Leveraging Industry 4.0 technologies for Self Disruption

Can leveraging new technology on your existing models solve your challenges for good ?

You know the answer to this one. The answer is NO.

If that would have been the case, Bio Pharma companies would not go into panic mode every time a major patent expires. Oil and Gas Industry would not get gloomy with falling Oil prices. The reason I am using these examples is that these Industries are cash rich and invest generously in technology. Yes, the investment in technologies provide them many aspects like process improvement, visibility, analytics abilities -but none of these alleviates the core threat these industries face. The core of their business model is still the same, leading to the same situation every few years ! Every time a major patent expires or Oil prices tank.

Technologies like Industry 4.0 will not alleviate these problems but it will allow you to create new products and value propositions to hedge against the above mentioned issues.

Now, we could not have blamed them few years ago, when the technology advances were not mature enough to pursue business model expansion or disruption. Also, there was always a cycle to things. If Oil processes tank, they will rise again. New patents will be found etc. But that may change soon. As an example, the threat of rising popularity of Electric vehicles is a significant threat to Oil and Gas. Business models must be disrupted now. Significantly, if not radically.

The “Force fitting” mindset – Applying legacy thinking to New Technologies

My strong personal opinion is that we need to use technologies and ecosystems, like Industry 4.0 to work around new parameters and new behaviors, rather than transpose our thinking on these new technologies. I know that I have mentioned only two industries in the previous section but I can think of examples in many other Industries.

While it is obvious that we need to strategize how we can leverage technology to improve what we have, the biggest advantage of new and emerging technologies in my mind is that they provide you the possibility to create what you don’t have. Yet – we are never able to get out of “force fitting” new tech around existing ideas and methods.

Netflix launched in 1997. Ever since it started becoming popular, companies like RedBox responded by opening more kiosks, getting into streaming almost two decades after Netflix launched. A classic example of thinking within an imaginary constraint

What currently is your organization’s expertise, may be something that is killing your innovation mojo. RedBox’s expertise was kiosk DVD rentals and it just could not push itself to think of additional models. And in my opinion, 2014 was a bit too late! The good news is that you don’t have to always let go of your core competency. You can actually build additional products and services using your competency, but rethink about expertise.

Remember, Disruption is not always about innovating something entirely new

Disruption is the art of identifying which parts of the past are no longer relevant to the future, and exploiting that delta at all costs -Levie (2014)

Key point here, in my perspective, is the idea that organizations don’t always have to go against the high level norms of their Industry. The Product and solutions that I can think of are not even radical and within the core area of Industry expertise – A Bio Pharma company need not manufacture toothpaste or an Oil and Gas company does not need to start selling Pertoleum Jelly (like Vaseline). In my opinion:

The key idea is that you look at the boundaries (imaginary constraints) of your business model design, and leverage brand new thinking on how to leverage cutting edge technology to change the parameters that fixed the design process or created those Unnecessary constraints.

Opportunities abound in all Industries

Companies are just not getting the true essence of Digital transformation right. The Digital revolution is not just about driving operational efficiency in enterprises. That is only the first step towards a Digital end game much farther down the line. Real Digital transformation casts the net much wider and it entails completely new business set-ups and ways of working across all functions.

Dig a little deeper and you will see that opportunities to create these products are in many Industries. Ranging from Bio Pharma, Oil and Gas, CPG, Logistics Service Providers (LSPs) etc .

There was recently a news item about Novartis’ $2.1M/treatment gene therapy. People love to go after Big Pharma whenever they read something like this but if they are to survive, BioPharma companies MUST incorporate the cost of Drug development in their pricing model.

But what if BioPharma companies could leverage their deep expertise in many clinical areas to create products/business models leveraging Industry 4.0 (Data, Technology and Algorithms) ? That may allow them to lower the price on new drugs, thereby reaching wider consumption base as well, and hence there may not be an impact to revenue at all.

I can think of few, not only in Bio Pharma but in another Industry that is looking at an uncertain long term future – Oil and Gas. Having these additional business models, and hence additional revenue channels, will allow BioPharma companies to lower drug prices and will allow Oil and Gas companies to hedge their revenue sources.

Expand the imaginary constraints of your existing Business models….!!!

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Views my Own.

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