Technological Innovation is now the single most important driver of competitive advantage for firms in many industries. It is evident that the business world is rapidly evolving and subject matter experts have dubbed this change the “Fourth Industrial Revolution”. Previous waves of the Industrial Revolution were propelled by Technological Innovations that changed the way individuals and businesses improved production, operations, and distribution.
Beginning in the mid-1700s, The First Industrial Revolution gave rise to technological innovations that changed how goods were produced. With the introduction of steam-powered machines and engines for transportation, products (like clothing), that had been previously made by hand, began to be produced in larger volumes giving rise to Mass Production and rail transport.
The Second Industrial Revolution which historians believe spanned from between 1870-1914 was another great leap forward in modern technology. We saw the rise of new innovations in steel production, petroleum, and electricity. This led to the introduction of public automobiles and aeroplanes and it changed the way people worked and conducted business.
The third Industrial Revolution which started in the 1980s gave rise to the digital revolution which introduced information and communications technologies (ICT) such as personal computers and the World Wide Web.
As we have witnessed in previous ones, each Industrial Revolution comes with significant shifts in social, economic, environmental, and political systems that truly alter the course of humanity. Some of these shifts are foreseen, and others are completely unforeseen and unexpected.
The Fourth Industrial Revolution & Competitive Business Strategy
The Fourth Industrial Revolution is building on technologies that transcend the physical, digital, and biological spheres across all business sectors. Emerging Technologies like artificial intelligence (AI), nanotechnology, the Internet of Things, Autonomous Vehicles, quantum computing, synthetic biology, and robotics will shape the way businesses and individuals operate and businesses profitability will largely depend on how quickly firms are able to adapt to these technologies and how best they can leverage on them.
The 4th Industrial Revolution will be dominated by companies with the flexibility to adapt to forthcoming technological innovation, build their core competencies around these technologies, and use these technologies to create better products and services. In simpler terms, the 4th Industrial Revolution will be dominated by companies that constantly innovate.
In his article, BBC correspondent Matthew Wall states that “Big companies that fail to innovate risk extinction. That’s the stark truth in the era of “digital disruption”.
What then is Innovation?
According to the Business Dictionary, Innovation generally refers to changing processes or creating more effective processes, products, and ideas. In business contexts, this could mean implementing new ideas, creating dynamic products, or improving your existing services.
As the Fourth Industrial Revolution catches on fast, it is obvious that jobs, work-life balance, product lines, business models, and organizational structures will be greatly affected. Innovation in this Fourth Industrial Revolution is, therefore, the process of businesses and firms developing new/ improved products and services leveraging emergent technologies.
Every new wave of Technology or Industrial Revolution provides businesses with the opportunities to profer new solutions to age-long problems.
Apart from the surge of new businesses and start-ups across all industries, we have seen “traditional” companies gradually embracing innovative ways of improving their services and satisfying consumer needs. For example, traditional companies like Coca-Cola and PepsiCo are now making use of big data. In 2015, Coca-Cola managed to strengthen its data strategy by building a digital-led loyalty program. This led to improved customer retention and acquisition which led to a growth in revenue. PepsiCo, on the other hand, makes use of big data for the efficient management of its supply chain. They use key inventory entries to make sure suppliers and consumers get the appropriate type of goods in the right quantity at the right time.
In the above examples, both companies through the use of big data are able to make informed decisions in a timely fashion while at the same time reducing operational costs. Now that’s innovation.
Major Pillars of Competitive Advantage in the Fourth Industrial Revolution
Customer-Centeredness: Despite the rapid changes we are witnessing in the business space today, the customer still remains king. Through research and experimentation, many businesses are finding out the unique needs of today’s consumers. Using AI, data and Machine Learning brands can go a long way to study, evaluate, and predict customer behavior which will, in turn, provide insights for improved product development. Tools like chatbots have been deployed to answer some of the key questions that customers may have thereby improving customer service and increasing the chances of customer retention.
Longterm: The Fourth Industrial Revolution like the ones before it will change the way we live, work, and relate with one another. The velocity, scope, and impact of Industry 4.0 sets it apart from previous ones. It is changing industries at an exponential rather than a linear pace.
With this in mind, businesses that are willing to adopt new technologies should accept that they are in for the long haul. Innovation and the improvement of business processes should be firm-wide, comprehensive, and well-thought-out.
Collaboration & Not Competition: Collaboration is the new marketing. You must have been hearing that for a long time now. Well, it’s true. With the rise of new technologies, there has been the creation of critical business ecosystems across the business landscape. Established companies need to work with a far wider range of partners to pull together underlying technologies, applications, software, and services in order to remain functional and competitive. Businesses participate in shaping their immediate landscape by belonging to ecosystems and contributing to them.
How Companies Can Remain Innovative
This revolution is centered around Data and Partnerships/collaborations. Here are a few recommendations for companies that want to gain a competitive advantage in the wake of this fourth industrial revolution:
- Rely on Data: See the revolution for what it is, creating new markets or leveraging the power of customer information to offer solutions in new ways and develop new products.
- Invest in your workforce: Prepare your employees for the future of work and at the same time set your business on the path of continuous innovation.
- Be Customer-Centric, Create Your Customer’s Future: A major way of staying ahead of the competition is by first of all figuring out what your customers want before they do.
- Integrate Technology into Processes and already existing products: Instead of creating digital stand-alone products or processes, it is best to embed them throughout your organization. Then experiment with prototypes that you can really bring to scale.
- Create an Innovation-Friendly Environment.
The Fourth Industrial Revolution is here to stay. Businesses need to remain awake to the importance of adopting and evolving with new and emerging technologies in order to remain functional and competitive in an ever-changing business world.
Written By:
Stephanie Etiaka
(Digital Transformation Officer/ Communications Executive, Olisa Agbakoba Legal)
