New business models, great opportunity: technology / manufacturing
According to a worldwide survey conducted by MIT Technology Review Insights by MIT Technology Review Insights, in association with Oracle, 80% are happy with their organizations ’ultimate goals for 2021 as they expect them to move forward (e.g. selling more products and services or transformation). change business models, sales methodology or otherwise do things differently.
The iconic manufacturer of agricultural and construction equipment is building a new operating model for the company as a technology hub, Raj says. For example, the tractors being sold today collect data on their operations and help farmers like planting jobs in full detail. It is one of the major movements the organization is making or organizing in a pandemic-transformed landscape — new business models, mergers and acquisitions, and major technological changes, such as extensive automation.
The story of two industries
Each industry has unique characteristics. Certainly this is the case with technology companies, which are undergoing a rapid transformation in their nature. Industries tend to be the first recipients of new technologies, says Mike Saslavsky, Oracle’s director general of high-tech industry strategy. Most technology products have short, fast-paced life cycles: “You have to keep up with the next generation of technology,” he added. “If you’re not transforming and developing your business, you’re probably going to be out of the market.” This premise applies to a range of businesses classified as “technology,” from chip manufacturers to consumer devices to office equipment such as copiers.
Manufacturing has traditionally maintained a more complicated relationship with technology. On the one hand, the industry is trying to be sustainable and flexible in a volatile balance, says John Barcus, vice president of Oracle’s industrial strategy team. Geopolitical issues such as protectionism make it difficult to obtain suitable materials for products, and pandemic blockades have led to more supply chain problems. This has led manufacturers to better adopt cloud technologies to connect partners, track goods, and streamline processes.
On the other hand, the industry has a reputation for short-term thinking – “If it works well today, I can wait until tomorrow to fix it,” says Barcus. This myopia is often misunderstood by cash flow problems and the risks associated with technology investment. “And then suddenly something new that wasn’t prepared happened and they had to react.”
There are shining examples of what manufacturers can do. For example, global auto parts maker Aptiv launched its train power business in 2017 to focus on high-growth areas such as advanced safety technologies, connected services and self-driving, said David Liu, who was director of corporate strategy until January 2020. (He is now the director of corporate development for General Motors.) In 2019, Aptiv created Motional, a $ 4 billion joint venture with Hyundai, to accelerate the development and commercialization of autonomous vehicles. The pandemic forced the company to become financially disciplined, to deal with the unpredictable “black swan” incident and to push its imagination and big things, Liu says. In June 2020, for example, the company made a $ 4 billion capital outflow of future growth through investments and potential purchases. “The key for us is to balance the operational approach and long-term strategic thinking.”
The impetus behind the plans
Among all those responsible for the survey, the largest planned movements are significantly increased technological investment (60%) and cloud migration (46%), with more than a third operating in business consolidation plans.
In the technology and manufacturing industries, there is a greater commitment to digitalizing businesses, and organizations that did this before the pandemic were better prepared to deal with it. For example, Barcus pointed out that employees had the technology to work from home. In fact, the crisis accelerated these efforts. Whatever the progress, he says, “Many, if not most, of them are now looking at how they are: ‘How to prepare and move forward in this new environment?’
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This content was created by Insights, a custom content from the MIT Technology Review. It was not written in the editorial board of the MIT Technology Review.