Radical Change: Building Next Normal Industry Ecosystems
Beyond surviving global upheavals like the COVID-19 pandemic, enterprises need to look at creating ecosystems for the next normal, and the recovery period that follows.
IDC has published its Future of Industry Ecosystems framework to help organizations that are embracing radical change in short periods of time to survive and thrive, as well as to guide initiatives that deliver resiliency, agility, responsiveness, and trust that must be implemented to maintain business growth.
Demand for rapid growth, networking
Companies across industries are building ecosystems of partners that can help expedite the flow of money, goods, and services, and to innovate rapidly in response to the demands of the times.
IDC program director for product innovations strategies Jeffrey Hojlo wrote in the IDC blog that it is estimated that “there will be 55.7 billion connected IoT devices (or “things”) by 2025, generating almost 80B zettabytes (ZB) of data.” He added that “organizations continue to connect their internal processes across roles on a digital platform”. According to him, they are realizing the importance of expanding their ecosystems to meet market and customer needs and be more flexible and resilient.
IDC also predicts that over 60% of G2000 organizations will be digitally dependent by 2021, and almost 80% in some industries by 2023. This will lead to a massive increase in the data flow across and between organizations within industry ecosystems. “Organizations also realize their limitations in resources, knowledge, and skills”, Holjo noted. He added that “sometimes the crowd, or the ecosystem, collectively makes better decisions that a small, internal data analytics group can provide”.
“The ecosystem can save time, effort, and cost in gathering foundational data and in pooling data that can illuminate threats and opportunities across the community,” he observed. “In some cases, the insights from this data could also be pooled”. However, he emphasized that insights are derived individually by different participants according to their own proprietary methods aligned with their strategic goals.
How industry ecosystems can work
Ecosystem participants can then work to achieve “resiliency, flexibility, and growth,” Hojlo added. “It is critical to adopt industry ecosystem models in order for companies to succeed in the digitally transformed, disrupted world we live in today.”
He provided timely examples to contextualize this concept. For instance, it can be manifested through sharing information about new viruses or medical device quality issues. A similar application could be sharing traffic, parking, and mapping information to a city or town database for public consumption. To address food safety issues, there may be sharing in sourcing, and supply chain provenance information to consumers for quality and safety validation.
Building these ecosystems as part of efforts toward “hedging against disruption and establishing resiliency”. As economies address dynamic markets and demand, weather, geopolitical, and black swan events like a pandemic, data sharing, and associated insights are becoming more critical.
According to him, the future of industry ecosystems “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” to 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 the market, customer, and consumer needs.
The impact of industry ecosystems
Each of these shared elements “complements and enhances the other, producing a multiplier, platform effect that results in improved innovation, intelligence, customer experience, and trust,” according to Hojlo. “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.”
The pivot, he said, “is based on several key drivers of change, such as customer/consumer needs and wants; the need for flexibility and resiliency and; operational and resource constraints, as well as personalization, innovation, and environmental sustainability.”
“Traditionally,” he noted, “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.”
For him, “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.”