Manufacturers have spent most of the past two years rolling out new digital business models to redefine aftermarket offerings and adapt to rapidly shifting buyer needs. Innovation will remain ongoing in industrial sectors, and consequently, more investments may be needed. But new research shows “manufacturers don’t have to go it alone.” As firms reposition for growth, experts find it is a good time to shift focus on ecosystem partnerships.
The vast majority do not hesitate to change course and actively seek to form effective partnerships that spur aftermarket innovation and growth. Gartner analysts predict the trend of forming ecosystem partnerships will endure for many years to come—and not only to sustain a firm’s financial growth but also its sustainability targets:
“By 2024, 75% of the top 20 global consumer goods companies will engage in an ecosystem partnership contributing to growth and sustainability goals.” — Gartner, Top Five Business Trends in Manufacturing for 2021
But those who struggle to select a perfect combination of partners may be left behind.
This article—the third in a five-part series about influential trends impacting the immediate and long-term future of global manufacturing—will elaborate upon partner ecosystems and how industry players can build the right connections to co-innovate in the aftermarket and sustain profitable growth.
Industrial Firms Are Stronger Together
Manufacturers have constantly broken new ground to aid recovery. Over the past two years, many have pulled the plug on legacy ways of doing business and brought digital innovation out of the backburner. But industrial leaders need to form broad partner ecosystems to make real progress on innovation initiatives and lead in a rapidly transformed world.
Growing evidence indicates that ecosystems present some of the greatest opportunities for innovation. Aftermarket players working closely together with a trusted ecosystem of partners combine complementary capabilities to develop personalized and differentiated offerings that fully address the customer’s changing needs and other real-time market demands. Alternatively, well-designed partner ecosystems play a key role in driving expansion into new markets:
“Global organizations can utilize ecosystem partnerships as an opportunity to grow not only in mature markets but in developing markets as well.” — Gartner, Top Five Business Trends in Manufacturing for 2021
Firms generally entertain the idea of launching new extended product or service offerings in partnership with other ecosystem entities. As it happens, forging innovation partnerships is a core priority for 70% of industry leaders surveyed in a study. Those who continue to forge and expand their partner ecosystems will be strategically positioned to serve a broader customer base and maximize aftermarket outcomes at market speed.
Having the Right Connections Is Central to Growth
A sharp rise in the costs of raw materials, energy, and transportation is hugely impacting manufacturers. Presently, international markets are volatile, unstable, and highly unpredictable. Ecosystem partnerships, however, promise to ease some of the pressure and sustain growth amid all the uncertainty. The key is to pick the right strategic partners.
Bad choices can be costly. That is why, first and foremost, it is vital to back away from transactional partner relationships. Transactional partnerships, which are mostly temporary and driven by self-interest, have lost their edge—potentially forever. Industry players are encouraged to “make connections in pursuit of [their firm’s] objectives,” yet each partnership they are involved with must be mutually beneficial.
The next steps in a well-laid plan to build strategic ecosystem partnerships essentially involve:
- Understanding the firm’s owned capabilities
- Identifying leaders with proven complementary capabilities—especially “up-and-coming vendors that show superior levels of innovation,” as experts advise—who extend existing strengths and will help to differentiate the firm
- Considering industry leaders who share a similar vision of innovation and growth
- Clarifying expectations, contributions, and partner incentives
- Devising clear strategies to co-invest, co-innovate, and jointly reposition aftermarket offerings to deliver new and enhanced value
A reliable ecosystem of partners is comprised of firms with complementary skills and shared values that co-identify growth opportunities and jointly reinvent offerings to deliver more compelling and profitable aftermarket experiences. Good and constant communication is proving instrumental in securing such partnerships. But transparency should also exist in every collaborative partnership that aims to prompt and sustain aftermarket growth. All partners work well together when they are constantly on the same page—making real efforts to collaborate openly and reach decisions based on consensus.
Still, a hard truth must be faced: ecosystem partnerships are not something to be done in haste. Firms must select partners carefully and take time to develop tight-knit relationships with those who matter most; this way, they may be in a stronger position to achieve goals previously beyond reach. Manufacturers displaying a rising interest in sustainability, for example, will have a greater chance to make it part of their business:
“In manufacturing, ecosystem partnerships can enable all types of initiatives, such as earth-friendly packaging, enablement of underdeveloped/underserved communities, and emission reduction through remote work capability.” — Gartner, Top Five Business Trends in Manufacturing for 2021
With all the promise it holds, investment in partner ecosystems certainly is more than a passing interest. Having the right connections makes all the difference in the changing world of today.
Change Is Imminent
Partnerships have begun to change. As transactional partner relationships come under scrutiny, trusted and reliable ecosystems of partners have the potential to become ubiquitous and well-established in industrial settings. Such a move would serve as an impetus for sustainable innovation and enhanced value creation in the aftermarket.
The global manufacturing sector is, however, on the brink of more radical changes as trends evolve.
Learn about the growing importance of investing in the total company experience and find out how a perfect blend of physical products and digital services puts industrial firms on the right track to connecting more closely with the customer in the aftermarket.