As technology reshapes our world, ecosystems reshape our business models
There’s an old saying, “You are only as good as the company you keep.” That has never been more true than today.
Business success is about collaboration and strong partnerships. New solutions, products and ideas do not come to market without tapping multiple minds, perspectives, insights and know-how. Because of today’s complex and dynamic global business environment, businesses are now increasingly reliant on formal structures that tap into the power of partnership - “the company you keep.”
The Internet of Things (IoT) is exacerbating this as perhaps one of the most transformational technology trends in recent history. According to Gartner, there will be 21 billion connected devices by 2020. Vertical-specific applications in retail, transportation and manufacturing are expected to nearly triple from 1 billion to 2.9 billion in the next five years. How do you quickly develop technologies that tie into multiple emerging IoT systems across many business sectors?
Enter the business ecosystem. Ecosystems refer to business networks that work together to generate value and competitive advantage along every part of the business and product lifecycle. We turned Avnet’s business model into an ecosystem so we could provide more value to our customers as trends like IoT, and others such as AI and deep learning, reshape our world. Specifically, we aimed to address three major issues we see many companies facing today, whether they be a small startup or a large multinational: increased technological complexity, the need for greater efficiency, and speed to market.
First, there is the sharp uptick in technological complexity. In a recent Forbes Insight survey of more than 500 executives, over one quarter (29%) said their biggest challenge was assessing the quality of IoT technology. (1)
The problem isn’t access to technology. In some respects, that is the easy part. The problem is quality. That is, knowing which technologies amongst the thousands of options available are best suited and most reliable for what you are trying to achieve. For example, a typical IoT solution includes dozens or even hundreds of power or battery options. But do you know which one is optimized for your device’s design and functionality? Do you know which power source will work best under water, exposed to sunlight, or is best in a dim and dusty enclosed factory? A sound ecosystem of partners and experts can provide the answer.
Cost and operational efficiency
Second, there is the task of finding efficiency amongst complexity. Success isn’t just finding the right technology or software, but having the ability—in as few steps as possible—to combine that with the right design, financing, manufacturing, distribution, and market support. We know from our experience that it can take up to 10 partners to bring an IoT solution to life. It means coordinating platforms and application programming interfaces (APIs), along with the best-in-class components like sensors—in addition to the various business stakeholders and sometimes their disparate objectives. A strong ecosystem makes it possible to manage this complexity in a cost-effective and efficient manner. A strong partner orchestrating that ecosystem can make sure that if something goes wrong, you can quickly pinpoint the problem and identify a solution.
Speed to market
Finally, there is the need for speed. Ubiquitous connectivity and social networks are fueling technology adoption rates no longer measured in years, but in months and even weeks. Consider IoT and the connected home. According to ABI Research the compound annual growth of connected home devices will be 67% over the next five years, which will be “much faster than smartphone or tablet device growth,” and have a shipment of 1.9 billion devices by 2019. (2)
To keep pace, much less get ahead, companies must move quickly from idea to prototype and production to distribution. First you need to know the right steps and the right skill sets for product development. Just as important is insight and knowledge into technology roadmaps– understanding what’s going to be available next quarter or next year. Working within the right ecosystem, developers can tap into this information to accelerate time-to-market, compress production timelines, and realize higher levels of reliability.
All of this is why we drew upon our nearly 100 years of experience in the industry to reorganize our business to be a true, integrated end-to-end ecosystem for our customers. Our ecosystem focuses on the journey in taking a product to market – from the idea, to the design and sourcing of the technology, making the product, delivering it anywhere in the world, and ultimately providing the maintenance. Avnet is always at the center orchestrating solutions that meet our customers’ needs.
We also stay laser-focused on broadening and deepening our engineering and supplier ecosystems. Our element14 and Hackster.io communities are at nearly a million members strong in 100 countries, and combined with our 1,200-plus supplier partners, digital capabilities and fast shipping of small quantities for prototypes, we’re better positioned than ever to help individuals and organizations of any size navigate the maze of technology options available at any stage of product development.
Reliable and vibrant ecosystems are the only way that businesses can master a market defined by complexity, efficiency and speed. But don’t just take my word for it. Ask the folks at McKinsey, Gartner, and Harvard Business School. They will tell you the same thing, which is why a connected ecosystem is not just at the heart of Avnet’s business strategy, it is, in fact, our business. We don’t operate alone so our customers won’t either.
So consider “the company that you keep” and whether your business ecosystem is helping, or if it is holding you back.
Bill Amelio is the CEO of Avnet. From idea to design and from prototype to production, Avnet supports customers at each stage of a product’s lifecycle.
(1) - "4 Ways To Overcome The Complexity Of IoT Implementation" - Forbes.com
(2) - "Home Automation Gadgets Are Leading Explosive Growth In The Consumer 'Internet Of Things' Market" - Businessinsider.com