By Radhika Roy
In the 2020s, we find ourselves in a world that is grappling with technology’s negative consequences. We have deepfakes; we have voice cloning; we have data breaches.
Governmental regulation and safeguards are finding it difficult to match their pace with technological development. A country that has promoted digitalisation for greater inclusivity and accessibility is dragging its legs while devising and operationalising its data protection legislation.
In his book, Fourth Industrial Revolution, World Economic Forum founder and executive chairperson Klaus Schwab observed that the changes this revolution ushers in are so profound that “there has never been a time of greater promise or potential peril”. This quote comes to mind and succinctly summarises the predicament we find ourselves in; a predicament sold as growth and profit in Fusion Strategy: How Real-Time Data and AI Will Power the Industrial Future by Vijay Govindarajan and Venkat Venkatraman.
Govindarajan, or VG, as he is popularly known, is a professor at Dartmouth College’s Tuck School of Business and writes primarily on management, innovation, and strategy. Venkat Venkatraman is a professor at the Boston University whose research revolves around adaptation of digital technologies by industries. Together, the two stalwarts have published a playbook for asset-heavy industries to commence their journey into leveraging real-time data and artificial intelligence (AI) to drive innovation and competitiveness in the industrial sector.
The book begins by examining the evolving landscape of the industrial sector, highlighting challenges posed by digital disruption, changing consumer preferences, and global competition. The impact of digital technologies is not confined to asset-light, high information sectors. VG and Venkatraman believe that it is time for industrials to ‘fuse’ their capacity to create physical products with the digitals. To illustrate this belief, case studies involving companies such as John Deere, Honeywell, and Tesla have been cited to showcase how manufacturing companies in fields such as agriculture, construction and automobiles have been ahead of the curve by tapping early into ‘fusion strategy’ which involves integration of real-time data and AI in every aspect of business operations, from product design and manufacturing to supply chain management and customer service. For instance, the book uses Tesla as an example to demonstrate how automobiles must be reconstructed as “cloud-connected computers on wheels”.
To aid companies in pursuing this endeavour, the authors provide a step-by-step roadmap, from procuring or partnering with companies that provide AI tools to restructuring their product design from the scratch with AI embedded in it. Throughout the book, a term that is encountered by the reader is “data network effect”. Data network effect refers to when the growth of the viability and value of a product is directly proportional to the usage of the product on account of the increase in data accumulation. The authors consistently emphasise how important it is to realise this data network effect by harnessing product-in-use data, and thus create datagraphs. These datagraphs allow companies to not only provide solutions to customers to address issues related to the products in itself, they also provide the course of action for customers to maximise their own profits.
While capitalising upon data network effect has contributed to the popularity of services provided by companies such as Uber, AirBnb, and social media platforms, the authors have noted that this is yet to be mobilised by many asset-heavy industries who are still on the edge about implementing, or even recognising the benefits that AI can render. Accordingly, the book advises industry leaders to engineer data network effects with the tripartite twins. By espousing the tripartite twins strategy, the authors convey that the design, manufacture and the performance of the product must not take place in silos, and successful creation of datagraphs and digitalisation requires the linking of these functions. With a strategy in place, the authors then guide their readers to the battlegrounds where these strategies can be employed. Fusion products, fusion systems, fusion services and fusion solutions are the four battlegrounds. Initiating value production from fusion products, the authors painstakingly take one through every avenue, ending at fusion solutions. Moreover, at all these avenues, four essential steps are outlined comprehensively for an industrial leader to follow: architecture, organisation, acceleration, and monetisation. Checklists have also been devised at the end of every avenue in order to understand whether the implementation is taking place according to the plan.
The authors bring their playbook to a conclusion by enumerating a set of principles and practices that may be adopted by industrial leaders to get started on their journey into the digital era and fusion strategy, such as creation of alliances even within overlapping ecosystems, and nurturing and cultivating fusion thinking within the C-suite.
Despite the credible insight that Fusion Strategy provides for industrial leaders, there are certain limitations afflicting the text. The persistent regurgitation of the importance of digital technologies gets monotonous after the first chapter itself. Additionally, though the book refers to consent of customers being needed to access a variety of data for improvement of services, it fails to address major ethical considerations involving one’s right to privacy in the absence of an individual-centric data protection law. Further, while there is emphasis on the intertwining of work done by humans and AI, there remains no reference to the negative impact of automation, specifically the obsolescence of blue-collared jobs. The exclusion of these factors signal an unfortunate divorce of social sciences from business strategy.
From the perspective of an industrial leader whose intent is to transition from a physical product-oriented company to a digital-services entity, Fusion Strategy is a goldmine. It is comprehensive and practical, and offers invaluable understanding of the future of industrial innovation by two people who have devoted their lives to strategy and technology. It only remains to be seen if this understanding will be utilised to usher in a future of promise or potential peril.
Radhika Roy is a lawyer based in Delhi, working on technology policy and digital rights
Book: Fusion Strategy: How Real-Time Data and AI Will Power the Industrial Future
Authors: Vijay Govindarajan and Venkat Venkatraman
Publisher: Harvard Business Review Press
Pp 256, Rs 1,199
