as take advantage of—the ever-accelerating pace of technology-driven change that defines our times. As a result, they are scaling swiftly—at least 10 times faster than other companies competing in the same space. Some can go from a hundred to millions of customers in a remarkably short timeframe. We call them exponential organizations, or ExOs.
ExOs are transforming the marketplace and taking business away from large, long-established organizations. These digital disruptors are dissolving traditional boundaries between industries and accelerating the pace of innovation. Big incumbents are recognizing that they cannot keep pace by relying only on their internal innovation capabilities. Instead, they need to leverage the innovation ecosystem that has arisen with the democratization of entrepreneurship—which has fueled radical thinking and sparked ever-faster ideation and execution of fresh ideas.
In India alone, entrepreneurs are supported by a thriving ecosystem of more than 100 venture capital funds, 7000-plus angel investors and more than 350 incubators and accelerators. Gone are the days when funding was the number-one challenge for a startup based in this vast nation. In 2019, startups in India (including e-commerce platforms) received as much as US$12.5 billion in investments from Indian and foreign investors, a significant rise from the US$5 billion invested in 2014.
What’s more, the pace of innovation—already brisk—is expected to accelerate even further. Accenture estimates a huge potential loss of growth opportunity—US$52 billion—for Indian companies that fail to forge ties with the right partner for digital. We believe that large, established Indian companies can still defend their market while also spurring exponential growth. How? By adopting open innovation to tap into the startup ecosystem most strongly aligned with their industry.
Breaking down corporate walls
Through open innovation, organizations draw on external technologies, solutions, knowledge and other resources early in their innovation efforts by forging an ecosystem that spans emerging technology companies, start-ups, Venture Capitalists and academic organizations. Many partners with a range of players in a global ecosystem to jointly develop new platforms and applications, enhance core offerings or expand into new markets. This approach enables companies to bring in numerous new ideas quickly that they can use to enhance their operations, including product development and process improvement. It thus helps save time and money.
Some companies are even sourcing game-changing ideas by forging mutually beneficial partnerships with other ecosystem players. For example, Philips and the Eindhoven University of Technology (TU/e) announced a strategic cooperation aimed at accelerating exploration and development of digital innovation in healthcare, lighting and data science. The two organizations have set up a program that will let researchers from both entities work together to develop new digital technology in real-life settings. Through this partnership, TU/e will add more than 70 PhD positions, of which Philips will finance 30. In total, more than 200 researchers, professors, doctoral candidates and students will be collaborating closely.
But these are rare examples. Most companies have instead invested in corporate research and development (R&D) and in initiatives centered on driving new growth by using their existing, internal resources. They seldom engage with elements of the broader ecosystem beyond their corporate boundaries to support their internal efforts. For those that do take part in open innovation activities, some are ad hoc. That is, the company notices an opportunity and reacts to it, rather than taking a more proactive, systematic approach.
Adopting open innovation is a must for established companies if they want to continuously harvest innovation, but the model does pose challenges. Cultural differences, technology risks, security threats and difficulty scaling an innovation can make it difficult for organizations to realize open innovation’s full potential. To get the most from this approach, businesses need to mitigate the risks and ensure that innovation efforts align with their corporate vision and support their business priorities. They also must manage the complex, time-consuming task of building and maintaining relationships with many partners, including startups—given that the quality of such relationships can make or break open innovation efforts.
To master all of this, established companies need to excel at five practices: define the innovation strategy, find the right partners, select a winning formula, deploy innovation at scale and foster an open innovation culture:
Define the innovation strategy: Clarify the business goals you want to achieve through open innovation, by identifying opportunities and threats arising in the market and assessing how digital disruption in other industries could help your enterprise seize those opportunities or combat the threats. Corporates could opt for “Target Innovation,” which focuses on a specific business problem such as an omnichannel strategy in retail or payments in banking, or they could opt for “Disruptive Innovation,” which builds a new business model for driving digital revenues.
Find the right partners: Successful open innovation relies on an organization’s ability to identify the right set of partners. The process requires sifting through multiple technology innovations and identifying partners that can help you create more valuable solutions than your company would have developed on its own. You can shoulder the unenviable task of identifying and managing multiple partners on your own while also running your day-to-day business. Or you can work with a bridgemaker.
Serve as intermediaries to help connect an organization with appropriate partners.
Act as a buffer between partners that have conflicting cultures.
Provide support in mitigating the risks inherent in open innovation.
Help organizations pilot and deploy innovative technologies.
