Consumers are more demanding than ever and no one knows that better than electronics manufacturers. Whether it’s the latest smart phone, niftiest gaming device, or coolest tablet, no industry is more defined by the search for the next shiny new thing.
But the next shiny new thing isn’t really a thing anymore at all. It’s a system, a network, and a bundle of services content and applications. It may still come packaged in a beautiful aluminum box (or rubberized black plastic, depending on your tastes), but that is merely the front end of the experience. And while consumers continue to talk about products and devices, their buying patterns have changed beyond all recognition.
To study this shift, the IBM Institute of Business Value talked with consumers and electronics industry executives around the world. The survey results highlight the challenges and advantages for companies responding to this shift to the consumer experience.
Consumers’ expectation of connectedness, interoperability, and services creates a market opportunity. But it also demands new skills. Based on this research, electronics companies need to develop five key capabilities to thrive:
- Open collaboration: Adopt new technologies that allow a company to team up with consumers, employees, and partners to develop new services. Consumers want to collaborate, but they need the right incentives, such as the first peek at a new product or discounts. For electronics manufacturers, many of which have never had direct contact with consumers, the key is involving consumers in consistent, open communication.
- Customer insight: Today’s customer is no longer simply someone who buys and uses a product. Because of the interaction now possible online, customers can also be designers, advocates, and quality control experts. Electronics manufacturers can tap into this change to reach out directly to customers and get a better understanding of their tastes. Smart companies are using analytics to turn such customer data into valuable insights that are woven into strategies and business processes. For example, understanding when and how consumers use a product and what services they prefer can lead to new product and service innovation and help target marketing.
- Service operation: For a manufacturing company, creating new services may require an entirely new operation, whether as a separate team or integrated within the product organization. Developing successful service offerings also means teaming up with partners, such as content providers or developers. This is often a new undertaking for electronics manufacturers.
- Software development: Software is the backbone of connected devices. It leads to smarter devices and product differentiation. Device manufacturers should bolster their software capabilities by, for instance, searching for skilled employees more globally. Companies also need to focus on building up their software-related knowledge and assets. A few ways to do that include building a common platform that accommodates changes and component reuse, standardizing software methodologies to improve resource allocation, and reaching out to partners who have skills the companies need rather than wasting time developing them internally from scratch.
- Flexible infrastructure: Electronics companies need a flexible infrastructure that allows them to create new services. But some companies are hesitant to or simply can’t make the investment. Today, there are creative ways companies can sidestep this issue. For example, they can outsource to a third party or use a service delivery platform in a cloud environment. These options help relieve the pressure to build in-house skills. They also reduce operational expense and let a company share the deployment risk with an experienced partner.
While this seems like a simple list, it amounts to nothing more than a complete rewrite of the traditional product development script. To thrive, companies that have traditionally been led by hardware engineers will need to adopt systems-level thinking and realign their organizations accordingly. To the winners go big margins and long-term client relationships. Those companies won't be device makers anymore. They will be systems managers.