Disruption is as old as history. It happened from when the Mesopotamians invented the wheel, to the Steam Age, and then on to the Industrial Age. But unlike in the past, today’s technology is disrupting a wide range of industries in a manner that has simply no precedence. We are at a turning point in human history, where we are seeing a confluence of many innovative and disruptive technologies that in conjunction will bring about a tsunami of change. Disruptive technologies such as AI, Robotics, IoT, and Blockchain have the potential of transforming economic structures, business models, companies, and jobs. Organizations need to consider preparing for these disruptive technologies and massive changes in ways that are different from previous approaches to handling emerging technologies.
Tech-enabled disruption of products and services – The new battleground for industrial companies
Industrial companies are finding that technology is an important link in the value chain for innovation and product development. The transformation is challenging, but there are ways to getting it started. Using technology to innovate and develop new products and services is fast becoming the new battleground. Companies are not only enhancing their offerings through software and data but making the transition from selling hardware-based products to creating tech-enabled businesses.
The effect on the industrial sector will be profound. In the auto sector, for example, estimates suggest global revenues will almost double from USD 3.5 trillion in 2016 to USD 6.6 trillion by 2030. As much as 84 percent of this growth is expected to derive from disruptive new offerings, such as shared mobility, connectivity, and electrification. To get a share of this growth, companies have no option but to pursue tech-enabled innovation for themselves. What’s more, innovation in products will go hand in hand with innovation in business and revenue models.
Extracting value from connected products and services
As per Mckinsey’s analysis, Connected Products could deliver USD 34 billion to USD 95 billion in incremental industry revenue growth. As the costs of sensors, connectivity, and computing continue to fall, leading companies are harnessing technology to reinvent their products and services and launch innovative new offerings in a bid to leapfrog competitors and gain market share.
Creating data-enabled business models
New business models offer the largest opportunity in tech-enabled product development, with an estimated USD 132 billion to USD 382 billion in incremental industry revenue growth. Some of these business models are likely to disaggregate value chains in much the same way that Uber is disrupting investment allocations for automotive companies, and increasingly aerospace companies as well.
It is heartening to note that we are seeing a number of Indian companies attempting to drive business growth, leveraging the power of disruptive technologies like AI and IOT.
A large car rental service company based in India has disrupted the automotive industry by offering a self-drive car rental service. They save you the cost and hassle of owning a car while giving you all the good parts – convenience, mobility and independence. By leveraging an IOT enabled telematics device attached to each car powered by cellular connectivity, they have reimagined customer experience and were able to drive business growth. This new economic model, called Transportation as a Service (TAAS), will disrupt existing models, industries, and companies.
No business is an island. Disruption is one area that has a ripple effect in many others. Disruptive technologies not only create new products but also change consumer behavior. Innovation, nimbleness, and flexibility to change are going to be key to the future. Business and managements should not only brace themselves for disruption but also embrace change.