Drive Smart Outcomes with Smart Services
Products and services must exceed customer expectations, offering richer, deeper, more personal experiences that lead to long-term relationships. Arguably the most enduring example of intense customer affinity in the last decade is the Apple iPhone. Today, Apple is extending the iPhone’s reach into the automotive market with CarPlay.
Design for Billion of Things
The R&D organization must be ready and willing to change direction quickly in response to markets that are increasingly digitally contestable. The news today includes countless examples of anticipatory business reorganizations. One that stands out is General Electric’s bet on the Industrial IoT and its creation of GE Digital. The new unit, led by a chief digital officer, brings together GE’s software center and its global IT and commercial software teams with its Wurldtech unit, which provides industrial security systems.
Navigate Unconventional Connectivity
Value needs to be delivered on software-centric, programmable and connected platforms so digital services can be launched quickly and upgraded seamlessly. Tesla Motors epitomizes the idea of R&D learning loops. In 2014, the electric car company issued a recall notice to its 29,000-plus Model S owners for overheating charger plugs, and then applied the fix over the air. Around the same time, GM issued a similar fire-related safety recall that required a software update. However, despite OnStar telematics, these owners had to take their vehicles into a dealership for the update. As a result, GM incurred a warranty labor expense on all 370,000 recall service appointments.
Innovate Beyond Silicon
Finding success in IoT requires a willingness to experiment in niche and industry-specific applications. Moreover, in these early days, pioneers are thinking very differently to uncover niche opportunities. Today, for example, 95% of the world’s population is covered by cellular networks, representing just 10% or about 15 million square kilometers of the earth’s land area. Beyond this, expanding coverage through conventional terrestrial cell towers does not make commercial or financial sense to service providers. One novel approach to extending LTE connectivity to remote and underserved markets is Google’s Project Loon. In partnership with telecommunications companies, Google is experimenting with a network of high-altitude balloons to connect people and things to the Internet.
Becoming digital durable
Aricent’s research shows that successful R&D-driven companies are competing aggressively on outcomes. These companies have a culture that anticipates disruption and introduces offerings that create sustainable value from IoT. They are digitally durable.
It’s not enough to embrace the new digital era. The existential challenge for companies today is to become digitally durable—to anticipate disruption and transform processes and products to compete on outcomes. Whether it’s understanding the profound impact of self-driving cars on transportation or being a part of the smart-energy revolution, simply closing the digital gap is no longer sufficient.
At the epicenter of the transformation is the R&D organization. R&D is responsible for innovating the design, development and support of the company’s products and services as the implications of Industry 4.0—specifically the Internet of Things (IoT)—become a reality. Designers and engineers must not just stumble on a hit but systematically arrive at compelling offerings that generate sustainable value from digital technology.
Evidence of the digital disruption is all around us. Light bulbs, for example, are intelligent nodes in our homes and offices that help us save on energy costs. Meanwhile, the auto industry is scrambling to prepare for a future where vehicle ownership is a service. General Motors’ response: a $500 million investment in the Lyft peer-to-peer ridesharing network and a new strategic focus on creating an on-demand network for autonomous vehicles.
In the telecommunications sector, companies such as AT&T, Verizon and Vodafone are reacting to fierce competition from the likes of Apple, Alphabet and Samsung as they vie for control of the customer experience both at home and on the road. US cable and satellite operators are on the defensive as “unlock the box” proposals are emboldened through digital services as an alternative to costly leased set-top boxes.
Aricent’s research, detailed in Technology Vision 2016, shows that successful companies are pursuing an R&D paradigm that allows them to compete aggressively on outcomes. These companies have a culture that anticipates disruption to create sustainable value from Internet of Things. They are digitally durable.
The pillars that define the digitally durable culture
The most innovative companies have an R&D organization that operates as part of a circular value chain. By closing the loop among sales, manufacturing and operations, these companies stimulate the evolution of products through market feedback, among other things. Now, leaders are not only gaining insights from the market but also developing cultures that enable anticipatory senses—and, hence, their companies are becoming more digitally durable.
In its most recent annual report, Amazon reminded its shareholders of its three “dreamy” businesses: Amazon Marketplace, Amazon Prime and Amazon Web Services. These offerings have a number of traits— customers love them, they are capable of growing and show a “potential to endure for decades.”
Winning offerings must also be agile and proactive. Aricent’s experience in R&D and product development for some of the world’s most pioneering companies reveals a culture that anticipates disruption in an era that is inherently digital and shaped by the Internet of Things. Such a culture demonstrates:
An R&D framework to achieve sustainable value from the IoT
Aricent’s Technology Vision highlights four R&D pillars that these and other innovative companies are using to the product development process to launch innovative products and services. These are the practices that will enable technology leaders to achieve digital durability.
MEGATRENDSFour Trends of Digital Durability
01Drive Smart Outcomes with Smart Services
02Design for Billion of Things
03Navigate Unconventional Connectivity
04Innovate Beyond Silicon
Four R&D trends that enable digital durability
- Drive smart outcomes with smart services: smart outcomes are about delivering exceptional customer experiences that create affinity and set the course for business growth. Two essentials for delighting the customer are pervasive platform thinking and human-centered design.
- Design for billions of things: building the infrastructure for hyper-scaled IoT means that suppliers and vendors must take full advantage of software definition and open hardware, which accelerate time to market, upgrade services quickly and seamlessly, and focus on software-defined security.
- Navigate unconventional connectivity: there is no dominant architecture for IoT. Survival of the fittest is how the market will select the standards and protocols that will orchestrate IoT devices and applications. It’s imperative to participate in fast moving technology developments, from high-altitude drones and narrow-band, low-latency spectrum options to the choice of custom chips.
- Innovate beyond silicon: the exponential growth of smaller, faster and cheaper chips is showing signs of diminishing marginal rates of return. Companies can continue to accelerate the pace of innovation by tapping complementary technologies, such as specialized chips and sensors.
Aricent believes these trends will enable companies to exceed customer expectations and to architect dynamic infrastructures, networks and components that will lead to digital durability.