Cross-Sector Collaboration Grows Better Industry Ecosystems in a Digital World
- A new IDC study says firms that collaborate with industry partners will increase their rate of innovation by 40% in 2022.
- Industry ecosystems add value in ways no CEO can ignore: supporting R&D, extending operational capabilities, and creating new customer experiences.
- The days when business leaders could view their firms in isolation are over.
Big companies can often seem unassailable—global behemoths that stride into markets with opportunities and vantage points that smaller firms can’t match. But the truth is made more complex, as digital proves to be a great leveler. A new company, idea, product, or service can emerge without warning and scale rapidly. And established businesses can wobble as the market landscape shifts beneath their feet.
This underlines the importance of organizational agility. Today, new businesses grow in a shared habitat that includes VCs, coworking spaces, accelerators, serial entrepreneurs, mentors, crowdfunding portals, and academic incubators. They’re all there, pitching in to help. Having so much guidance and so many resources to draw from is great if you’re a six-person startup, but global multinationals with thousands of employees aren’t set up to rapidly ingest outside advice. Making sudden course corrections can seem too hard when a company spans multiple countries, languages, currencies, and continents—but is it?
Industry Ecosystems Are Integral to Growth
The idea of cross-sector collaboration for big businesses first gained traction in 2014 when Chinese e-commerce giant Alibaba went public. At the time, it was the largest IPO in history, generating a flood of speculation about the changes this move signaled about the global economy and the surging impact of digital.
Poring over Alibaba’s prospectus, analysts like IDC noted that it mentioned the word ecosystems more than 150 times and conveyed to potential investors how integral ecosystems would be to the company’s future growth and development.
Ecosystems are fundamental in the natural world, enabling organisms to interact and cooperate amid a particular blend of environmental conditions. Ecosystem members influence each other’s behavior, competing on the same terrain but also forming symbiotic relationships, sharing resources, and engaging in tradeoffs that help them thrive and evolve. When external disruptions arrive, organisms in the ecosystem often adapt together.
Now, new research from IDC says that business success or failure depends on mimicking the natural world. Today’s fast-moving, disrupted market environments demand that former lone wolves operate as part of an “industry ecosystem,” collaborating and cooperating toward mutual growth and survival.
The study found that:
- 60% of worldwide organizations have identified industry ecosystems as priority investments that will ensure long-term resilience and success.
- By the end of 2022, industry ecosystems will see a 40% greater innovation rate of new digital and physical products and services brought to market, compared with traditional innovation approaches.
- Currently, 45% of global manufacturing firms participate in industry clouds, and 26% host marketplaces that enable third-party commercial transactions.
Giulia Carosella, IDC’s European digital transformation practice Lead and principal analyst on the study, says that digital ecosystems “enable organizations to work together with peers to deliver value, create resilience, foster innovation, and anticipate threats and opportunities. The Open Manufacturing Platform (OMP) is one example of global cooperation between businesses to accelerate innovation at scale through knowledge and data sharing and access to new technologies.”
One market that’s been lauded for its early embrace of industry collaboration is Japan. A 2020 report by the Japan External Trade Organization (JETRO) says that while Japanese firms are tough competitors, they tend to do battle in a group setting. Industry groups have formed over time with a pyramid-type supply-chain structure. Manufacturers sit at the top. Beneath them, products and markets are developed through a process of “comparing and adjusting,” where group members cooperate from product development to production.
However, the Japanese manufacturing industry has lagged behind in digitalization. Companies are still using 2D drawings and manual processes for parts procurement, which has hindered productivity gains. Improving the efficiency of this process would benefit both parts manufacturers and their clients. MISUMI, a manufacturer and distributor of mechanical parts, is accelerating innovation in the industry by building a platform that significantly improves productivity for its customers.
The company has been playing a role as indispensable infrastructure in parts procurement for Japanese manufacturers during the past 40 years by establishing catalog sales of parts with clearly stated prices and delivery dates, as well as unique production workflows that enable quick delivery. However, even with the mind-boggling 80 sextillion variations offered in its printed catalog, those standard products represent only about half of the parts needed by its clients.
To accelerate the procurement of original, non-standardized parts, MISUMI has created a parts procurement ecosystem called meviy. This is an on-demand system that allows any customer to upload 3D data of her own parts; then, the system’s artificial intelligence (AI) instantly recognizes the shape, checks the production engineering requirements, and instantly provides a price and quote. This system saves an enormous amount of labor hours and significantly shortens delivery times.
“meviy has also expanded the scope of collaboration,” says Mitsunobu Yoshida, a senior corporate officer at MISUMI and president, ID (Industrial Digital) Manufacturing Business Company. “We’re extending digital manufacturing to our partner companies in order to handle the huge volume of production, including Protolabs that deliver rapid prototyping. We are also adding new features to meviy through joint development with Toyota, a heavy user of the system. This parts procurement ecosystem will continue to evolve in the future.”
In the architecture, engineering, and construction (AEC) industry, Shimizu Corporation, one of the biggest general construction firms in Japan, says it’s working to add efficiency to the interactions among clients, designers, and contractors. “Firms in our sector tend to have their own rules in terms of how they manage and share information,” says Masakazu Yanagawa, advanced technology group manager of the Civil Technology Division at Shimizu Corporation. “It’s been difficult to have smooth information sharing and agreement.”
“To ensure everyone has a shared understanding of a project, we need to publish white papers, provide explanations to those who do not understand how to use the system, or hold information sessions,” Yanagawa says. “For Japanese companies, there are many cases where cloud services are only allowed in domestic regions, which often becomes a problem.”
To help overcome these issues, Shimizu has woven together its own set of cloud-based solutions, creating a digital ecosystem that transcends the traditional barriers between client and contractor.
“With that, we were able to eliminate the need to send documents via email and made it easier to receive and deliver large files,” Yanagawa says. “In Japan, the national government departments, local governments, railroads, and road operators who are our clients have difficulty configuring high-spec computers. In such cases, using an ecosystem like [Autodesk] BIM 360 is very effective because the 3D models can be easily viewed even in a web browser on a mobile device.”
As the global economy continues to move toward its digital destiny, IDC’s Carosella says that the majority of global gross domestic product this year will be driven by digitally based revenues. In a time of extreme environmental, economic, and geopolitical disruption, strengthening industry ties may be one of the best ways to protect them.