Accenture Ventures and Open Innovation serves as such a bridge maker for its clients which represent the G2000. It worked with a large bank to define the digital-banking ecosystem and to identify startup players that could help the bank accelerate its digital transformation program. Drawing on Accenture’s experience with payments and analytics from other industries, we developed a solution for the financial services industry that helped the bank establish new digital operations and develop digital services and products.
Select a winning formula: There is no one-size-fits-all way to adopt open innovation, however there are best practices and models to repurpose or adapt. You can select from an array of formulas or even combine them in ways that best meet your business objectives. Consider these examples:
a. Corporate Accelerator: Large incumbents engage with a group of startups on an identified innovation theme. Key examples in India include the Reliance GenNext Innovation Hub as well as the Target Accelerator Program, which has been launched by Target, a large retailer in North American with a global in-house center in India.
b. Co-promotion: A group of like-minded organizations come together to run an accelerator program. To illustrate, Accenture, along with the Partnership Fund for New York City, runs FinTech Innovation Lab. The annual 12-week accelerator program brings together early-stage financial technology companies and the world’s leading banks. The program’s objective is to give early and growth-stage companies the platform they need to develop, trial and prove their proposition alongside the world’s leading banks. The program runs in New York, London, Hong Kong and Dublin.
c. Exclusive Partner: An organization teams up with one partner in an exclusive arrangement centered on implementing a specific innovative idea. For example, Accenture teamed with Isansys, a UK based IoT startup, to develop the iDOC physiological wireless monitoring system for healthcare. The device monitors a patient’s electrocardiogram readings and transmits them wirelessly through a mobile device to a doctor or hospital, where healthcare providers can analyze the real-time data to assess risks to the patient.
Deploy innovation at scale: Most organizations and startups have no difficulty working on a pilot together. But they struggle to scale the innovative solution—across the enterprise or to their customer base—because of several reasons such as lack of capabilities as well as the expertise to integrate multiple enterprise systems. To overcome these challenges, corporates need a clear business case, strong internal sponsor, the right partner and an open innovation culture.
Foster an open innovation culture: Open innovation requires a different mindset about how innovation should be driven within an organization. At the most fundamental level, corporate leaders must foster a culture that embraces experimentation and open innovation and backs it up with investments of time and money. Examples include designing incentives and rewards encouraging employees to share knowledge and technology with external parties as well as easing the legal and procurement processes to quickly on-board startups.
Driven by disruptive technologies, the pace of change in the marketplace is accelerating. Traditional companies cannot keep up by relying only on their internal innovation machinery. Instead, they need to augment their technological capabilities with open innovation to compete against Internet-enabled startups as well as digitally savvy large companies. Applying the practices described above can help them manage the challenges that come with adopting open innovation—so they can extract maximum value from this powerful approach.
What are the Future Open Innovation Trends?
Almost 70% of the Fortune 500 enterprises have implemented some version of the Open Innovation model in their organization – from co-creation and partnerships to hackathons and crowdsourcing. However, the concept of Open Innovation has been evolving since the time it was first coined almost 17 years back by Henry Chesbrough. Below we look at some of the new trends emerging in this space:
More open to Open Innovation: Many industries like Manufacturing and Pharma have been relatively slow to adopt Open Innovation practices compared to the ones which have seen massive disruption already like Retail, Financial Services and Media. The early adopters in India for example have been MNCs, Banks and companies and Tech companies like Microsoft, Cisco, google, SAP and IBM. This trend has slowly started changing and there is a healthy appetite now among Indian corporates across industries like Manufacturing, Construction, Pharma, Oil and Gas, Healthcare, Telecom and Consumer Products. A large industrial equipment maker based in India collaborated with a niche Internet of Things startup to create a connected boiler. The connected asset is helping the equipment maker transform its maintenance and support model in the short term and its business model in the long term. GE Open Innovation Manifesto focuses on the collaboration between experts and entrepreneurs from everywhere to share ideas and solve problems. One of GE’s project is the First Build, a co-create collaboration platform, which connects designers, engineers, and thinkers to share ideas with other members who can discuss it together.
