Mastering Industrial Competition: Strategies for Success in the AI Era

What do precision farming, autonomous cars, and smart buildings have in common? A fusion strategy that combines industrial products with AI algorithms to deliver better value and outcomes to customers.

The book “Fusion Strategy: How Real-Time Data and AI Will Power the Industrial Future" by Vijay Govindarajan and Venkat Venkatraman outlines how industrial companies can create and capture value on the fusion frontier, a future state where industrial products are infused with sensors, software, and IoT functionalities through a seamless convergence of physical and digital domains.

Every day, we are impacted by AI-powered capabilities from digital giants such as search results from Google, product recommendations from Amazon, and social feeds from Meta. Manufacturers must combine what they do best, creating physical products, with what digital firms do best: mining massive data sets for critical insights.

Business leaders in asset-heavy industries must understand the fusion strategies and develop a strategic roadmap to survive and thrive. The book identifies four kinds of fusion strategies:

• Fusion products are designed to collect and leverage information on product use in real time.
  
  
• Fusion services deliver immediate customized recommendations from AI.
  
  
• Fusion systems integrate machines from multiple suppliers in ways that enhance them all.
  
  
• Fusion solutions combine products, services, and systems with partner companies’ innovations to significantly improve customer performance.

The book's case studies, featuring industry leaders such as John Deere, Tesla, and Honeywell, demonstrate how these strategies work in practice. These studies prove that fusion strategies aren't just theories but have been successfully implemented to achieve measurable success.

Dr. Vijay (“VG”) Govindarajan, co-author of the book, explaining the fusion strategy.

Each of these strategies creates value for customers beyond the core functions of the physical products, as described by the authors: “Fusion products create value by improving uptime on the company’s machines. Fusion services do it by bundling services with fusion products to enhance customer productivity.

Fusion systems add value by ensuring uptime on all the equipment used by the customer, not just the industrial’s own products. And fusion solutions are designed to solve customer problems in their entirety.”

 Go beyond the conventional five forces in competitive strategy with five fusion forces:

1. The interlocking of the physical and digital business domains.
   
   
2. The intertwining of humans and machines to work together.
   
   
3. The infusion of digital thinking into the analog disciplines.

4. The interlinking of physical and virtual worlds.

5. The interconnections among companies through cross-industry ecosystems.

The authors do an excellent job of detailing the key digital capabilities used to implement fusion strategies:

• Data graphs, inspired by social networks and graph theory and powered by AI and machine learning, create data network effects.
• Integration of the three types of digital twins – product, process, and performance.
• AI algorithms that interlink descriptive, diagnostic, predictive, and
  prescriptive analyses.

While the first phase of digital transformation represented 25% of GDP or $25 Trillion, the fusion frontier is projected to encompass 75% of global GDP. The book shares the essential principles and strategies for conquering this frontier, making it an indispensable guide for executives and managers in asset-heavy industries seeking to capitalize on the vast potential of fusion strategy.

You can get your leaders started on a fusion strategy by:  

• Reading the article in Harvard Business Review “Heavy Machinery Meets AI”, which provides a good summary of the book.
  
  
• Watch our on-demand webinar and fireside chat hosted by Circuitry.ai with Professor Venkat Venkatraman, co-author of the Fusion Strategy book.
  
  
• Creating and implementing fusion strategies for your company with the playbook provided by the book.

Circuitry.ai empowers industrial companies with decision intelligence to analyze, augment, and automate impactful decisions. Partner with Circuitry.ai to infuse decision intelligence into your applications, workflows, products, systems, services, and solutions. Contact us now to learn more.