The Acceleration of the Future of Industry Ecosystem Model
The movement to future of industry ecosystem models is happening now. The platform, sharing economy was the first step toward this open, shared way of working not only with partners from within the industry but also from other industries. We saw this trend in industries such as automotive, aerospace, and life sciences commence in the past few years and accelerate during the COVID-19 pandemic (as well as in other industries). Why are industry ecosystems critical for success in the digitally transformed, disrupted world we live in today? Because the complexity of products, supply chains, digital experiences, and changing market and customer/consumer needs are too great for any one organization to address on its own.
The future of industry ecosystems goes beyond partnering with more companies and organizations; it is also about leveraging the sharing of data, applications, operations, and expertise — expanding upon the platform, sharing economy that was built over the past five years. The segments of sharing across an industry ecosystem encompass the following:
- Sharing data and insights to ensure security, reduction of fraud, functional safety and security, or new, mission-critical innovations, as well as cross-ecosystem reporting such as for sustainability.
- Sharing new applications to enable data and insights, improved operational efficiency, or better customer experience.
- Sharing operations and expertise so that organizations can scale up and down their capability and capacity for new products and services to meet market, customer, and consumer needs.
Each of these shared elements of the future of industry ecosystems complements and enhances the other, producing a multiplier, platform effect that results in improved innovation, intelligence, customer experience, and trust. Industry ecosystems are dynamic entities that can change depending on customer and market need, scale to meet volume and demand, and evolve to be resilient, innovative, and open in the face of disruption, competition, and change.
Why Industries Need Industry Ecosystems
The pivot to the next normal of industry ecosystems is based on several key drivers of change. These drivers and challenges will significantly influence the purpose of an organization’s ecosystem, in addition to providing foundational operating principles:
- Customer/consumer needs and wants: It is the provisioning of all the products and services that the customer may want at a single transaction or point of purchase — an example is buying a car and also having the option to purchase with insurance, financing, and infotainment. Also, industry ecosystems can not only improve upon, or anticipate what a customer wants to buy in a moment, but also impact how people could live differently through the products and services that they offer.
- The need for flexibility and resiliency: The rapid move to digital transformation over the past two to three years has led companies to build platforms for internal and external collaboration and begin to expand the breadth and capability of their ecosystem. The COVID-19 pandemic is accelerating this trend and making companies that were not already moving to develop their industry ecosystem, shifting to do so.
- Operational and resource constraints: This includes physical facilities, lack of skilled workers, the need for digital innovation and software development expertise, and service support. This could also include “patient” or long-term capital to help stabilize and grow organizations.
- Personalization: As different parts of the ecosystem are engaged with the end consumer, greater insight into the individual can be gleaned and then used to personalize product and service offerings — we will see a shift from brand loyalty to ecosystem loyalty.
- Innovation: A key learning from/during the COVID-19 pandemic has been the ability to innovate — that is, the translation of an idea into a product, a service, or an action, with those ecosystems that could innovate more quickly, outpacing the competition as they pivoted their offerings to adapt to the current situation.
- Environmental Sustainability: The protection of the planet will be a core underlying principle for ecosystems moving forward. IDC research has shown that those organizations that are both digital and sustainable outperform their peers. June 2020 IDC research on Environmental Health & Safety (EH&S) showed the prioritization of sustainability as a key initiative. Focusing on environmental sustainability will require organizations to have an end-to-end view of all the aspects of their delivery mechanisms from raw materials to finished goods and in-service usage and all the way to disposal/recycling (the circular economy).
Traditionally, organizations operate around a value chain — a set of sequential activities in a specific industry geared toward delivering a valuable product or service for the market. As over 80% of organizations are undergoing digital transformation, these value chains are being disrupted. COVID-19 and the dramatic disruption of markets and supply chains have accelerated the need for business transformation.
An increasing portion of an enterprise’s ability to generate value will be tied to its participation in a new economy. As new business models, customer requirements, and ways of operating emerge, new ecosystems are created. Traditional industry value chains that were limited in the number of partners give way to industry digital ecosystems that leverage software platforms to deliver scale and speed, as well as federate data from connected products, assets, people, and processes. These open, agile, and scaled industry ecosystems facilitate the sourcing and distribution of new innovation and provide operational support and expertise as required to support dynamic needs and opportunities.
As industry ecosystems evolve, IDC will continue to research and write about this topic over the next year and beyond. To learn more about our planned agenda and research framework for the Future of Industry Ecosystems, click the button below, You can also contact Jeffrey Hojlo via email, firstname.lastname@example.org.