The Emerging World of Connected Industrial Ecosystems

Whenever I seem to read about Platforms and Ecosystems, it mostly seems to relate to technology-led organizations and how they are continuing to connect us all up in our private lives. We get offered, as leading examples of the disruption that occurs and the connected value, the likes of Uber, Facebook, Apple etc., all bringing new value to transform our world.

Yet for me, the area that is shifting as dramatically is where Industrial organizations are providing platform solutions to solve industrial problems. Good examples are Bosch, Siemens, GE and Schneider Electrics. They are transforming their solutions and clients businesses, through offering digital on top of the existing products, in some highly impressive ways. They are focusing on connecting up their solutions into their client network on platforms to build the industrial internet.

The building of these platforms has taken priority within specific industries to master and progressively transform their business, into a digital connected one. This seems to me, to be so much harder than those like Facebook, Google or Uber. Industrial solutions have had to deal with legacy “big time,” overcome entrenched positions or views and begin to collaborate in highly sophisticated ways, with often very demanding and sometimes, skeptical clients.

Recently, I attended an event at Siemens and when I reflected I realized how transforming the Industrial changes are becoming due to the application of digital technology. The drive towards meeting the fourth industrial revolution is changing much. It is fusing technologies with machinery assets, it is pushing virtual, augmented reality, artificial intelligence, 3-D printing, mobility solutions that are far more radical in their design and long-term impact than for us as individuals, simply marveling at the smartphone.

The revolution is changing jobs and skills, it is requiring an increasingly collaborative environment as standards, protocols and intellectual property all need this partnership environment.

I wrote a fairly long, extended post: “Creating the Industrial Ecosystem” but I wanted to pull out some of its parts here to form a further step forward in this recognition as part of my focus on innovation and ecosystems.

We need to pass through the current phase of Industrial digital development.

Today, I feel Siemens like so many other Industrial Organizations, are still in first love with digital. They are learning the boundaries, constraints of technology and digital solutions, as well as pioneering and exploring where digital can be pushed beyond its present limits in industrial solutions. As technology presently is evolving constantly, its value needs constantly exploiting in new industrial ways and you certainly do need to have the digital structures in place, to allow for this evolution of solution scale and global connectivity. Platforms are central to this for connecting and delivering solutions.

Today, you sense that many Industrial organizations are looking at the valuations and impact that Amazon, Facebook, Apple, Microsoft, and Google as platforms are having in market valuation and this does have some “digital envy.” Rightly so, yet we do need to have some clear “degree’s of separation” and we are beginning to appreciate clear distinctions between Industrial and Technology-led offerings. Asset-heavy versus Asset light is certainly one of the prime differences that require different managing.

  • According to McKinsey*, seven out of the ten largest companies by market capitalization are ecosystem players -Alibaba, Alphabet (Google), Amazon, Apple, Facebook, Microsoft, and Tencent. McKinsey predicts that Ecosystems will account for 30 percent of global revenues by 2025

Industrial applications are very different from those formed for a Social application.

You can never lose sight of where the sustaining value comes from, in physical products that need to perform consistently, over a product lifetime, with the asset owned by someone else. Relationships need to be deeply trusted and well-supported, over the lifetime of the asset. Digital is rapidly becoming a key enabler to manage the assets more efficiently and in far more effective ways; to extend life, improve productivity and build greater return, on the physical asset.

Some of the ‘jargon’ of technology rooted companies has a different place within Industrial designed solutions. Can you image “pivoting to success,” when you are relying on an aircraft to perform or a gas turbine to constantly deliver into a community totally reliant on its power generation? Solutions offered need to be robust, guaranteed to work and sustaining, validated on their design and specification to do the job required not based on lean thinking. Industry solutions often “hold lives” in their hands or ensure we can function, well beyond technology-led solutions.

Of course, the phenomenon of digital and the platforms that we have all embraced and embedded in our daily lives, has been stunning, in what I see emerging from Siemens and many others. It has transformed all of what we refer too, in recognizing connections and interactions and give us a potential for a whole new ‘connected’ value. Technology offers us a whole different way of managing our daily lives, with the operating system not given the appreciation it holds. Yet the industrial world feeds off this even more, in distinctive ways of need where the solution is highly visible in the asset and how it functions or performs essential jobs in our lives.

Certainly, Siemens can and I expect certainly do, constantly look to build on what they have, with digital driving the impetus of change, within those that strive to fully understand it to produce an end result that can force transformation and growth due to new breakthroughs. We need to determine that Industrial platforms are different, significantly different, in how they create and connect value, in radically ways for their customer’s needs as well as societal. As an end result, it has to be far more sustaining and not built on ‘instant’ reaction or gratification. Application, not an app.

I do believe real value can come from scoping the Industrial Ecosystem holistically

Digital is increasingly central to create value, it is the primary focal point in most organizations at present. Industrial organizations are perhaps drawing more from the ‘pure’ digital organization, as they are only getting comfortable in their own “digital skin”. Certainly, the external consulting advice often being provided to them, is constantly relating to the ‘best practices’ to these purely digital orchestrators of their digital ecosystems, but this can be equally, damaging and constraining. If you focus too much on other parties practices, they are not your own “emerging practices”, they are someone else’s practice, operating in a totally different business contexts and market conditions. Individual ecosystems need to evolve in their environmental circumstances. We must never lose sight of this.

