To succeed in global markets, Finnish industries need to execute and deliver new forms of digital services and experiences to their customers. It’s a concept that’s perhaps more familiar in the B2C space, where consumer expectations have been shaped by major digital players. But even industries that are mostly B2B are not exempt from digitalisation.
This digital reinvention of industry is what Accenture calls Industry X.0. The transformation starts when businesses employ an optimized suite of advanced new technologies, from AI to IIOT. These digitally-enabled companies go beyond the fourth industrial revolution, by developing smart products, connected services and as-a-Service business models.
It’s a new mindset, that for many is yet to become established. For example, many Finnish businesses are using digital technologies like cloud, social and mobile to do what they’ve always done but more efficiently. But Industry X.0 is about much more: it’s 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.
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.
Finnish businesses recognise that they cannot innovate and grow their R&D capabilities simply through internal growth. To date their emphasis has largely been on protecting IP and focusing R&D in one location. But to thrive in the new means partnering in ecosystems, working with unfamiliar companies and partners in new ways to acquire new kinds of skills. It requires a major shift in culture and mindset.
Moving faster product to experience
Finnish companies know the change is coming, but the journey is still taking 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 Finland innovating the product – but having trouble in extending those into commercially attractive propositions to customers. What’s more they need to make the transformation much faster.
For most industrial firms the process of ideation to launch takes not untypically between 3-6 years. In contrast, digital businesses think in terms of weeks or even days. The implications of delivering new services and experiences and the use cases companies need to develop for connectivity, data, analytics etc are far from trivial. It requires them to rethink product development, and how digitisation changes core processes. That in Finland, as elsewhere, is a challenge. And while it’s clearly understood at a senior executive level, getting that understanding to flow through 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.
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.