This node in the open innovation paradigm reflects the trendy rise of the platform business model. Platform business models have sprung up to leverage opportunities within the business ecosystem. A business-driven framework allows a community of partners, providers, and customers to share and enhance digital processes and capabilities. This framework enables for a different combination of business models, leadership, talent, delivery and IT infrastructures that power digital business ecosystems for open innovation.
Thus, the platform simply presents organizations with a practical way to innovate and create new forms of value. In April , Baidu announced a one-of-a-kind open platform — Apollo — for autonomous driving solutions, roping in partners from across the globe. Making the source code available to everyone allows companies to build off of existing research instead of starting from scratch. Apollo delivers an open, complete and reliable software platform for its partners in the automotive and autonomous driving industry. Baidu will also open source code and capabilities in obstacle perception, trajectory planning, vehicle control, vehicle operating systems, and other functions which will include a complete set of testing tools.
The company will begin by initiating a partnership alliance, working with partners who will provide the best and most compatible vehicles, sensors and other components to achieve broad participation and collaboration. It will also provide references and recommendations to participants of a rapidly expanding ecosystem enabled by Project Apollo. This will be used to lower the entry barriers for research and development of autonomous driving technologies, making it more accessible to the general public and accelerating the overall pace of innovation.
With BMW Connected, mobility extends beyond the vehicle. BMW is committed to building a comprehensive mobility ecosystem and providing intelligent, seamless and personalized mobility services for customers. Source: New mobility]. As a result, foreign companies have the opportunity to partner with Baidu and have access to their open-source platform of higher technologies for vehicles. The Apollo platform ecosystem alliance has reached to over partners, ranging from Original Equipment Manufacturers, Tier1s, core suppliers, travel service providers, emerging companies, hedge funds and investment firms, research institutions, and related governments.
Thus, this platform merely serves as a small example of how firms can implement an open innovation strategy in China by engaging with other partners within a general ecosystem of diverse specializations. Application leaders derive maximum value from new technologies like artificial intelligence, API programs, service-oriented architecture, and the five platforms for digital business: information systems, customer experience, data and analytics, the internet of things, and ecosystems.
Therefore, creating APIs that enable ecosystem interactions is important if an enterprise is to benefit from digital business technology platforms and grow into markets that were previously beyond its traditional model of reach. Applications are important for open innovation enterprises in China because they allow the business to engage in ecosystems that connect them to new partners.
Chinese software market: More opportunities, tougher competition
For this to be successful, enterprise leaders need to know how to manage APIs as products that their partners and customers wish to use. However, for many Western MNCs delivering business value via applications is dying out as firms struggle to deliver next-generation experiences using innovative application architectures, APIs and machine learning. Hence, application leaders must adopt a product-centric model to maximize the value they deliver on new digital platforms.
APIs are all about empowering users and creating partnerships. APIs have the ability to completely transform your product or an entire business into something much, much better, a platform. By turning your product into a platform as Apple did to iOS with their app store you can effectively crowdsource features and innovation from your developer community.
There is one main reason why companies build an app ecosystem — to reach a wider audience. Every single app created by your community is another feature that puts you on par with or differentiates you from your competition. Every single feature in your product opens up new and wonderful use cases. Every single use case attracts users that can now use your product to solve their specific problem. Successful companies crowdsource innovation from their community by developing an app ecosystem.
Modiface is a beauty tech company that has been teaming up with big cosmetics brands for over a decade to create augmented reality apps for mobile and desktop. Furthermore, Modiface also manufactures AR mirrors that superimpose makeup on your face in real time.
Open Innovation: Transforming your Business in China | Daxue Consulting
These technologies are essential because by allowing customers to use AR to try on and test beauty products in the store, it allows for a more immersive and interactive experience that is more customer friendly and preferable to the individual. Thus, it creates value in two ways, firstly, via the commercialization of engaging technologies that enhance customer loyalty and attraction, and secondly, by cutting costs on inventory.
