Digital transformation and innovation are creating the potential for visionary players in the air transport ecosystem to step into the critical role of “innovation orchestrator.”  In this role they will be conductors of the entire ecosystem, enabling innovative passenger journeys that are ac-companied by a whole new realm of lucrative services. Players in the air transport ecosystem will need to be responsive to new trends, technologies, and evolving flyer and stakeholder preferences.

The undeniable and irreversible effects of digital transformation are visible everywhere: In our personal and immediate communications, our supply chains, the data revolution, the early     beginnings of true Artificial Intelligence (AI). Thus, it can be tempting to believe that the impact of high technology on society and business is well underway. In fact, it’s only just begun.

As the physical world of equipment and machines continues to dovetail with the digital world, new technology innovations will enable previously unimagined capabilities across the B2B equipment and machinery universe and impact the wide range of companies that develop and supply the equipment that other companies need to run their operations. The breadth of equipment, machines and devices spans from components such as semiconductors and sensors to robotics and industrial machinery as well as the transportation and mobility arena.

As networks continue to invade the physical world, system developers are seeing the value that comes from the growing interactions between sensors, machines, systems, and people, and the ability to detect patterns from large-scale sensor and machine data.

THE SHIFT TO COMPLEX ADAPTIVE SYSTEMS

These combinatorial innovations are what we call “complex adaptive systems” or “system of systems,” where multiple technologies converge and reinforce one another. A system of systems is an arrangement of independently operated systems that allow for collaborative interactions among them, giving rise to emerging capabilities and values while maintaining each of the individual system’s own capabilities and values.

Complex Adaptive Systems

source: Harbor Research

For example, the development of autonomous vehicles not only depends on advancements in robotics and artificial intelligence to operate vehicles, but also on the maturation of the Internet of Things so an array of sensors can analyze driving conditions and interact with other cars, as well as improvements in lithium and battery technologies for cars to be able to efficiently refuel themselves.

Today, people understand digital systems are interwoven into nearly every aspect of life and increasingly expect more from the technology they consume. And yet architects, developers and investors struggle to build new innovations on top of legacy technologies that simply cannot support the required scale. performance and flexibility necessary for modern digital services. We need a completely new way of thinking about the embedded intelligence in machines as well as the networks and infrastructure that connects them.

ENABLING NEW DIGITAL INNOVATIONS FOR AIR TRANSPORT

As in society-at-large, multiple parallel technology developments are now evolving in the air transport space that reinforce and accelerate one another. Cloud infrastructure resources provide unprecedented computing scale anytime, anywhere. Mobile computing devices are extending the reach of computing with broadband network connections. And the Internet of Things (IoT), Machine Learning (ML) and AI are bringing intelligence and awareness to almost every manufactured thing. The strategic implications of these trends go far beyond the innovations and impacts in any single industry. All industries, including air travel, are now subject to the same technology impacts common to all business.

And yet, while some parts of the air travel industry—bookings and surveillance and security, for example—have been closer to the forefront of innovation, most of the industry remains woefully behind the digital curve. Today, most discussions of next-generation inflight experience still focus almost exclusively on entertainment or in-seat systems. Similar discussions about airports might highlight shopping malls more than true experience. But the digital transformation of the air travel experience will go much deeper than media and entertainment tied to seatback systems or airport shopping.

Steep demand for travel—driven by a growing middle class in emerging markets, as well as the increasing importance of designing and consuming travel experiences—means that more digital innovation will be vital if the expectations of tomorrow’s consumers, customers and stakeholders are to be met. If these Millennial-driven demands are one side of the coin, the other side consists of diverse, data-driven services as well as new in-cabin enhancements such as more sophisticated cabin pressurization, air purification, wellness sensors, anti-bacterial  seats,  personalized lighting, and windows with variable translucence. Consumers will be the catalysts, but not the only beneficiaries of all these new services, regardless of how many “hidden” providers are necessary to bring about that result.

Air Transport Digital Services Ecosystem Innovation

source: Harbor Research

THE ERA OF “FLYING SOLO” IS OVER

All of the major segments of equipment and hardware suppliers who serve the airline industry have historically operated within well-established business models that reflected the distinctive competencies that each group had at its core. But digital transformation is causing a blurring of the line between legacy business models, forcing all the major suppliers to re-think their strategies. This is especially true of the relationships between and among complementary suppliers of inflight entertainment systems.

To realize the transformational value of these technologies, players in the air transport arena will need to understand that the era of “flying solo” is over.

The days when a company could generate value simply by building a better product—such as a new seatback display—have given way to an age of interconnectedness in which value is built as much by collaborating with the right peers as by building a great experience.

In short, we’re witnessing an end to the traditional “command-and-control” partnering strategies of the past. The new reality is collaborative systems. As carriers, airport operators, airframe OEMs and IFEC players evolve to understand that all aspects of a traveler’s experience are interconnected, we will begin to see new innovations in every stage of a journey—pre-flight, at the airport, in the cabin, and post-flight—as well as many new relationships across the air transport system.

A shift from product-centric service to engagement-centric interactions is key. Traditional industry roles will continue to blur as stakeholders throughout the traveler’s journey compete to own the customer relationship through new innovations.

Given that air transport is a relative “late comer” to the digital party, it helps to look at adjacent industry sectors where digital technology has made earlier inroads and evolved further. Auto manufacturers, for example, design and assemble beautiful cars, one after another, right down to the perfect integration of digital communications and information services, with most consumers having no grasp of the ecosystems involved.