Clients and markets quickly define differentiation and prospective value, that always needs shaping and influencing.  This will revolve around exploiting: 1. Technology and Relationships, 2. extending Depth and Breadth of Knowledge, 3 Forming and 4 Extending Connections, 5. Experimenting and exploring in defined, collaborative ways,  6. Creating and participating in New Ecosystems of common purpose, and finally 7. Paying attention to the Rejuvenation of the Old. All need equally combining as the Industrial common need.

Building in the broader Ecosystem perspective

That consistency of evolving, challenging and reshaping even faster, with this Ecosystem perspective, will drive the ’emerging’ digital solutions of the Industrial Organizations, for the likes of Siemens, as well as a number of other Industrial companies, looking to lead and continue to grow.

Of course, Ecosystem development and its management are a whole lot more, as it is truly dealing with an often well-established complex system that needs systematically managing. It is fully appreciating the dynamics within the (specific) system. Managing the fixed asset but being constantly aware and always adapting, emerging and evolving at different rates on the demands placed.

The emphasis has to be equal to explore and exploit innovation, and this is where digital is greatly enabling this. Collaborating and communicating needs a digitally-led design, as the central concept of Ecosystems and the platforms provided. Industrial Ecosystems need far greater attention and further exploration of real differences that have at their core to build ‘collective value’.

For me, it is the management within the broader Ecosystem that will leverage fresh knowledge. Being able to apply context and domain expertise, worked through digital platforms and applied technology, that focuses on co-creation, to deliver on the potential of new insights, that are leading to innovation with a real difference. This collaborative “orchestration” will determine those that will emerge as winners within the Industrial environment as they form unique competitive edges based on reliance, trust, and deepening partnerships. The digital platform facilities this but it is the value of the relationships that are connecting up and exchanging value will decide the true winners and that requires ecosystem thinking.

I wrote a series of posts that are building my Ecosystem thinking increasingly.

The need is for the application of Ecosystems in multiple contexts and forms. Just equally consider the Interconnected Parts of an Ecosystem. Are we truly clear on what is reshaping entire industries? This requires not just a robust understanding of Ecosystems but also of the power and strength of your platforms, in its adaptability and flexibility to respond, not just to simply build but to shape. An ecosystem that is highly collaborative and that shifts the relationship dynamics, will require a deepening of the co-evolution and strenthening partnerships built on recipricating value.

This co-evolution is a significant difference between ‘pure’ digital ecosystems, where the winner is constantly looking to take all, and the emerging Industrial Ecosystem, one that forms and deepens relationships around trust, reliability, and performance, with its clients and partners over time, in final product solutions.

Industrial Ecosystems will become highly distinctive in their value-generating appeal

Industrial Ecosystems will be designed differently, they will need ‘infusing’ differently, more than just building and copying the technology-led designs we see today. Those that learn the new dynamics of Industrial Ecosystems first will be best positioned to win the long-term race, not just in having a “me-too” platform, but in its unique design and adaptability.

Those that can articulate their Industrial Ecosystem designs in value, reason, and purpose, to provide the business case for others, so they can then see the clear value in joining and extracting greater value, mutual value, from their participation. The outcome result is an Ecosystem that evolves and is constantly connecting in radically new ways, of thinking and proposition, offering value-based relationships built on technology enablers.

We are entering this new era of innovation, where connected highly collaborative relationships, form the ecosystem to build unique value propositions, that deliver the new competitive edge. During the past eighteen months, I have produced a series of posts arguing we are in the early stages of a  new innovation era” and I am witnessing this has emerged and evolved during the last year. This has encouraged me in a number of my recent posts to capture my thinking “relating to this new innovation era” as it evolves. I am encouraged that we are moving our innovative design. I wrote about some of this with my post “Advancing my Applied Innovation Thinking” on how Industrial Ecosystems are developing in more, open, fluid design of innovation, critical needs for them to continue to flourish.

I see a role in the moving along an evolutionary path to Ecosystem Management

We are getting somewhere along an evolutionary path in what I saw and heard at Siemens, but it needs a more radical blueprint of ecosystem design. Who will pioneer this new game, where management skills will be based on ecosystem understanding, building and managing needs, to be thought through and fully connected?

As we presently focus on the digital platform, let’s not forget, it is the strength of connecting and understanding the ecosystem, that will actually be the difference between winning and losing, and that’s formed far more on the relationship-based part, much more than the technology-based focus we have at present.

Today, ecosystem management needs far greater articulation,

We need to further determine why we need to articulate ecosystem design as central to our new innovative thinking. It needs to have a far greater clarification as well as determine what truly differs one (Industrial) Ecosystem from another for example. No different than we are describing as different platform designs for different market jobs. Also how each solution within the Industrial Ecosystem will work within Industry as a total design? Where will Industry 4.0 fit within this?  I believe in the next twelve months, Industrial Ecosystems will evolve and it will become highly critical to be mastered and articulated, in ways that show their connected innovation value.

Industrial Ecosystems that combine not just the digital with the physical, but also fully leverage the connected relationships, ones that all mutually prosper by co-evolving and striving to deliver innovation in new exciting ways, ones that are focused on advancing innovative solutions and value-adding. It is the “combination effect” that will build out better solutions we require, from those industries that provide much of our necessary infrastructure to function, firstly within supporting society to function but also within our communities and not just as individuals.

 

*Refer to the McKinsey Report: “Insurance beyond digital: The rise of ecosystems and platforms

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2 thoughts on “The Emerging World of Connected Industrial Ecosystems

  1. Pingback: Defining Ecosystems in Industry | Ecosystems 4 innovators

  2. Pingback: Entering 2019 – What Do Each of Us Need to Focus Upon? | Paul4innovating's Innovation Views

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