The shift to a “digital” economy is fundamentally changing virtually every industry. Over the next decade or so, the accelerating integration of digital technologies will make many things connected and “smarter,” capable of reporting where they are, who’s using them, and how they are used. That flood of data and the embedded analytics that harvest insights from it promise to offer a multitude of new value-creation opportunities to the companies (and their customers) who embrace “digital.”
Getting there won’t be easy. Let’s look at the automobile as an example. Cars are already halfway or more to being the ultimate mobile applications platform, despite the fact that for manufacturers (OEMs) hardware still matters more than software and the idea of “agility,” “updates,” and rapid evolution are embryonic. The update cycle for a vehicle line is still multiple years, and the over-use of “all new” for each model cycle fails to obscure the fact that most changes are minimal and “revolutions” are rare.
Despite the impressive gains in safety and economy, few OEMs (and no mass brands) have fully embraced the smart, connected vehicle paradigm, and few of the lessons learned in building smart connected products in other industries have made their way into auto designers’ thinking. Continuing pressure on safety, infrastructure capacity, and emissions are going to change all this, probably sooner rather than later. As soon as one OEM gets on board the digital platform, competitive pressures will drag everyone else along, or relegate them to niche status.
So the car of the future will be:
So CAR will become CARE. Not soon or easily or smoothly or without missteps, but inevitably.
There’s a lesson here, I think, for many, if not all, consumer products that can become smart and connected. Although the initial evolution will likely be adjacent to what we already have — and hence familiar — the end points could be very different.
In a smart connected world, what will your products look like? What new capabilities and services will they need to support them? What are you doing to get ready?
John Parkinson is an affiliate partner at Waterstone Management Group in Chicago and a regular CFO columnist. He has been a global business and technology executive and a strategist for more than 35 years.