Advancements in technology have brought us a long way. From the early days of the agricultural economy to an industrial economy and to the transformation into a service economy, technology has been the ultimate enabler changing the world.
Here we are, at another crossroads yet again, preparing for another evolution. This time, we're transitioning into a software economy because as Marc Andreessen said, "software is eating the world."
With the Internet of Things (IoT) being one of the beneficiaries of 5G, the expectations are clear: the products we use today will evolve and new products and services will be created. The key to success will be leveraging the connection between IoT, 5G and software.
But how will this all change the business landscape?
Every business is a competitor on a software playing field, whether your company is prepared or not. With companies like Uber, Netflix and Airbnb, among others, disrupting long established industries, no one is safe. If a player hasn't emerged in your industry yet, you can be sure they are right around the corner.
"In a world underpinned by ever more powerful, affordable, and public technology platforms, software is still king. And its importance as a source of value will only continue to grow," says Vijay Gurbaxani, Founding Director of the Center for Digital Transformation (CDT) at the University of California, Irvine.
This evolution of the economy is not about stopping production on your current products or halting your services. It's about creating additional value with the opportunities that 5G will provide. "This approach recognizes a fundamental shift in the sources of value creation and competitive advantage toward software," Gurbaxani notes.
In the software economy, companies need more than best-in-class hardware products. Businesses have to adapt to changing customer expectations, technological advancements and ever-evolving standards. That's a lot to keep up with. It's also the reason companies must invest in their research and development (R&D) efforts to keep competitive.
To truly differentiate, companies must view their product or service as a complete customer solution that includes software components that perfectly complement the hardware and service offerings. Companies can create incredible value by adding digital services to their physical products. Through these "bundles," consumers can get a one-stop solution to their pain points that increases user productivity and knowledge, and in return companies could find higher retention rates and, ultimately, increased revenues.
For the last decade, the R&D efforts at John Deere have been shifting toward software and service offerings, for example. The company has recognized the need to provide more than excellent hardware products. They recognize that they must also provide solutions that address their customers' complex pain points.
As a result, John Deere not only provides the customer with the hardware to do the manual work of planting corn, but also features a variety of monitors, sensors and software that help them "optimize the planting process and generate detailed computerized data about how and where seeds are sown."
By staying ahead of today's expectations and looking forward, companies can find new ways that enhance their products and add new value to their customers.
Sure, 5G will lift our IoT devices into new heights we can't reach with 4G, but one element is absolutely critical: user experience. It is the piece that will determine your product's (and ultimately your company's) success. In fact, by the year 2020, customer experience is expected to overtake price and product as the key brand differentiator according to a study by Walker.
The Internet of Things will enable high-traffic data sharing within and between hundreds of devices, affecting in-the-moment situations and taking smart actions based on historical trends. This means that companies can no longer view their products as a singular piece. They must zoom out and discover how their product fits in or defines an ecosystem. That's where the real opportunity lies.
However, companies that have solely specialized in their physical product may not have the expertise in designing the user experience that translates into the IoT era with 5G. But to go through this digital transformation, we must take our learnings and best practices from other industries and find innovative ways to apply them to different ecosystems.
If your industry or world is changing faster than you can keep up, it's time to ask these questions in your company and come up with a plan to prepare for the 5G:
How can 5G elevate our current products and offerings?
What are other industries doing/planning to do with 5G and how can we leverage that in our industry?
What is our customer experience like? How can we enhance it with additional services and software?
How do our products fit into or define an ecosystem? What opportunities do we have to strengthen that ecosystem?
Companies that ask these questions first will be better equipped to plan for the changes 5G will enable in every business and industry, leading to effective and lasting innovation.