Look East: 2019 Global startup ecosystem report described that there Will Be No “Next Silicon Valley” instead, there will be 30 “next” hubs, distributed around the world, reaching critical mass driven by either regional as Singapore in Southeast Asia or Sub-Sector leadership (e.g., San Diego in Life Sciences. While none of them will be as big as Silicon Valley, each will thrive. For organizations starting out on their open innovation journeys, ‘start-up safaris’ to Silicon Valley and Israel have been an integral part of the initial discovery process. While these global startup hubs will still host a fair share of safaris, more organizations will start looking east - especially at China. China is making its presence felt in the global startup ecosystem as a hub for deep tech startups in areas ranging from artificial intelligence, computer vision and electric vehicles to drones and genomics. Expect more China ‘safaris’ and bridge programs in 2020 and beyond. Singapore an Hongkong have emerged as major FinTech Hubs and India is home to the 3rd largest number of Unicorns.
Accelerators 2.0 - Distributed, Virtual and Rolling: Accelerator programs have been the low hanging fruit for many corporate open innovation programs, and they will continue to be so in 2020 as well. However, the format will increasingly move to virtual and hybrid programs where a cool working space is no longer the center of attraction. Also, the fixed term cohort model will increasingly give way to rolling cohorts based on real time business needs. Finally, more and more organization are reinforcing their open innovation efforts in different ecosystems by collaborating with different cities and keeping track of the entrepreneur’s evolution. The Coca-Cola Accelerator program aims to help start-ups in eight cities around the world, Sydney, Buenos Aires, Rio de Janeiro, Berlin, Singapore, Istanbul, San Francisco, and Bangalore. Those start-ups aim to think in innovative ways to build the Happiness Coca-Cola brand. Samsung’s accelerator program invites the collaboration of diverse startups across New York, Palo Alto, and San Francisco.
From use-cases to broader business problems aligned with Digital Transformation: In 2020 and beyond, Open Innovation programs at corporates will focus more on broader business problems and Digital transformation than peripheral use-cases as the focus shifts from tactical, one-off problem statements to scaled deployments. Expect Open Innovation to become a key catalyst for Digital transformation initiatives of large enterprises. Bangalore International Airport has a comprehensive Open Innovation agenda, collaborating with multiple digital startups all the way from Customer experience to energy optimization as part of their Digital Transformation agenda.
Investments and Acquisitions: Organizations who have already experimented with open innovation models like accelerators, hackathons, crowd-sourcing and co-innovation programs will show more appetite for investments and acquisitions in 2020. This is especially true for industries which are more vulnerable to disruption where incumbents look to tap new markets and open new revenue channels through these non-organic bets. Expect a surge in Corporate Venture Capital beyond front-runners like Intel, Facebook, Google and Reliance.
Partner diversification: In the last couple of years, Open innovation programs have mostly focused on technology enabled startups in the B2B and B2C space. 2020 will see more interest from organizations in engaging with start-ups as well as academic institutions and research organizations which specialize in deep sciences as well as tech for good. In order to build a mathematical algorithm that can determine the optimal content of medical kits for NASA’s future manned missions, NASA collaborated with TopCoder, Harvard Business School, and London Business School. In this collaboration, TopCoder members provided 2,833 code submissions to help NASA build the intended algorithm. Top solutions were provided from UK, Japan, Indonesia, and Brazil.
Embracing Bridgemakers: Accenture research found that incumbents and startups together spent US$3.2 trillion on innovation-related initiatives between 2012-2017. This included investments in research and development, technology, corporate venture capital, and mergers and acquisitions. However, only 14 percent of those surveyed turned these investments into real value. As there are growing concerns about financial sustainability and how to measure the return of the investment of these programs, collaborating with Bridgemakers might grow as more incumbents are moving away from internal management to third-party managed accelerators. In future we will witness more organizations embracing bridgemakers like Accenture Ventures or Microsoft for Startups as strategic partners to give arms and legs to their open innovation programs and help reduce time to value by moving from PoCs to large scale deployments. To conclude, moving forward, corporates will move several steps further in their journey to leverage the power of Open innovation, especially by experimenting with multiple Open Innovation models, collaborating with a wider set of ecosystem partners across Geographies and thinking deeply about realizing real value from their investments by working with bridgemakers.
There are many ways to create lasting partnerships leveraging the Open Innovation model that deliver long term value. The key is to recognize that the best partnerships for a business may not always be conventional, and or seem obvious. But if invested in the right manner, they unlock new opportunities that pivot on your core strengths to tap new markets and make greater gains. Driving innovation and making it sustainable is not a “one and done” exercise. It’s a continuous evolution that requires business leaders to take cognizance of their organization’s appetite for taking risk and coping with failure, address ‘Not invented Here’ syndrome through cultural change and considering your open innovation partners as an extension of your organization.
