Reports from companies such as Cisco and GE predict that the Industrial Internet will bring an increase in private sector profits of 21% and create over $32 trillion in business opportunity. But in order to participate in all this predicted growth, manufacturers will need to adjust their attitude around what their customers will buy. The question you need to ask when planning your next product now changes from “What do my customers want to buy that I can provide?” to “What problems do my customers have and how can I solve them?”
As Accenture CEO Paul Dougherty wrote in his May 26, 2015, CIO Journal article in The Wall Street Journal, “Welcome to the ‘outcome economy’ — where companies create value not just by selling products and services, but by delivering solutions that directly produce quantifiable results.”
And this means spending more time thinking about who your customers are and how you can deliver measurable results to them. A report from the World Economic Forum explains the shift in competition, “This is a much more challenging prospect. Among other things, providers will require a deeper understanding of customer needs and contexts in which products and services will be used. Value based on output also entails quantifying results in real time.”
“It is the digital age that makes the outcome economy possible. With the proliferation of connected sensors, the physical world is moving online, becoming increasingly quantified and accessible.” The report goes on. “Similar to the data logs that show web trails, sensory data streams from connected machines contain detailed traces about product usage and customer behaviours. By applying advanced analytics to such data, along with the right external data and domain models, companies can gain a better understanding of interactions among input variables, and optimize what it takes to achieve desired business outcomes.”
During his keynote at Smart Industry 2015 earlier this month in Chicago, Industrial Internet Consortium (IIC) executive director Dr. Richard Mark Soley described his view of an outcome economy. “You’re basically moving capital expense to operating expense. You get to encounter things in a very different way than you used to. That, of course, changes the model of the way companies operate,” he said. “But the net effect is products not failing anymore. I think we’re 30 to 40 years away from a world in which products don’t fail. Or if they are going to fail we know ahead of time and we get the spare parts and we get to replace them before it fails.”
The net result of this dependability is hugely increased customer satisfaction. “Imagine a world where the things that you depend on don’t fail anymore,” said Soley. “That’s a very changed world, that’s a world that we’re actually going to like.”
To learn more about what Soley and the IIC think is needed to move us toward this outcome economy, visit the IIC website.
Naomi Price is Content Strategist for Smart Industry, writing about the evolution of the Industrial Internet of Things and innovative ways companies are putting these tools to work. Previously, she covered the data backup and recovery as Managing Editor for SaaS company Intronis. Prior to that, she was Managing Editor of EE Life on UBM Electronics’ EE Times.