The advent of the connected car, with built-in infotainment systems, was a great challenge for automotive OEMs. The biggest conflicts involved the growing diversity of new players in the vehicle ecosystem, where synchronization of innovations proved very difficult. When the life-cycle of the vehicle was 5+ years, and most new suppliers of electronics and software were operating within 12- 18-month innovation cycles, the ecosystem was perpetually out-of-phase, making true collaboration next to impossible.

Today the role of digital technology in connected vehicles is having a significant impact both on customer expectations and the way that forward-thinking auto OEMs are re-engineering their end-to-end value chains. In fact, multiple players in the auto industry—including parts and device manufacturers, cellular carriers, smart phone manufacturers, and myriad more—now engage in delicate relationships and interactions to enable these offerings in the marketplace. There are glories to being part of an ecosystem, and one of them is delivering a superior result within the confines of a rich mobile experience while making it look easy, which it most certainly is not.

End-To-End Air Transport Experience Requires A Collaboration Architecture

source: Harbor Research

THE CRITICAL ROLE OF INNOVATION ORCHESTRATOR

Mastering digital transformation still involves a subtle dance of timing and delivery. Technology innovation always moves faster than the manufacture and marketing of actual products in the real world. This creates a classic disconnect between the pace of evolution in microprocessors and software versus the specific applications of these components in objects offered for sale. Part of the ecosystem story is the ability to see where, and how fast, things are going and thus get usable products in the hands of consumers before the next technological wave makes them obsolete.

Consider that during the roughly 25-year lifespan of a commercial jet, ten or more cycles of major innovation will occur in various ancillary components of the aircraft. The fuselage and engines will remain constant while many other aspects of the plane which are designed in a modular way—i.e., seat design, systems for cabin-pressure, communications and entertainment—can be swapped out when they become superseded. Many of the components of an aircraft are now designed by AI and machine learning. The increasingly lightweight nature of these components, combined with software that is rapidly replacing hardware-based control and communications, makes it possible for the entire interior of a single aircraft to exist in five or six distinct “contemporary” versions over its lifespan.

Even though no one can predict precisely what the innovations will be, or when they will come, the process by which they will be delivered is now clear. Digital transformation and innovation are creating the potential for visionary players in the air transport ecosystem to step into the important role of “innovation orchestrator”—that is, to become the facilitators of the whole evolutionary process.

The Role of the Innovation Orchestrator in Driving Digital Transformation

source: Harbor Research

Innovation orchestrators who facilitate and leverage digital platforms will enable new alliances based upon information-sharing and co-creation, and these partnerships will become increasingly important from a B2B perspective.

This means that leadership companies need to stand in their prospective partners’ shoes and work through the logic of how these collaborative systems get designed, procured, and deployed. It won’t be a classic linear cycle this time around. Old-fashioned “customization” gives way to personalized configuration, while the technology itself makes everything much more programmable. In travel, almost everything about a customer’s trip will change end-to-end because of that. Understanding this gives the orchestrator-leader an opportunity to reach out to new ecosystem participants and build empathy with potential partners who haven’t thought through these disruptions yet.

Orchestrators will also need to help facilitate changes in how aircraft systems and cabin elements are specified, helping to synchronize diverse players and innovations. They will now take the lead in helping to evolve certification processes and policies. They will become educators to their ecosystem peers on challenging issues such as data privacy and data usage, as well as the inherent contention between collaborating parties regarding personalization.

Top players in the air transportation ecosystem are in an ideal position to become innovation orchestrators, but they must learn to be responsive to new trends, technologies, and evolving flyer preferences. In this fast-changing environment, the orchestrator’s ability to identify emergent trends and potential discontinuities “around corners” will become a minimum requirement.

This capability is more art than science and requires very acute observation of the external world. Staying close to customers, vigilantly tracking emergent technologies, and tapping alliance and ecosystem partners for new insights and perspective are ways to stay acutely aware of change.

HOW TO GET STARTED: ACT EARLY; ACT OFTEN

Collaborative communities both inform and express the strategy. Built to pursue multiple aims simultaneously, a dynamic network of connected products, developers, users and stakeholders will drive new information values which, in turn, create new influences in the marketplace. Power in collaboration structures falls to those who best understand how to use this information and influence to get and keep key positions.

Forging collaborative innovation communities means managing uncertainty.

To achieve success, companies will need to recognize the new opportunities driven by a collaborative innovation—from customers, from partners, and from your own people. This will require new thinking, including:

• Act Early; Act Often: Assembling a collaboration community calls for a balance of timing and carefully selected participants. Most community opportunities will quickly evolve and re-form as learning grows.
• Understand Customer Experience By Having Customers Participate: Customer behavior is complex; multiple complimentary designers and developers carefully observing customer experience can enable a much richer and deeper appreciation of new services offerings.
• Look for Non-Conflicting Business Models That Encourage Collaboration: Collaborative communities and coalitions need to be comprised of self-motivated market participants that pursue a common goal, not mere subcontractors tied to a “command and control” scheme.
• Target the Highest Value Customer Segments: Marketers often get distracted by the sheer size of a particular market segment or because of the marketers’ familiarity with it. In the process, they often miss the segments where collaborative communities could deliver the most value.
• Build Open Collaboration / Align Partner Behaviors: Seemingly superior offerings can also fail because traditional product development protocols do not create a superior experience. Successful collaborative communities allow participants to invest resources, reap rewards, and innovate openly with one another—while pursuing individual interests.

Collaborative ecosystems and communities create value and strengthen market leadership by increasing customer intimacy, creating operational efficiencies and enabling new multi-party product and services innovation. ◆