3.1 Intelligent Enterprises
Quick thinking allows quick decision making. Decisions need to be backed up with accurately analyzed data and must be fast enough to beat the competition. The art is to balance, and there is no balance without strong footing.
Today, LinkedIn is the largest professional social networking platform, on a global level. It offers a wide variety of business-oriented services integrated in a single platform. It is boosting its business sales by utilizing the user and prospect data. Over the past few years, LinkedIn’s revenue has steadily grown, with over USD 6.8 billion in 2019.
Data has undoubtedly been proven to be one of the key driving factors of business decisions across industries. Modern startups are targeting this niche of data collection to provide industry leaders with data analysis tools, designed to make them better at what they do. Consider the example of Saama Technologies, which used the Partner@Speed program to attain world-wide support from prime big data and analytics companies like Informatica, Hyosung, Cisco, Tableau and Salesforce. Saama employs its Fluid Analytics engine accelerators in combination with their industry-specific consulting services. They provide big data solutions relevant to the world’s largest public companies. Data and analytics are speeding up the outcomes, delivering transformational business for world-class clients, and changing the game.
Mark Ledbetter, former Senior VP of Solutions Engineering at Hortonworks, sums up this need for speed, without compromising on accuracy, and shares his company’s solution: “Our customers want insights delivered at the speed of business. The software’s that we use in integration with other companies with a similar strategy has helped us accelerate customer success with reduced implementation times.” The digital age is infinitely more about sharing, than it seems at first glance, and sharing promotes efficiency in almost all contexts. Smart factories are an example of how a business concept with long-established connotations of rigidity can have a bright future.
“The factory of the future—the smart factory—is a paradise of efficiency where, defect and downtime, waste and waiting are long forgotten issues of a long-forgotten age.” — Industry Week. It is predicted that the newly established factories will have plant managers and CIOs crafting together, a solution that will seamlessly incorporate data with production. This helps them to stay on top of every movement of every gear, in order to deliver services like never before. Combining advanced tools with high-tech workers will result in an optimal assimilation of manufacturing and technological advancement. Investigating the ‘Siemens Gadgets Works Office’ in Amberg, Germany, feels like walking around tech heaven, with an area of 108,000 square feet, it is striking in its level of technological advancement. The company’s intelligent machines are used to coordinate the factory production and worldwide distribution of Simatic Controllers. This includes a custom made-to-order process, involving more than 1.6 billion parts for more than 50,000 annual product variations. Siemens assembles around 10,000 materials from 250 suppliers to produce 950 different products in the plant.8
The introduction of smart factory technology will improve the reliability and flexibility of advanced automated machines, thus changing assembly line production as well. This cuts down the costs associated with changing production lines and machine set up. The smart factory will enable manufacturers to make a wide variety of products and offer customers the products that are more customizable. Being capable of manufacturing a smaller number of products at mass production price will give smart manufacturers significant competitive advantage over their traditional counterparts. “The intelligent networking of industrial devices promises to deliver productivity gains, but not all manufacturers are ready to make the leap to the smart factory. Connecting efficiency and productivity is the key for the future of the industrial sector,” entrepreneur Arthur Wisser.
The term “Industry 4.0” sneaked into use. It first appeared at the Hannover Industry Fair and was the focus of discussion at the 2014 exhibition. Industry 4.0 has digitized the manufacturing sector and helped in fostering the smart factories. Being the fourth industrial revolution after mechanization, mass production and digitalization, the focus is on exchanging data and automation using digital technologies. Over the past few years, the manufacturing sector saw a lot of IT-integrated products put onto factory floors, such as autonomous industrial vehicles, and the same happened with production processes. This integration included computer aided design, enterprise resource management and planning. Smart factories are characterized by adaptability, ergonomics and resource efficiency. One novelty such factories bring to the table is the inclusion of customers and business partners in the business and value management process.
Integration, along with sharing, is a common theme in the digital age. Helmuth Ludwig, the CIO of Siemens North America’s Industry Sector, emphasizes that “The future of smart manufacturing is today. Previously, the industrial value chain including product design, production planning, production engineering, production execution and services were implemented separately. Today, new technologies are bringing these worlds together in exciting ways.” The fact that made the ‘Amberg Siemens plant’ successful, was combining three specific and critical technologies, namely Product Lifecycle Management (PLM), Manufacturing Execution System (MES) and Industrial Automation. Whether a company decides to produce a modern commercial aircraft, fuel efficient cars or high-performance golf clubs, the technology used in PLM, MES and Industrial Automation are helping manufacturers to realize and achieve top-line growth by increasing productivity and minimizing risk.
