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Relationships among companies will
be more fluid and the price and cost
of goods and services more volatile
than they are today. There is one
certainty, however: Trustworthiness
and a clear articulation of purpose, will
become more important to business.
An enterprise that is continually
changing must balance that turbulence
with purpose and trust, or people
— including employees, suppliers,
customers, and regulators — will not
be able to make the full commitments
that businesses need.
Our research at PwC suggests that
the Industrial Internet presents
unprecedented potential gains for
companies that claim leadership roles.
Their ability to realize these gains will
depend, in part, on their actions during
these early years: the capabilities they
build and the extent to which they
reframe their business and operating
models to make the most of this new
technological infrastructure.
How, then, can you lead your
company, whether it is large or
small, to play a pivotal role in the
next industrial revolution? How can
you take advantage of your existing
strengths while developing the digital
prowess and personal skill that
you need? How do you balance the
technological acumen you require
with the managerial skill to become
a true market leader in this field?
How can you help the broader society
meet the challenges posed by this
technology — issues related to
privacy, employment, income equality,
and general well-being, among others
— while still ensuring success for
your enterprise? The following 10
principles can help senior executives
navigate the uncertainties of the
next few years in a systematic and
profitable way.
Establishing Your Strategy
1. Rethink your business model.
The business world has become
accustomed to disruption. In industry
after industry, incumbents that cling
to old business models lose ground to
upstarts that introduce new products
and services at much lower prices.
The next industrial revolution will
accelerate this sequence, especially in
manufacturing, by reducing costs and
improving efficiency at a broad scale.
Companies that are slow to change will
lose to those that rethink their business
models to take advantage of the new
platforms and their new opportunities.
Consider, for example, the electric
power utility industry, which has
essentially maintained the same
business model since it began in 1882:
metered power generation, selling
electrons to residential and commercial
customers. Now power utilities find
themselves at the nexus of an evolving
technological ecosystem that allows
them to offer a variety of new options
— and just in time, because the
revenues from selling electrons are
rapidly shrinking. The new offerings
include renewable energy from solar
and wind sources; sensor-based energy
monitoring systems that use data
analytics to continuously improve
efficiency; and heating, cooling, and
facilities management services. Some
power utility companies are recasting
their offerings as “gateway hubs” for
Internet access and home security.
The utilities have the potential to
capture several new sources of value,
but they will also face unprecedented
competition from technology and
telecommunications companies.