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How Should Players Think About
New Digital Growth Opportunities?

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Peer-to-peer information, social networking and pervasive computing are combining to create new modes of collaboration and decision making. People, information, and technology are becoming more connected, distributed and pervasive enabling the convergence of physical and virtual worlds. Social networking technologies are moving to the enterprise and will be embraced and experienced differently than in the consumer space. Network awareness will include knowledge, people and things.

These forces are informing a new trend we call “Smart Systems.” In its simplest form, Smart Systems is a concept in which input—from machines, people, video streams, maps, newsfeeds, sensors, and more—is digitized and placed onto networks. These inputs are integrated into systems that connect people, processes, and knowledge to enable collective awareness, creativity and better decision making. The foundation of Smart Systems is based on leveraging embedded computing, software and networking technology to deliver smart, remotely monitorable goods that will support entirely new modes of customer-device interaction and service delivery — thus, Smart Systems.


As networks have invaded the “physical” world, traditionally unique components and interfaces between and among electronic as well as mechanical elements are becoming more and more standardized. Connectivity and integration will become universal as components, platforms and systems become ever more standardized, open and readily integrated.

The implications of these trends are enormous. No product development organization or its suppliers of componentry and sub-systems will be able to ignore these forces — product and service design will increasingly be influenced by common components and sub-systems. Vertically defined, stand-alone products and application markets will increasingly become a part of a larger “horizontal” set of standards for hardware, software and communications.

As it becomes easier and easier to design and develop smart systems, competitive differentiation will shift away from unique, vertically focused product features towards how the product is actually used and how the product fosters interactions between and among users in a networked context.

Thinking about the business opportunity associated with a connected product is a highly creative process. Often there are no cut-and-dried markets to identify and size. Rather, there are whole new markets that might develop as networked products and systems are brought to market.

We believe business model design needs to transcend discrete product or service innovation. Assuming that the role of business design is only about making existing products or services more attractive no longer works. Business developers need to creatively imagine fully developed systems and whole marketplaces. Companies need to envision the design role as one that can address product, service, user experience and cumulative system value.

Today, with the emergence of connected products and information-based services, even more complexity has arisen in the design of the systems and the services as well as in the core of the products and elements within the core system. Additionally, from our viewpoint, because networks add yet more complexity to the process and because just about everything will get connected, we strongly believe business developers need to address multiple interrelated dimensions in order to fully address the nature and scope of the resulting business opportunities.

To move from thinking to research to real-world solutions, you will go through a process of synthesis and interpretation that needs to begin with a discovery phase that can help organizations connect better with the customers they serve. Done properly, discovery sets the stage to drive new concepts and innovation potential and help organizations to see tangible new opportunities. The elements that need to be addressed in the discovery phase follow here:

» Experience: Developing solutions based on user-centered experience for users, customers and partners;

» Behaviors: Understanding the many and diverse buying and usage behaviors and modes of collaboration across ecosystems and markets;

» Relationships: Potential to engage and leverage extended communities of users, companies, OEMs and suppliers with real-time interactions and information value;

» Technology: Emerging technologies, if properly nurtured and applied, can foster many opportunities to disrupt current competitive structures;

» Skills: Leveraging human capital and skills in this connected world to re-design and automate business processes will create entirely new solution values; and,

» Data and Content: Organizing the rapidly growing amounts of data from open systems for wider use, awareness, collaboration and collective intelligence.

The intersection of the six dimensions above is where discovery of business models begins. This discovery phase is where organizations can identify a “business model design challenge.” The foundation of smart systems business model development is identifying a concise design challenge. This challenge will guide the queries and questions you will ask customers during field research and the opportunities and solutions you will develop later in the process.

But the whole process begins by discovering and identifying challenges customers are facing or leveraging opportunities your organization has identified and is interested in exploring. The goal is to narrow feedback and inputs from the discovery process down to one specific business system and model design challenge.

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March 30, 2019