Opportunity for Collaboration between Start-ups and Corporates in the Industry 4.0 domain

Collaboration between large corporates and technology start-ups play a critical role in the innovation process. Corporates can expand their businesses and create new markets. Start-ups can develop their products quickly when they get the necessary funding, and they can soon achieve scalability. The growth of the organization, competitive advantage and profitability are the shared strategic goals in this collaboration. The enabling technologies in the Industry 4.0 domain facilitate the corporations to increase collaboration. Cloud computing is one of the core components of the Industry 4.0 approach, and it provides a unified platform for allowing close interaction between machines, data, and people. Economic and supply chain globalization is also accomplished by creating new opportunities for professional collaboration. The data can be shared internally and externally with reliability, efficiency, and security. Many academic institutions have also entered into symbiotic relationships with the companies in their areas of specialization. The companies provide them with an opportunity to test their research work in real life scenarios and improve the employability skills of their graduates.

Background

The revolutionary approach recommended in the Industry 4.0 domain enables efficient and quicker business processes. The products are developed with higher quality and lower costs. A recent study has concluded that organizations adopting the Industrial Internet of Things (IIoT) will increase their productivity by 30%. At the same time, they will reduce their maintenance costs by 30%. IIoT is just one aspect of the Industry 4.0 approach. Other enabling technologies include big data analytics, augmented reality, and cybersecurity.

Innovation with smart technologies is at the heart of Industry 4.0. The objective of disruptive innovation can only be accomplished if there is an amalgamation of digital technology and physical technology. However, creating such an advanced technological infrastructure is a challenging task for an organization relying on conventional modes of businesses. Most of the organizations will require external support for entering the world of Industry 4.0. The collaboration is an ideal strategy where suitable technological expertise can be acquired from other organizations. The organizations can save considerable costs in this collaboration if they rely on start-ups for technical expertise. Start-ups are highly enthusiastic in making an impression in the industry. Also, due to their qualifications gained recently, they have a better know-how of the latest tools and technologies used in the Industry 4.0 environment.

Industry 4.0 Capacity Development through Collaborations

Established companies can benefit significantly in their Industry 4.0 initiatives by looking externally to start-ups. In various implementations of Industry 4.0 enabling technologies, organizations will be required to think strategically in determining their areas of focus and the capacity development. The development of new and advanced capabilities in-house will be highly complicated and require significant investment in human, financial, and material resources. Also, with uncertainties prevailing in the economic conditions across the globe, there has been a high staff turnover rate and the trained employees may leave the organization at critical stages of the Industry 4.0 technologies implementation. Hence, organizations will do best by looking externally for the solutions and invest in start-ups that possess the required and relevant expertise.

A study conducted by Deloitte describes that smart manufacturing in the Industry 4.0 approach usually focuses on increasing revenues and lowering costs. However, the study highlighted that there would soon be a transition to more holistic solutions. The shift can be categorized into three horizons that define the maturity model of Industry 4.0. These three horizons include process optimization, process flow, and quality, and new business models. The process optimization necessitates the companies to look inward to improve their current business processes. Initiatives are targeted towards a specific need identification and defining a precise return on investment.

The next horizon is process flow and quality. In this phase, organizations aim to increase their current level of connectivity. They want to use digital supply networks for evolving their supply chains. For example, one of the implementations could be to gather sales data and automatically transfer it to souring and manufacturing systems. Suppliers should also be able to connect to the networks of the manufacturers for responding dynamically to the changes in the demand and supply. In the second horizon, more organizational and technological shifts are needed, and hence a collaborative framework will be an ideal strategy for the organization. The third horizon is that of new business models. The organizations opt for increased product personalization, new product development, and the development of new revenue models. Organizations in this phase will also benefit significantly from the technological expertise of the start-ups.

Issues in Collaboration

The Industry 4.0 approach is highly focused on digital transformation, and such a change does not occur in a vacuum. A real digital transformation makes a significant impact on business models, talent management, strategy formulation, and organizational climate. One of the issues the manufacturing organizations face in the implementation is the lack of knowledge regarding technology. Artificial intelligence, big data science, smart grid technologies, augmented reality, cloud computing, and data mining may sound familiar to an information technology professional, but the professionals in other disciplines struggle to realize their significance in their organizational context. Even when the organizations do not build the expertise in-house and rely on collaboration with the technology start-ups, they are not confident about the viability and feasibility of their agreements. The external partner may charge higher for basic functionality by exaggerating its scope and interfaces.

Another issue with collaboration is the privacy and confidentiality of data. When the organizations automate the systems through the expertise of employees, they trust their integrity and association with the organization. However, collaboration with the external partners exposes the critical and sensitive information of the organization to the third parties. Even if a single partner shares this information with a competitor, the organization may lose its copyright, patents, and competitive advantage.

Since the collaboration in Industry 4.0 is enabled in a digital world, some of the external parties may not be interacting in-person with the organization. Hence, it becomes difficult to establish their credentials and contact them in the case of a disaster or unforeseen circumstances. For example, the data in the cloud computing environment is managed by a cloud service provider. Many times, the organizations are not aware where the data servers are physically located in the internet cloud hosting their data. If the cloud service provider does not enable a server connection at any time interval, it becomes complex for the organization to contact the provider. The in-house IT department cannot intervene in this situation because all the data is hosted in the internet cloud.

Final Words

The collaboration between start-ups and corporates is a win-win strategy for both players in the Industry 4.0 domain. Large corporates may lead the industry in their areas of expertise. However, they may not possess the same level of competence in the implementation of advanced technology. The start-ups are equipped with the knowledge and skills in the technological sector, and their services can be acquired based on the need identification as well as the Industry 4.0 horizon that the organization aims to implement. The organizations may also face issues regarding privacy and real-time availability of services in the Industry 4.0 approach. Hence, a risk management strategy should be developed to address those issues.

Business adviser and senior manager fascinated by how new technologies, like blockchain and AI, revolutionize the economy and create new business models.