For beauty companies, this second facet allows them to now save the products they had previously needed to allocate for testing and sampling. As a result, foreign marketers now have the opportunity to innovate their business by integrating within this open platform and promote their product through social media and advertisement. With ever-increasing connectivity, the number and density of connections between people, organizations and things are increasing almost exponentially.
All organizations have the ability to connect to a diverse web of customers, partners, and even machines and this can be leveraged for your open innovation strategy in China. Bandwidth and storage are no longer limiting factors. From new insights provided by information and analytics, organizations now have the ability to access, process and analyze vast amounts of information. Analytics gives insights into complexity, revealing new patterns and insights making it possible to create and manage complex business ecosystems. In accelerating the test, learn, and refine cycle to attain China caliber speeds, companies need to compress the time it takes to turn customer feedback and other data into new features or products.
Furthermore, user interaction allows for a way to engage directly with the Chinese consumer. This relates to the API economy, where business models and channels are based on an exchange of data from the users of the app to an ecosystem of developers. Thus, the internet has provided a way to get instant feedback from consumers everywhere, and Chinese consumers are particularly eager to share their opinions.
In online forums and Chinese social media sites , they talk about products they like, share advice, and voice opinions about features, pricing, or policies they dislike. Many Chinese consumer-facing companies have special websites for customers to share their opinions and personalized social media pages where fans can gather and research the product or service. Xiaomi , for example, regularly posts proposed features for smartphone software on an online forum for its fans. Consumers vote for their favorite ideas, and the company adds popular ones to the product development system, sometimes within a week.
As a result, Xiaomi has more competitive products and more loyal customers. By working with startups through external digital platforms, Lenovo, for example, has been able to innovate its product line and better meet the needs of its customers. The NBD has allowed the company to openly innovate its products with the help of startups who are focused on unique and innovative strategies in China.
In addition, by adding specialized industry expertise in fields that the company has no previous experience in. Given strong economic growth along with government mandates and incentive plans in digital innovation, enterprises in China now more than ever have the opportunity to digitally disrupt their industries. The exponential growth in recent years in the number of mobile users and online shopping has facilitated innovations in digital marketing that better digest customer behaviors and improve customer service.
Also, the next wave of emerging technologies driven by AI has provided businesses with the potential to expand and enhance their products and services. The Chinese government has nominated AI as a major national economic strategy for the next decade. It has become an important driving force in the modern day technological revolution and industrial transformation that will profoundly change the means of human production and ways of life.
Thus, businesses looking to capture the Chinese open innovation market must accelerate the adoption of new technologies, including BI and analytics, AI and cloud computing. Also noted in the survey, more companies in certain industries are upgrading their digital capabilities in order to overcome increasing market competition and rising operational costs. As China embarks on the path of restructuring its economy from manufacturing to knowledge-driven, export to domestic consumption driven, and from low-cost low-quality to higher-cost higher-quality, there will be more and more innovations that will attract greater interest from abroad.
Presently, there are boundless opportunities for foreign companies with advanced technologies and products to enter the Chinese market. At the same time, however, the accelerating pace of digitalization has made it increasingly difficult for foreign firms to respond to and take advantage of the disruptive technologies needed such as artificial intelligence, IoT, cloud computing, automated manufacturing, and logistics, and blockchain enabled supply chains. Furthermore, companies in China are facing challenges in adjusting to rapidly-changing markets, competing with local counterparts, recruiting and retaining high-quality talent, evolving their business models and supply chains, developing effective Research and Development functions locally and partnering with smaller local businesses.
Thus, the need for more in-depth market insight and continued reforms regarding partnerships, fair treatment, and collaboration around technology for OI in China is greater than ever before. In the endeavor to implement an OI initiative, Daxue Consulting can produce an optimized research structure to understand the innovation within a particular industry in China. Our broad market oversight allows us to scout for specific innovations that can make your business more competitive and technologically up to date. Furthermore, being agile in market analysis, our service provides clients with a bespoke landscape roadmap that helps them navigate the complexity of their initiatives.
