The Future of Competitive Strategy

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Introduction

©2022 MIT. This excerpt is from The Future of Competitive Strategy by Mohan Subramaniam, published by The MIT Press.

30 to 50 billion such connected assets in the coming years, creating vast opportunities to unlock the value of data for competitive advantage. 11

Tenet 2: Comprehend Emerging Digital Ecosystems

To unlock data’s new potential, a firm needs a network of data recipi- ents to share data with. Some of these recipients are internal to a firm’s value chain. Sensor data on any specific component in Ford’s cars, for instance, are shared with recipients such as software design depart- ments, AI centers, units coordinating digital services, warehouses that stock spare parts, and service dealers—all part of Ford’s organization. These recipients can coordinate their activities to deliver new digital value propositions, such as predictive maintenance services. Other recipients of sensor data are external to a firm’s value chains. Amazon (through its Alexa smart speaker), Starbucks, banks, and app providers for weather or traffic are examples of data recipients that coordinate their roles to effect Ford’s coffee service described earlier. A network of data generators and recipients constitutes a firm’s digital ecosystem. For legacy firms, such a network has two components: one, internal to its value chains consists of its production ecosystems ; the other, external to its value chains, consists of its consumption ecosystems . 12 Production Ecosystems Production ecosystems arise from digital linkages between and among various entities, assets, and activities within a company involved in producing and selling products, including suppliers, R&D, manufactur- ing, assembly, and distribution channels. These linkages are possible because of sensor-equipped and IoT-enabled connectivity across the company’s value chain activities. Production ecosystems thus provide an internal avenue for a firm to unlock the value of data. By estab- lishing a sensory network within its supply chains, for example, firms achieve tighter inventory coordination based on the real-time status of inventory usage. With sensors in their smart factories, firms can fur- ther enhance operational efficiencies by synchronizing how machines,