The future of industries: Bringing down the walls
Are you ready for a new industrial order?
A shock wave in the form of a new industrial revolution is taking place. It’s reshaping the foundations of many industries. And it’s bringing down the walls between others as the boundaries between suppliers, producers and consumers and, in some cases, between whole industries shift.
Technological change is creating historic shifts in industry footprints. Over the next ten years, we think this process will accelerate. Traditional industry classifications will need to be rewritten. Where industry boundaries begin, where they end and who are the main players will all be up for grabs in a number of sectors. We look at what’s happening in different industries. Will we see a new industrial order? Are completely new sectors emerging? And, crucially, is your company ready?
56% of CEOs across all sectors predict a large existing player from another industry will move into their industry…
Automotive companies are eyeing a future where they’re no longer selling a car but facilitating and personalising ‘on demand’ mobility. Automakers have been investing heavily in connected services, new ride sharing and other transport services. We are already seeing experiments with self-driving car services. And we’re also seeing the entry into the market of data-centric digital players. These developments are changing the industry mindset of how companies see themselves.
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60% of CEOs across all sectors expect a tech-based, non-traditional competitor to enter their industry
Lifestyle devices are evolving in ways that can give healthcare providers and pharma companies rich data insight. Already the take-up of such devices is significant. It’s pointing to a future of a ‘health internet of things’ in which on-body sensors and home behaviour sensors provide data to enable health professionals to provide real time and early diagnostic services. With the involvement of technology players, the walls are coming down between technology, healthcare and pharma. They are also coming down between health and retail. For example, a PwC survey found that a quarter of consumers would consider administration of a MRI scan, ultrasound or X-rays at a retail store or pharmacy and approaching half would consider going to these places to get a minor ailment diagnosis.
Source: PwC CEO Pulse 2016.
62% of CEOs across all sectors anticipate their customers purchasing their products or services through a new provider
The century-old electric utility industry is at the nexus of a developing ecosystem that starts with smart homes but stretches out to embrace a diverse range of vital infrastructure. Integrated and automated systems have the potential to bring together energy management, energy demand response, asset management and condition monitoring, city resource use, transportation efficiency and even elderly care through smart software solutions and analytics. Collaboration and shared business models come into view. Power utilities have the potential to capture several sources of value in this future but face considerable competition from a range of other players.
Source: PwC CEO Pulse 2016.
80% of CEOs across all sectors think that the production technologies their companies use will change in the next five years
The industrial internet is transforming company footprints. Companies that previously just manufactured something as mundane as a seal are now able to add sensors that enable predictive maintenance and take this into value-add areas of being able to offer full monitoring, maintenance and renewal services. Now the race is on to develop and grow the platform ecosystems that will be capable of building critical mass and either sideline or encompass more fragmented offerings from other companies. The most successful first movers of the software and internet industries all cemented their positions with such powerful and distinctive platforms. First movers in the industrial internet are seeking a similar advantage.
Source: PwC CEO Pulse 2016.
No industry is immune
All industries will need to be ready to stretch their horizons. Advanced technology adoption will be at the heart of future competitiveness. It doesn’t necessarily mean the walls will come down between all industries. But we do expect all industries to be transformed by the technology shockwave, lowering cost bases and improving operational efficiency as well as demanding greater integration with customers and suppliers. In many sectors, it is likely to transform competitive metrics and open up industries to new start-up entrants or incumbents from other sectors.
Logistics
In the logistics industry, some of the sector’s own customers are starting up logistics operations of their own, and new entrants to the industry are finding ways to carve out the more lucrative elements of the value chain by exploiting digital technology or new ‘sharing’ business models.
Retailing
The retail sector was in the forefront of the first wave of the walls coming down with traditional retailers being eclipsed by more nimble and agile online models. But the realignment of the boundaries of the sector still has a long way to run.
Oil and gas
Digitally-enabled technology systems are expected to significantly reduce the cost-per-barrel of future hydrocarbon resource exploitation. And the gains of integrating technology and services are bringing down walls in the oilfield services sector.
Mining
Even an industry as specialised and far up the supply chain as mining is not immune to the walls coming down. A number of developments, such as bioengineering of microorganisms and the potential of blockchain technology, are pointing to a technology-transformed future.
Five big issues for companies
1. Have you got an outcomes focus or are you still stuck in a physical product mindset?
2. What are you doing to avoid commoditisation of your business?
3. Are you building a platform presence?
4. Are you leading with or being left behind by advanced technology?
5. Have you got your timing right?
This ‘Future of Industries’ report discusses these and a number of other questions. Download it to find out more and join in the discussion with PwC.
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Global Energy, Utilities and Resources Leader, Partner, PwC Netherlands
Tel: +31-88-7921328
Global Energy, Utilities and Resources Industry Executive, PwC Germany
Tel: +49 211 981 4602
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