New Business Thinking: What is it?
New Business Thinking: What is it?
Regardless of the industry you serve, the Internet of Things (IoT) has become a competitive differentiator in how businesses are valued. Businesses that have yet to digitize their environments are already three to five years behind and this gap continues to widen. In fact, looking at the industry holistically, 2017 is the year the IoT became operational. Throughout 2018 and 2019, businesses will begin to scale their IoT initiatives.
"Digitization is changing our society as fundamentally as the Industrial Revolution did. It is having a tremendous effect on the style of value creation"
With an explosion in data and new computing capabilities—along with advances in other areas such as artificial intelligence, automation and robotics, additive technology, and human-machine interaction—there is an unleashing of innovation that has already begun to change the nature of manufacturing itself.
Today’s business models aren’t necessarily going to hold true for the future. This is the time for manufacturers to take a step back and look at their business through a different lens with a mindset focused on maximizing the business value chain and delivering customer value for tomorrow, not just today. Everything has to center around a customer value add. If doesn’t, don’t do it.
When employing an IoT strategy there is a sequence of events you may go through along the way: digitization, digitalization and finally, digital transformation. These three steps are the very foundation upon which an IoT strategy is built. However, there often is confusion regarding the differences between these terms and some people may not even know there are important distinctions to be made. The differences are significant and should be well understood.
Let’s take a closer look at each stage and how it applies to the manufacturing process:
Digitization: Transitioning from analog to digital.
Digitization is changing our society as fundamentally as the Industrial Revolution did. It is having a tremendous effect on the style of value creation. Just what does digitization look like? At its most basic, digitization is the process of making analog information available and accessible in a digital format. For manufacturers, it could be the transition of work order forms into PDFs, using scan guns and forklift scanners to capture inventory, converting customer files and reports from paper into online spreadsheets, or converting product manuals and repair handbooks from hard copy into a digital format. The benefit: one truth, one source.
Digitalization: Leveraging your digital technologies.
Now that you have data generated from many different devices that are stored in various places, how do you leverage it? You have reached the next step in your IoT journey – where you move from digitization to digitalization. Now, you can connect those devices and eliminate the various steps of gathering and analyzing that data from fragmented channels. This is where the real and virtual worlds converge and data becomes a real-time-based tool.
Digital Transformation: Re-anchoring or creating an entirely new part of your business model.
Digital transformation is innovation enabled by technology. An enterprise never finishes digitally transforming. Since technology is always evolving, you never reach the end of this phase. Businesses must stay agile and be prepared to adapt to newer transformative technologies in the future. So, digital transformation is a journey of strategic, planned and organizational change. It starts by empowering your teams with new methods to create a highly responsive data driven strategy in a bold culture of innovation. It culminates with an end-to-end digital integration of your business operations in real-time. The result: businesses influence their own value chains.
Are you ready to begin your IoT journey?
Now that you understand the three core phases of the IoT journey, here are three steps that will help align your teams for a digital transformation mindset.
1. Data as an Economic Asset: The key focus for a data-driven economy and new business models is in leveraging and linking data. Today, like never before, an unprecedented amount of data is being generated from a variety of sources. The great news is that the IoT is capable of creating valuable data in every industry—which is what is driving such widespread adoption.
2. Understand your Core Competencies: Don’t fall into the productization trap. Products live and die and the life cycles of products are moving faster than they ever have. If you productize your company, you’re also going to live and die with that product.
Instead, focus on your core competencies and the unique value you bring to your customers and then capitalize on those strengths. Look beyond the product and examine the assets your customers find significant; identify what differentiates you and use data to amplify these distinctions. This mindset creates a sustainable competitive advantage by allowing manufacturers to strategically control how they leverage their value chain.
3. Think Strategically: As with any emerging technology, fully leveraging the benefits of a well-executed IoT program requires a strategy that reflects your business objectives and goals.
In today’s economy, technology and business strategy go hand-in-hand. However, it’s important to define your business strategy first. Identify your goals and objectives, then rely on the technology and data to help get you there. In a broader sense, technology must be a conduit to meet your objectives and not a driver by which your objectives are defined.
Whether large or small, projects should be conducted with a larger vision in mind. It’s at this point that technology and data should support the objective that aligns with your business strategy. Make it work at the tactical level, of course, but also make sure you have a strategic objective in mind.
Embracing the Digital Revolution
This is a very exciting time in the world of manufacturing as the ways people and organizations use information has shifted dramatically. Value used to be in brick-and-mortar assets, now the value of companies is in its data. So leverage your data assets, don't be afraid to take data and put it together in different ways. It gives you the capability to control your value stream, rather than sitting, waiting and hoping for the next order.