Connected Supply Chain
For companies and businesses aiming to deliver products to their customers on time and without compromising on quality, an efficient supply chain is a must. In this ever-evolving global marketplace, managers are required to employ more innovative and proactive strategic approach, to be able to optimize the supply chain and reduce costs throughout the product life cycle. The supply chain management strategies need to change with each phase of the product life cycle—Launch phase, Growth phase, Maturity phase and Market Decline phase.
Communication and information are vital in maintaining a seamless supply chain. Providing a proper access without compromising on security can help organizations support an incredible workflow, that promotes innovation and eases collaboration. As an example, CEMEX faced high transportation costs and spoilage as customers repeatedly changed their orders and delivery schedules. Using global positioning system (GPS) sensors, mounted on cement trucks and linked to a central control center, CEMEX can now reroute trucks dynamically, based on up-to-the-minute information about changing customer requirements. As a result, CEMEX reduced delivery time from three hours to 20 minutes, cut the number of delivery trucks by 35%, trimmed operating costs by USD 100 million and improved on-time delivery.9
Supply chain performance can be greatly improved through innovation. Technology and innovation play major roles in cutting down production costs by designing products that are easy to manufacture. The assembling process can be optimized by designing the product to contain a minimum number of subcomponents/designing subcomponents that are easy to assemble.
In order to enable an intelligent, connected supply chain, a platform that enables a deeper visibility across the value chain must be in place, providing a comprehensive look at health, risk (always a crucial factor in decision-making) and profitability. The platform should securely manage, automate and supervise the complex network of systems and things that need to access resources and share them. Collaboration among various people is key in this context. The platform must allow them to seamlessly connect with each other by delivering the right information to the right entity at the right time. Finally, the platform can be on cloud, in order to reduce cost, help simplify infrastructure management and accelerate time to market.
This is what “Internet of Things” (IoT) is, and has a huge impact on connected supply chain management. As per Cisco, IDC and Gartner reports, a notable increase in the number of devices making up the IoT will have an acute impact on how supply chains operate in the future. Cisco` predicts that the number of connected devices on the Internet will exceed 50 billion by 2020 on a global level, i.e. 6.5 devices per person.10
The impact of IoT-supported supply chains is wide and significant. IoT has already incorporated a number of commercial operations like telematics that are used in trucking fleets to improve logistics efficiency.
Here is a piece of wisdom from Accenture that emphasizes the inevitability of transformation, if growth is to be achieved. “Every high performing supply chain is a digital supply chain.” In this age of digital disruption, every traditional business is transforming into a digital business to stay in business. Digital disruption has especially impacted supply chain management, and no business can reap the optimal benefits of digitalization without reinventing their supply chain strategy. To successfully transform the supply chain, the businesses should evolve into a digital network, connecting the physical flow of materials, talent, information and finance. The supply of the new age can be characterized as more connected, efficient, scalable, and intelligent than the traditional one.
Today’s public utilities face increasing and often conflicting pressures to restrain costs and comply with new mandates. More than ever, companies need to use their infrastructure wisely. In Siemens, they know and take advantage of the fact as they say, “IT and automation are expanding the potential of infrastructure across the world. Solutions for sustainable power distribution, efficient traffic systems and efficient intelligent buildings are becoming more flexible and adaptable to new conditions.”
An integrated digital infrastructure plays an important role in the development of modern cities. Smart transportation, intelligent buildings, smart and independent power grids are their basic characteristics. An intelligent infrastructure enhances the potential of any location to become the location of choice for digital businesses.
“In a fully realized intelligent infrastructure, the desktop will be provisioned based on the unique user profile, providing the applications and infrastructure services each employee needs to support his/her unique role,”—the Wall Street Journal. The infrastructure will be able to determine the employee’s location—office, mobile/home, and provide user experience accordingly, to maximize workplace capabilities. This infrastructure will ensure that devices are always on and are connected securely to a network at required environments. The current technology is not quite ready to bring the vision of an intelligent infrastructure entirely into reality. The IT leaders should start preparing for it.
