When we hear the term smart industry, we often visualize an image of a highly sophisticated new age customer buying at the click of a button. Imagine calling a cab using an app or paying utility bill through the mobile phone or even transferring money using twitter. There are multiple such examples from the banking, publishing, transport, travel, utility and retail sectors.
However, the concept of a smart industry is much more than what meet the eyes. Smart industry is a highly interconnected ecosystem of business enterprises and other stakeholders, enabled by technology.
The future is that of smart industries and it is worthwhile to understand the multiple aspects of a smart industry. Based on my ongoing research, I discuss here the 6 aspects, which make a smart industry.
1. Technology driven
Smart industries are essentially built upon an extensive use of information, communications & production (or operational) technologies. It’s the latest advancements in the digital space, the next generation networks and the operational technologies that enable a smart industry.
The IT enablement is not restricted just to an individual enterprise but it is present across enterprises, integrating them together. The integration enables the business enterprises, their partners and customers, the financial and regulatory institutions and other stakeholders work seamlessly with each other. The intelligence is embedded in the inter-connecting processes, which makes them smart. Imagine the real time settlement between banks, which happen at 9 AM every morning, without any manual intervention or online underwriting for an insurance policy, which the regulator can see or real time inventory replenishment and its automatic payment as per agreement. These are all examples of processes in smart industries.
2. Systemic intelligence
A smart industry by definition is a system of interconnected entities (business enterprises, customers, partners and institutions) and is not a simple sum of these entities. They together create a system, which has a mind of its own, different and bigger than the individual entities. The systemic intelligence is the source of value creation.
The individual players in the systems put together create value, which is not possible for any individual or few of the individuals to do alone.
3. Customer Centricity
All roads lead to the customer, who is at the center of a smart industry. Rather than building a product or a service driven value chain, it is a customer driven value chain. Many products and services bundle together to create a unique offering. E.g. when a customer pays his electricity bills using the mobile, or when he buys an insurance policy online, she is using the telecom, banking and electricity or the insurance services, all put together.
4. Innovative and Disruptive
Technology not just integrates and enables an interconnected smart industry; it also promotes innovation by the existing as well as the new entrants. The innovation is created by either adopting the new technologies or the existing technology for creating newer processes or both. The new technology or newer processes constantly create digital disruption, thus keeping the incumbents on their toes.
As the true nature of a system, it always remains unaccomplished, always unstable and at the edge of chaos. Even if stability is reached, it is for a very brief period. Business enterprises are continuously trying to figure out newer bases and newer process capabilities to compete in the market place. Continuously searching for a new business model is a very important aspect of competing in a smart industry. This directly questions the management thinking of the past, where stability was a rule and change an exception, strategic horizons were longer, and hierarchy was an effective way to organize with power centralized at the top. In order to compete, business enterprises need new mindset, new leadership and new ways to organize.
5. Competitive AND collaborative
Business enterprises also need new ways to see competition and competitive strategy. Competition and collaboration go hand in hand in a smart industry. In an interconnected system with customer centricity, competition does not happen just between individual players but between consortiums. Very often these cosortiums of collaborative efforts are loosely held. The line of divide between competition and collaboration is rather thin. Organizations require a very different approach to strategy and structure to operate in such a dynamic environment. It should be noted that many industries like IT has seen competition and collaboration hand in hand, but a smart industry meets all the other criteria too.
6. Regulated but not controlled
Smart industries are highly regulated but only from a compliance point of view. The compliance promotes fair practices, protects interests of the various stakeholders, ensures adoption of the latest technology, practices and standardization. Beyond the issue of interest protection and general guidelines, the regulator does not interfere in the way individual operators want to compete and the choices they make.
As stated earlier, a smart industry meets all the 6 criteria to quality as one. Many industries may exhibit a few of these characteristics but they cannot be termed as smart industries.
<Image courtesy of watcharakun at FreeDigitalPhotos.net>