Daxue Consulting offers a strategic advisory for businesses at the micro level. Following initial research, we screen the industry for competition and potential startup collaborations. This process allows us to most effectively engage the traditional OI strategy of providing a touch point for business to interact with innovative ecosystems and partner with local startups. Our holistic offering affords us with a proper framework to break down the value chain and provide businesses with the ability to capture innovations they need and integrate them into their model.
You must be logged in to post a comment. Monthly report. Manufacturers of appliances and other household goods dominated the first wave of customer-focused innovators in China. But these offerings no longer suffice to gain a growing share of consumers. Companies like smartphone manufacturer Xiaomi are responding with cheaper and better products designed to offer hardware features as good as those from global brands but priced for the Chinese market.
Like other customer-focused innovators in China, Xiaomi also uses the massive consumer market as a collaborator, rapidly refining its offerings through online feedback. Internet service providers are another hotbed of customer-focused innovation. Alibaba, Baidu, and Tencent have become global leaders in online services, largely thanks to their success in the enormous Chinese market. The government already is pushing to modernize traditional businesses through its Internet Plus initiative, announced in early Innovations are needed to expand access to services for example, remotely monitoring the health of rural patients , to improve the quality of offerings greater choice and customization in financial and educational products , and to optimize operations crowd-sourced logistics.
Chinese companies will also have opportunities to use their skills in customer-focused innovation to take a lead in selling to other emerging markets. These advantages give Chinese manufacturers a lead in some important knowledge-based manufacturing categories, such as electrical equipment, construction equipment, and solar panels.
Today, Chinese companies improve their efficiency with a variety of cutting-edge approaches, including agile manufacturing, modular design, and flexible automation. The apparel manufacturer Everstar, for example, uses automated equipment and online design and e-commerce systems that help consumers to customize designs for clothing and receive finished goods within 72 hours.
China is also pioneering the use of open manufacturing platforms. The challenges are mounting, however. As wages rise, the country becomes less competitive for the most labor-intensive work.
At the same time, a worldwide transition is under way toward a new kind of manufacturing, sometimes called Industry 4. As a result, Chinese companies will face pressure to improve their performance in utilizing assets, matching supply with demand, and controlling quality.
Some efforts are under way to mobilize rapid, flexible manufacturing. Elsewhere, companies are looking at ways to mass-customize products by combining flexible manufacturing with the aggregation of a huge Internet consumer base.
Entrepreneurs are poised to play a bigger role. In Shenzhen, a rich ecosystem of component suppliers, design services, business incubators, and outsourced assembly capacity has helped start-ups prototype products and scale up global manufacturing businesses quickly. China has had mixed success with engineering-based innovation.
The best performers are found in Chinese markets where motivated domestic industries are nurtured by national and local governments that create local demand, push for innovation, and facilitate the transfer of knowledge from foreign players. China has used this formula successfully in high-speed rail Chinese companies have a 41 percent share of the global railroad-equipment revenues, according to McKinsey estimates , wind power, and telecommunications equipment. We estimate that the country has accounted for 86 percent of global growth in this market since then.
Using technology transfers from overseas partners as a knowledge base, Chinese companies tailor their offerings to local requirements, such as terrain and temperature conditions, through incremental innovation. Learning and innovation have been slower to come in automotive manufacturing. To date, most domestic Chinese carmakers have relied on platforms from their global partners or on designs from outside firms to bring products to market quickly.
Thanks to exploding domestic demand and strong profit streams from joint ventures, they have felt little pressure to innovate. In some sectors, such as nuclear power, explicit state support will continue to be critical. China has an ambitious government plan to build nuclear plants resulting in a total installed capacity of 58 gigawatts by , which can support its goal of obtaining 20 percent of its energy from non—fossil fuel sources by In other industries, such as medical equipment, the private sector will drive innovation.
Mindray, United Imaging Healthcare, and other smaller new Chinese players will continue to make inroads in market categories for instance, CT scanners and MRI machines that foreign suppliers now dominate. The slow progress has a number of explanations—not least that this type of work takes a long time to pay off and requires an effective regulator to protect intellectual property. Huge investments by government and the private sector to shepherd projects from the lab to commercial deployment are needed, as well.
The government is addressing some of these obstacles.
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