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Ecosystem Design in the
Age of Smart Systems


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Traditional management in many OEM businesses tends to assume that, whatever the OEM’s focus, their business and their peer OEMs share similar characteristics, organization structures, product development protocols and sales and marketing practices. Management attention in OEM businesses has traditionally focused on the known, the visible, and the predictable.  Anything too difficult to measure is too often treated as if it were unreal.

Even more misleading is the assumption that “business as usual” will prevail over a given planning period. Such assumptions leave little room for dynamic management (or creation) of change, the early identification of emerging markets or technical discontinuities, or the increased presence of unfamiliar competitors.  Traditional planning processes, with their linear view and built-in bias towards the established and predictable, will fail to prepare OEMs for the significant changes coming.

OEMs will need to be better at spotting emergent trends and being able to quickly respond to new market entrants with new technologies or evolving competitive threats.  In this fast changing environment, leadership’s ability to identify emergent trends and potential discontinuities “around corners” will become a minimum requirement.  In our experience this capability is more art than science and requires very acute observation of the external world. Staying close to customers, vigilantly tracking competitors maneuvers and tapping alliance and ecosystem partners for new insights and perspective are all methods to become more acutely aware of change.

Today, across diverse manufacturing business segments, many companies feel they are being disrupted by digital, smart systems and IoT technologies. Incumbents are quickly realizing that in order to address the next wave of opportunity, they will have to shift from product-driven organizations to service-driven businesses but, for the most part, are not driving tangible results.  Why is that?  We believe there a many diverse challenges and pitfalls, including:

» Companies not knowing where to begin on the digital and IoT journey and who in the organization should own the initiatives.

» A lack of education or disagreement amongst leadership for what digital and IoT means as a growth opportunity for the company.

» Too many siloed digital projects happening all at once, no central function or organization schema to capture the whole opportunity.

» Leadership does not understand or has not seen examples of proven ROI or tangible measures for success, which impedes companies from getting out of the starting gate.

» Companies are taking a technology first mentality, meaning they focus on leveraging “AI” or “Blockchain” and just assume they will achieve value in the long-term.

» Peers and Suppliers aren’t geared or organized to support digital and IoT in an ecosystem, or do not understand how to design or navigate dynamic partnerships in the context of an ecosystem.

It is still early on, but the mounting pressure and potential disruption to companies that manufacture products could be quite large.  In order to achieve success, companies need to start with real customer pain points and problems and work with them to collaboratively create solutions.

In our experiences working with a diverse cross-section of manufacturers, one of the most important dimensions to making these initiatives work (a dimension, I’m frustrated to say, that is too often overlooked) is identifying the right people and mix of staff to drive strategy, engagement, and empathy; a group that can quickly develop the right energy level and enthusiasm as well as having a “stick-to-it” and “see-it-through” attitude for new smart systems and digital business creation.

While we strongly believe Smart Systems and IoT technologies will play a central role in OEM’s strategies going forward, we have also observed how difficult it’s been for many OEM’s to integrate new digital and IoT technology into their core business.  As the pace of Smart Systems and IoT technology adoption increases, many managers will be challenged by the trade-off decisions they will face.  Should we invest more in the core business or invest more in new autonomous innovation teams and new growth ventures?

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September 20, 2018

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