If you are a Business 3.0 company, it’s time to take it up a notch because Industry 4.0 is here where tech adoption is happening at an accelerated scale, challenging traditional business models and giving rise to new ones. And if you look “Through The Looking Glass”, you can take lessons from other traditional industries such as electricity generation, retail and life sciences.
At the opening of Travelport Live in Bangkok earlier this month, Ananth Krishnan, chief technology officer at Tata Consultancy Services, spoke about how an Industry 4.0 world was emerging, driven by cloud, automation and AI, and how Business 4.0 companies were defined by three characteristics.
One, companies can mass customise the experience at unprecedented scale and accuracy in real time where every second happens at scale. (Think Uber, Spotify, Netflix)
Two, companies can create exponential value – a business transaction binary building block is at the heart of the model but you can layer that by creating products on a base transaction. (Think Grab now getting into groceries, bikes and everything under the sun they can sell to you)
Three, the creation of ecosystems. Supply chains have existed for 150 years but the idea of ecosystems had been notional and conceptual. Today, sometimes, the ecosystem is the company. (Think Airbnb or marketplaces like Alibaba, Amazon, Flipkart).
Business 4.0 companies, said Krishnan, tend to have a very different view of risk. “We (traditional companies) are trained to identify risks in our company and trained to eliminate or recover from them.”
Pointing to the Facebook and Cambridge Analytica data scandal, he said, “It could have destroyed any 3.0 company. Data risk was perhaps a part of their overall risk strategy, the speed with which they have responded is noteworthy, and is a lesson for us.”
Krishnan said that Business 4.0 companies are also trained to think with a mindset of abundance, different from how 3.0 companies view resource and opportunity.
“We identify opportunity, then look at resources, then get the tech and resources and sometimes we downgrade the opportunity. They go the other way – if the opportunity is big enough, how can I maximise it? It’s a different mindset – it is not constrained. It’s entrepreneurial thinking.”
Acknowledging the skepticism within the audience of 400 mainly traditional travel companies, Krishnan said, “I know you’re thinking only a certain type of company or industry can do this – Google or Alibaba. We are normal companies, it’s too hard for us.”
Ananth Krishnan reveals what drives Business 4.0 companies.
He then cited examples of Business 3.0 companies which have reinvented themselves. For example, in the electricity generation industry, one of Tata’s partners has created a digital twin of the boiler.
“It’s using the internet of things and analytics to turn their energy power plants into active participants in the ecosystem so that they are deemed to be partners in the ecosystem, and they become part of the exponential value.”
Their boiler is married to retail data from consumers, and with over 2,500 sensors, 250 parameters and 45 AI rules being monitored in real time, they use over 10,000 combinations to tune the boiler for maximum efficiency.
“The digital twin of power plants would have been unimaginable five years ago.”
Traditional industries are now looking at 4.0 models. Tata is working with a large US retailer to build a digital twin, based on tech like IoT-based remote management and monitoring, machine learning and blockchain for supply chain.
“By digitalising, they can launch a product a second, change the algorithm many times a second, and they are now on the agile development cycle.”
Over time, it will also transform them from “selling products to providing connected experience in entertainment, security, communication, energy and health.”
Said Krishnan, “Retail used to be one of the slowest industries in tech adoption. Now we are buying stuff on our phones and this has forced these industries out of the tech backwater to become one of the most agile adopters.”
In life sciences, the product cycle used to take 10 years and you needed at least four or five clinical trials. Now with smart packages and mobile devices, dosage adherence through real-time data integration and personalized patient support in real-time through analytics, Tata is working with a global company to see “if they can substantially change their customer experience for their trials”.
To leverage the ecosystem, Tata Consultancy Services has created COIN (Co-Innovation Network) where it puts its customers at the middle of the network. “All the smart people who don’t work for us are part of the network and with this network, we developed a digital bank in 10 weeks, pivoting fintechgeration for a large European bank.
“It takes years for a bank to change its technology but we managed to integrate four pieces of startup tech. That’s the power of ecosystems,” said Krishnan.
To move to a 4.0 thinking, the critical factor is the “mindset change in the way you look at your tech. In the past, you built, plugged in things and operate. Today, you broker, integrate and orchestrate.”
• Images credit: Travelport