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Embracing Digital Durability

How R&D organizations can achieve sustainable value from the Internet of Things

Becoming digital durable

Aricent’s research shows that successful R&D-driven companies are competing aggressively on outcomes. These companies have a culture that anticipates disruption and introduces offerings that create sustainable value from IoT. They are digitally durable.

It’s not enough to embrace the new digital era. The existential challenge for companies today is to become digitally durable—to anticipate disruption and transform processes and products to compete on outcomes. Whether it’s understanding the profound impact of self-driving cars on transportation or being a part of the smart-energy revolution, simply closing the digital gap is no longer sufficient.

At the epicenter of the transformation is the R&D organization. R&D is responsible for innovating the design, development and support of the company’s products and services as the implications of Industry 4.0—specifically the Internet of Things (IoT)—become a reality. Designers and engineers must not just stumble on a hit but systematically arrive at compelling offerings that generate sustainable value from digital technology.

A key challenge for most companies will be arriving at meaningful outcomes through the choreography of software, hardware, connectivity, and the ideal user experience.

A key challenge for most companies will be arriving at meaningful outcomes through the choreography of software, hardware, connectivity, and the ideal user experience.



Digital disruption

Evidence of the digital disruption is all around us. Light bulbs, for example, are intelligent nodes in our homes and offices that help us save on energy costs. Meanwhile, the auto industry is scrambling to prepare for a future where vehicle ownership is a service. General Motors’ response: a $500 million investment in the Lyft peer-to-peer ridesharing network and a new strategic focus on creating an on-demand network for autonomous vehicles.

In the telecommunications sector, companies such as AT&T, Verizon and Vodafone are reacting to fierce competition from the likes of Apple, Alphabet and Samsung as they vie for control of the customer experience both at home and on the road. US cable and satellite operators are on the defensive as “unlock the box” proposals are emboldened through digital services as an alternative to costly leased set-top boxes. 

Aricent’s research, detailed in Technology Vision 2016, shows that successful companies are pursuing an R&D paradigm that allows them to compete aggressively on outcomes. These companies have a culture that anticipates disruption to create sustainable value from Internet of Things. They are digitally durable. 

The pillars that define the digitally durable culture

The most innovative companies have an R&D organization that operates as part of a circular value chain. By closing the loop among sales, manufacturing and operations, these companies stimulate the evolution of products through market feedback, among other things. Now, leaders are not only gaining insights from the market but also developing cultures that enable anticipatory senses—and, hence, their companies are becoming more digitally durable.

In its most recent annual report, Amazon reminded its shareholders of its three “dreamy” businesses: Amazon Marketplace, Amazon Prime and Amazon Web Services. These offerings have a number of traits— customers love them, they are capable of growing and show a “potential to endure for decades.” 

Winning offerings must also be agile and proactive. Aricent’s experience in R&D and product development for some of the world’s most pioneering companies reveals a culture that anticipates disruption in an era that is inherently digital and shaped by the Internet of Things. Such a culture demonstrates: 

An R&D framework to achieve sustainable value from the IoT

Aricent’s Technology Vision highlights four R&D pillars that these and other innovative companies are using to the product development process to launch innovative products and services. These are the practices that will enable technology leaders to achieve digital durability.  

Four R&D trends that enable digital durability

Intel, GE, Tesla and Google are among the many companies that embody a digitally durable culture. Aricent’s “2016 Technology Vision” highlights four R&D trends that innovators are pursuing to shape their R&D agenda and create sustainable value.
  1. Drive smart outcomes with smart services: smart outcomes are about delivering exceptional customer experiences that create affinity and set the course for business growth. Two essentials for delighting the customer are pervasive platform thinking and human-centered design. 
  2. Design for billions of things: building the infrastructure for hyper-scaled IoT means that suppliers and vendors must take full advantage of software definition and open hardware, which accelerate time to market, upgrade services quickly and seamlessly, and focus on software-defined security. 
  3. Navigate unconventional connectivity: there is no dominant architecture for IoT. Survival of the fittest is how the market will select the standards and protocols that will orchestrate IoT devices and applications. It’s imperative to participate in fast moving technology developments, from high-altitude drones and narrow-band, low-latency spectrum options to the choice of custom chips. 
  4. Innovate beyond silicon: the exponential growth of smaller, faster and cheaper chips is showing signs of diminishing marginal rates of return. Companies can continue to accelerate the pace of innovation by tapping complementary technologies, such as specialized chips and sensors. 

Aricent believes these trends will enable companies to exceed customer expectations and to architect dynamic infrastructures, networks and components that will lead to digital durability.