Industrial companies1 were not having the best time before the COVID-19 pandemic hit. Then, the public health crisis essentially shut down the world’s major economies and severely impacted most industries—with each company experiencing the ramifications in a unique way. Followed by predictions of a sluggish (at best) post-pandemic recovery. It all seemed quite bleak. 

However, reality is now painting a much brighter picture. In fact, we may be in the midst of an all-out Industrial Renaissance

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It turns out, a series of technological, macroeconomic, societal, and B2B customer trends indicate that industrials may see a more rapid recovery than anticipated.

 

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For example, China’s economy grew a record 18.3% in the first quarter of 2021 according to data released by the country's National Bureau of Statistics. Automotive manufacturers—important customers of industrial equipment suppliers as well as industrial & electrical equipment companies—also saw a significant increase in the first quarter of 2021, with a 22% increase in global automotive sales volume in comparison to the same time last year.2 The global industrial automation market is forecast to grow 8% annually over the next five years.3 And these are just a few examples.

The question now is, how can industrial companies strongly capitalize on the opportunities that lie ahead?

 

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Shifting gears to growth

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As the industrial sector looks past short-term recovery to a future of long-range growth, we see five key drivers for companies to gain sustainable competitive advantage.  

  1. Cloud transformation, lean processes, and new digital core. 
    Scaling the adoption of cloud technology will be central to industrial companies’ future growth ambitions. Cloud enables companies to optimize their IT costs, although this will not be the major driver for them in a B2B environment. It will increase their speed to market and ability to do business differently. It supports new kinds of digital engagement with B2B customers and innovative product-as-a-service business models. It enables the modernization of infrastructure, applications, and data. Most importantly, it provides a platform for rapid experimentation, faster innovation, and accelerated growth. 
  2. Connected products and services. 
    With sales volumes still sluggish, industrial companies know they must shift from making discrete hardware-focused products to software-driven connected products. The whole design, R&D, and engineering processes should be centered around developing connected and intelligent products which generate an attractive customer experience. In parallel it’s important to consider how to architect, scale, and maintain platform-based service models—including curating an ecosystem of third-party developers and solution providers. It’s complex. But done right, the returns can be significant.
  3. Consumerization and growth. 
    B2B customer expectations have shifted dramatically to a B2C-like purchasing experience (the Amazon effect), which calls for a streamlined, user-friendly digitalized sales experience—a digital customer experience journey. This will mean moving away from depending largely on traditional B2B sales channels to generating more sales online through digital channels. At the same time, companies need to carefully balance partner relationships, which will remain critical to the industrial sector, while managing internal organizational and cultural change—including reskilling and upskilling people with digital technologies and developing a customer insight-driven mindset from top leadership on down.  
  4. Intelligent operations. 
    Industrial companies should rethink business operations across the entire industrial value chain. Embed intelligence in all operations to build agile engineering and digital manufacturing capabilities in a seamlessly connected operations network. Here, intelligent shopfloor automation and digital simulation techniques (e.g., digital twins) play a crucial role in improving operational efficiency, streamlining customer interactions, and driving higher flexibility and agility levels. They should also better manage supply chain risk and dependencies—clear learning from the pandemic. 
  5. Responsible and sustainable business. 
    Consumers, customers, employees, businesses, and governments are all demanding higher environmental, social and data governance standards. People increasingly expect companies to be purposeful about sustainability, hold strong ethical standards, and operate responsibly in everything they do. The good news for the industrial sector is that the circular economy offers an unprecedented opportunity to create economic and environmental value for both business and society. Our research at Accenture shows a massive $4.5 trillion of value is at stake by 2030, even by conservative estimates.4 

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Time for bold leadership 

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Reaping the rewards of the Industrial Renaissance will require bold leadership from industrial companies. They’ll need a willingness to challenge convention and make the necessary investments, in talent as well as technology, at the right time and in the right place. The winners in this new era will be those companies that move now to refocus on growth, fully leverage their digital technologies and reorient the business to be truly customer experience driven. 

It will be worth the investment. 

Industrial companies that embrace change and invest boldly in the future stand to gain greater business agility, higher production efficiency, more opportunities to reach new untapped profit pools, and an engine for generating sustainable value and lasting profitability. Let’s talk about how to get started. For those who have started already, let´s discuss how to make the Industrial Renaissance a long-lasting lever for growth.

 

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Sources: 
1 Industrial companies include industrial & electrical equipment, consumer durables, heavy machinery and suppliers.
2 MarkLines: Accenture Research analysis.
3 Statista: Size of the global industrial automation market from 2019 to 2026 (in billion U.S. dollars).
4 Accenture, The Circular Economy Handbook - Realizing the Circular Advantage, Peter Lacy, Jessica Long, Wesley Spindler, published Jan 2020.   

Thomas Rinn

Managing Director – Global Industrial Lead

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