Triggered or terminated? The fusion between the physical and digital worlds
What should you be prioritizing today to gear up for tomorrow? Should it be the most robust real-time information or your most valuable assets? Preparing for each new digital age means leveraging real-time data so you can give new life to your products, strategies and customer relations. How? By merging the physical (tangible assets) and the digital (AI and data). Otherwise… otherwise, what else are you going to do? You might as well lay the ground work!
The latest technological advances in AI and data are opening up fresh opportunities for growth in the primary and secondary sectors, which until now have been relatively untouched by the digital transformation. And yet, the fusion between the physical and the digital worlds started off with different pioneers. It’s an area that is well worth looking into, if only so you can sidestep a huge bias: over-investing in the present where things are going well and under-investing in a future that still seems very hazy.
Based on
Fusion Strategyby Vijay Govindarajan et Venkat Venkatraman (Harvard Business Review Press, 2024).
1 – Fusion and new horizons (There’s no turning a blind eye any more)
Your coffee machine, like so many other objects, almost certainly carries the “smart” tag… but the truth is, it isn’t intelligent! Smart products generate real-time data about how they’re being used and their environment, information that is then aggregated with every type of relevant big data before being processed by AI. It is this unlikely fusion between a coffee maker and big data that is driving new forms of growth.
Are value propositions changing? Fusion strategy is based on revamping traditional economic models to create new types of value.
If we take General Motors as an example, the company’s focus now is squarely on the data it can collect in real time rather than the volume of vehicles it shifts. Because today’s cars aren’t (exclusively) physical objects: they have evolved into a means of transport that is connected to the cloud.
Have vertical and horizontal integrations reached the end of the road? It’s a much better idea to break out of your natural ecosystem and look “diagonally” to find new types of actors to team up with.
John Deere, the US corporation that manufactures agricultural machinery, is developing partnerships with firms that specialize in satellite imagery, sensors and field mapping so that it can make driver-free, smart equipment.
Are you doing enough for your clients?If you analyze how your products are used in real time, together with the context, and then aggregate the information with other big data, you’ll have a better understanding of what your clients need. You’ll be in a position to predict their future behavior accurately and tailor your recommendations to suit their requirements. Amazon, Netflix and Airbnb have recognized the value of offering customers bespoke suggestions.
What are the benefits of merging machines and digital technology?
Tracking how a product is used in real time. Maybe you’ll discover new uses or features you can grow.
Understanding the interactions with other objects, the environment and the user. You will have a holistic view of how your products are used, and you’ll be able to predict user behavior more effectively.
Performing remote servicing / improvements. The updates are transparent for the client.
Predicting potential breakdowns and scheduling maintenance work. You can think ahead and limit the amount of product downtime.
Giving clients custom-designed recommendations. You can help your customers use your products more efficiently.
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