Stephen Shih: Digital in Industrial Machinery

Read the transcript below.

STEPHEN SHIH: All machinery executives are facing a new wave of digital technologies. Many within this group are taking a wait-and-see attitude, but some business leaders are recognizing that just as machinery was core to the Industrial Revolution, it's also going to be core to the new digital revolution. They're proactively looking for ways to create more value for their customers, and they're seeking to disrupt and not be disrupted.

Digital technologies create two opportunities for companies in this sector. The first are ways to innovate the product offer using sensors, 3-D printing and advanced analytics to offer new products and solutions for customers. The second is to transform the value chain—moving away from only selling products to developing new business models centered around services and solutions.

In order to capitalize on digital, executives can take three actions. The first is to make sure they're understanding how digital is affecting their industry and taking a clean-sheet-of-paper view. Not being too narrow, but looking at all the opportunities for redefining their sector. The second is to redefine the customer relationship and move away from the traditional models of interacting with customers to a more continuous interaction with customers. And the third is [finding] ways to adapt operations to improve efficiencies.

From an implementation perspective, executives need to simultaneously find ways to increase the speed of decision making in their organizations, develop a test-and-learn mindset, while also ensuring that their organizations are prepared for a multi-year commitment to a digital transformation.

Read the Bain Brief: How Industrial Machinery Makers Are Capturing the Digital Opportunity