While designing intelligent infrastructure, the focus should be on the end user. It has now become vital for companies to provide its users with services, whenever and wherever the users demand. IT can unlock workflows that meet the needs and expectations of the ever-needier end users of the new age. For example, user expectation on the rise is having a “user app” allowing access to all the business applications on their mobile devices. While these applications must work at the same level of efficiency and in the same manner irrespective of device. Companies must work closely with developers, building apps and need to pay detailed attention to the user interface and overall quality of user apps. It is pertinent to embrace the ‘workplace-as-a-service’. Cloud services are quickly gaining popularity for non-core operations, as they offer a low-cost alternative.
Change is always difficult, but it leads to long-term possibilities for growth as opposed to stagnation first, and then drowning in the sea of innovative startups. Businesses that went through change are now riding this new tech wave. Once the business has moved over to the new systems and infrastructure, processes will get smoother, leading to better decision-making and thus perpetuating progress.
Smart Product Lifecycle Management (PLM)
The process of managing entire lifecycle of a product, encompassing everything from initiation, through engineering design, manufacture, and disposal to service. An organization’s product data is one of its most valuable assets. Different levels in an organization have various roles where they evaluate product data to make decisions that greatly affect the business in various ways.
The adoption of a new enterprise management solution requires weeks of intensive training. The daily active user needs to understand every minute detail about operating the software and filtering the data that the software manages. While this training is ideal for people who manage such software on a daily basis, it is an overload of data for other stakeholders. Smart PLM solutions provide the access of information to stakeholders/anyone who is not a regular user of the software. For instance, if someone in manufacturing, sales, marketing/procurement needs product data occasionally and lack training for more complex PLM tasks, they can simply use a role-based app to get specific pieces of the information.
By incorporating elements of smart PLM technology, the complexity of global product development and manufacturing is drastically minimized. Product development depends on valuable feedback from both within and outside the confines of a business. The brand-new PLM generation brings socially-oriented, collaborative techniques, which pave the way for advanced social media strategies.
Search Manufacturing ERP provides an example to showcase the comprehensiveness of PLM—“A company developing a new washing machine could capture ideas and requirements in PLM. They could use those to develop some conceptual designs and collaborate on them with the marketing department. Then, they could manage new product development project through the design of all the related specifications, components, software, documentation and other deliverables required to launch a successful product. Ideally, they would manage manufacturing and service processes with PLM as well.”
According to Harbor Research, there is a significant sluggishness across businesses: “It is interesting to compare consumer focused smart connected business models to industrial B2B models. The industrial players are moving so slowly to evolve their business model designs, that they risk implementing solution concepts developed in the late 1990’s by about 2020.”
Digital giants like Apple, Google, Facebook and Amazon are setting examples for companies that are developing a smart service business model by combining technologies from different domains, and in turn providing services and solutions in the way consumers want.
A company wanting to become a player in the smart services arena should make a strategic decision about the role it wants to play in the overall ‘Business Ecosystem’. Monitoring and controlling the data entry point to a platform is a significant part of the new, smart services. Suppliers of consumer demands and data interfaces of smart, networked products and services will lead the way. Such companies will also seek to grow and further increase scalability by creating digital ecosystems.
According to Harvard Business Review, “Smart services are a wholly different animal from the service offerings of the past. To begin with, they are fundamentally preemptive rather than reactive/even proactive. Preemptive means your actions are based upon hard field intelligence. Smart services are thus based upon actual evidence that a machine is about to fail, that a customer’s supply of consumables is about to be depleted, that a shipment of materials has been delayed and so on.”
Smart services can eliminate all kinds of unpleasant customer experiences. Thanks to its data-based intelligence and consumer behavior, that enables manufacturers to gain unprecedented R&D feedback and insight into customers’ needs, and thereby providing even greater ongoing value.
Machine intelligence has reduced the issues arising from tasking humans with gathering real-time data. Devices running on machine intelligence can digest billions of data points. Processing and controlling it, depending on the data itself. This helps the decision-makers by providing them with more visibility and insights pertaining to the business’s assets, costs and liabilities whenever needed.
Companies like GE, Siemens, Honeywell and ABB etc., are the leading smart service providers. Honeywell’s aerospace, GE’s jet engines, ABB’s power plant equipment and Siemens’s medical equipment, locomotive, all produce assets of critical value to customers. They are using various kinds of networking to carry out remote monitoring and diagnostic procedures.
The innovation paradigm has changed from closed to open innovation, providing a significant boost to the industrial research and innovation processes. Open Innovation contributes and improves one's entrepreneurial knowledge. Industrial sectors are keen to exploit and access knowledge outside their boundaries to accelerate their innovation processes.