Industry X.0 is the digital reinvention of industry, where businesses use advanced digital technologies such as IoT, Advanced Analytics, Artificial Intelligence and Cloud Computing to transform their products and services, their core operations, customers’ and workers’ experiences, and ultimately their business models. The manufactured product is on a path from being static—delivered once and then maintained—to become living, i.e., connected for, continuous enrichment, predictive maintenance, integration into a wider value chain and hence being bundled with or delivered As-a-Service.

This transformation goes beyond the fourth industrial revolution by developing smart products, connected services and As-a-Service business models and hence has a profound impact on how businesses operate and on core business capabilities such as innovation, R&D, engineering, product lifecycle management, customer service and IT.

The Nordics is a very exciting region with a huge potential in digital reinvention of industry. Many companies are leaders in their industry, operate globally and export the vast majority of their products and services. To succeed in global markets, they need to execute and deliver new forms of digital services and experiences to their customers. To do that, their R&D sometimes faces challenges that they often cannot address simply by growing internally. The emphasis on protecting IP and focusing R&D in one location has been the prevalent model. But to thrive in the new often means rapid innovation, partnering in ecosystems, working with new types of companies—in new ways—to gain access to new types of capabilities and services. This requires a major shift in culture and mindset.

Four characteristics of Industry X.0 businesses :

  • They are smart, with every product and production process self-monitoring, and data generating, aware of its evolving context.
  • They are connected, sharing data everywhere in real-time.
  • They are living, able to respond and change quickly to meet new needs and seize emerging opportunities.
  • And they are learning, creating increasingly relevant and valuable experiences over time.

Denmark’s journey to Industry X.0 underway

This is a new mindset that for many is yet to become well established. Many Danish businesses are using digital technologies like cloud, social and mobile to do what they have always been doing—just in a smarter a way. However, this is often not enough.

Industry X.0 is about the transformation of industry models. And achieving that goes to the core of strategy: R&D, the product journey, and how companies define and manage what they deliver to customers.

Digitising R&D

Businesses already make significant investments in R&D. But to embrace digital transformation, R&D itself has to become a digital process. It’s a big shift. For example, Mercedes recently launched a new operating system for its cars. This is a huge change for a company that has traditionally designed and created vehicles. From building cars to creating an operating system that enables services and value on a software platform is, from an internal perspective, a huge transformation. We believe that this a change that many businesses will have to embark on.

Industry X.0 is about the transformation of industry models. And achieving that goes to the core of strategy: R&D, the product journey, and how companies define and manage what they deliver to customers.

From product to experience

Danish companies know the change is coming, but for many the journey is still taking too long time to get started. Accenture research shows that while one-third are using digital technologies to unlock new levels of efficiency, and half to drive new sources of growth, only 6 percent are doing both. We’re seeing companies in the Nordics innovating the product—but having trouble in extending those into commercially attractive propositions to customers.

From years to days

Industrial firms’ traditional time-to-market for new products is typically 3-6 years. In contrast, digital businesses think in terms of months or even weeks, driving new sets of expectations for customers and consumers. The implications of delivering new services and experiences at speed—ultimately the vision of living products – are far from trivial. It requires rethinking product development and digitisation of core processes in manufacturing and customer service. In the Nordics as elsewhere, this is a challenge. Traditional firms find it hard to be innovative in a such radical way. While this challenge is clearly understood at a senior executive level, getting this understanding propagated and eventually implemented throughout the organisation is more difficult.



Opening up to innovation

But we are seeing some clear examples of new approaches to innovation and participation in ecosystems evolving around a platform can achieve differentiation. Look at Scania One, for example. Scania One provides its connected vehicles with a range of data services. But it is also built as an open platform, encouraging developers to add their own services that could address the specific needs of what the truck is used for (ie outcomes) rather than the performance of the truck itself. It opens possibilities for an unlimited array of services and clearly acknowledges that Scania cannot create all those services itself.

Another example is Sonos. Originally, Sonos had its own app with limited Spotify integration, enabling playlists created on Spotify to be played through Sonos connected speakers. But it did not support the discovery functionality that makes Spotify so attractive to its many millions of users worldwide. But now Sonos has opened up Spotify to run its speakers and in removing the walled garden is allowing others to participate on its platform. And that opens up whole new markets.

Three key areas for Industry X.0 success

For others to follow, we see three key areas that they’ll need to address:

  • Embedded and connected products, How do companies connect their products? How do they connect from the platform level to the customer and make sure that they have the right solutions in place to do so?
  • Shape the right services, companies cannot develop and run everything on their own. So how do they create an innovative environment, spanning ideation to roll out? They need to design and operate new services at speed and scale, create the right approach to innovation that moves rapidly from concept to testing.
  • Transform their core operational processes, moving from disconnected, document-based processes to a connected approach. They need to: integrate previously siloed processes and solutions to share new ideas, products and changes and in doing so enable rapid innovation across the enterprise.

And to support the achievement of these objectives, industrial companies need to develop and master some new capabilities, from software to agile manufacturing, and analytics to unified product lifecycle management. We’ll examine each of these in more detail in future articles.

Jens Held-Hansen

Managing Director – Products Denmark

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