What do Boeing’s Digital Aviation unit, Ford’s Blueprint for Mobility and the Mayo Clinic’s Center for Innovation have in common? They’re all driving digital business to reshape the rules of competition of their industry with a focus on people, business, and things.
Take, for example, Boeing’s Digital Aviation Unit, which seeks to improve airline operation. The company partnered with Apple and Microsoft to migrate paper-based checklists and information to digital devices that pilots can use more easily. Boeing also acquired ETS Aviation and its fuel management software, which it hopes to use to reduce fuel consumption by up to 5%. By working with other companies and setting an end goal, Boeing set an industry standard for how IoT and automation will affect the aerospace industry.
By 2020, CEOs expect 41% of enterprise revenue will come from digital business. Some companies still haven’t figured out to how make the transition. After all, digital businesses come in many shapes and sizes depending on the industry. Companies can transform by exploiting business moments or by using digital capabilities to create or enter new markets. How should they get started?
Build on a simple plan
Creating an industry vision is the first step to leverage digital capabilities or tackle business needs without a cumbersome, expensive or limiting approach, said Jorge Lopez, vice president and distinguished analyst at Gartner. Companies should put together a simple plan, and build on it as the industry evolves and they acquire knowledge and skills.
Boeing set an industry standard for how IoT and automation will affect the aerospace industry
“Companies use the vision as a kind of blueprint and build it out gradually as they acquire the knowledge and ability to do so,” said Mr. Lopez. “They are ‘industry’ visions, not just company visions, because realizing them requires ecosystem partners and, if successful, they will fundamentally change the way the industry operates.”
Ford, for example, is looking into how the connected car needs to interact with passengers, pedestrians, infrastructure and other vehicles. In addition to working with two consortiums, the company is adding connected technology to its cars and working with software engineers.
CEOs may task the CIO with leveraging technology to advance the business. How a CIO approaches an industry vision will depend on the industry and company. An enterprise in a field with an established industry vision will be different from a company that works in a slower-moving industry, but generally, companies will need to approach the situation from one of four main angles.
Four approaches to create an industry vision
Create your own industry vision
CIOs for companies in industries that haven’t seen a widespread shift toward digital businesses should aim to be pacesetters. This approach offers the opportunity to set the terms for an industry and emphasize the competitive advantages of your own company. For example, a company that excels in crash-avoidance and safety technologies in cars would be able to emphasize the importance of those systems as a part of the overall vision. The challenge is CIOs won’t be able to refer to other companies’ knowledge or experience when crafting their industry vision.
Create a vision that supersedes a competitor
A second approach occurs when an industry vision for how digital business will affect the industry already exists, but a CIO determines a new vision that can outpace the competitor. The CIO must be able to explain why the alternative industry vision offers an opportunity to outpace the competitor and why it is better or more compelling. In this situation, the challenge comes in convincing the research and business partners of your industry vision’s superiority.
For example, the CIO realizes that the industry vision creator is moving toward using drones to create an agile supply chain, but it makes more sense to send out trucks as temporary warehouses. In this situation, the CIO must convince the business partners that trucks make more sense than an experimental method.
Join another company’s vision, but dominate one layer
If a competitor has an overarching industry vision that can’t be bested, identify one aspect of the vision that your enterprise will be able to dominate and take over a part that makes your company indispensable to the industry. The challenges are in allowing a competitor to set the industry vision, and the risk that the competitor will regain superiority in the layer on which your enterprise has focused.
For example, if your company owns the best 3D modeling technology in the industry, leverage that to dominate that aspect of the industry vision.
Look to adjacent industries
If the industry vision has already been established for your industry, but your company has carved out a portion to leverage based on a particular skill set, don’t settle for a small piece of the business. Look beyond the native opportunities to adjacent industries for digital opportunities. These are nontraditional options, but allow the company to join diverse fields and reduce the risk that a competitor will regain control.
For example, a bank that excels at financing might look at other industries that could benefit from their techniques. The bank could assist a heavy equipment manufacturer in creating new financing that separates out the capital investment and ownership from the usage and revenue.