February 2021
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Fostering Ecosystem Innovation and Orchestration for Smarter Buildings

Innovators from Thomas Edison to Steve Jobs have understood that simultaneous disruption in both products and business systems could create entire industries around their revolutionary inventions. Their genius lay in the ability to look beyond this or that discrete improvement and conceive of the higher order value that emerges from the convergence of multiple emergent technologies with the processes required to deliver and support these new platforms.
Republished from
https://harborresearch.com/shared-smart-building-destinies/


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A LONG-AWAITED WAVE OF DISRUPTION

The combination of new technologies and new service delivery modes has set the stage for a significant wave of disruption in the smart building systems arena. New software technologies are leveraging diverse data from equipment and larger systems, creating the potential to unlock new operating values and user experiences for owners, occupants, and equipment suppliers.

And yet many participants have been holding their breath for a long time, waiting for its arrival. The smart building systems market forever seems poised to be entering a new period of transformation, but it always falls short of the finish line.

Like other connected systems, several factors inhibit the evolution of smart modern buildings. Traditional building automation system (also known as building management system or BAS/BMS) offerings have focused on reducing energy consumption and improving operating efficiencies. And yet today, despite these devices being integrated and enabled with network connectivity, OEMs and suppliers have largely been unable to unlock the value of Smart Systems—and ultimately their own devices—because they consider the opportunity too narrowly through the lens of aging business models and practices.

SMART BUILDING SYSTEMS MARKET OPPORTUNITY

Smart Building Systems Market Opportunity

Source: Harbor Research, Inc.

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KEY CHALLENGES FOR SMART BUILDINGS

A few key challenges facing the evolution of the buildings space include:

SMART BUILDINGS VALUE CHAIN IS FRAGMENTED

Smart Buildings Value Chain Is Fragmented

Source: Harbor Research, Inc.

CLINGING TO THE STATUS QUO

As building system providers move toward Smart Systems, many are trying to do so by simply “bolting on” new digital capabilities and emergent technologies without considering the need to address other critical strategy and operating elements.

The rising intelligence of equipment and devices, and the new processes required to leverage their data, challenge existing supplier operating models and protocols. Equipment suppliers, contractors and engineering firms are purely transactional and walk away following the completion of projects. Building industry OEMs have bundled equipment, software, and services contracts for major customers in a largely unchanged model since the early days of BAS/BMS.

Steadfastly clinging to the status quo is not exactly a recipe for success in a rapidly evolving market where digitization is redrawing the competitive landscape.

DIGITAL TRANSFORMATION IS A SUBTLE DANCE

Mastering digital transformation still involves a subtle dance of timing and delivery. Technology innovation always moves faster than the manufacture and marketing of actual products in the real world. This creates a classic disconnect between the pace of evolution in silicon and software versus the pace of change in an equipment sub-system.

Part of the ecosystem story is the ability to see where, and how fast, things are evolving and thus get usable products in the hands of customers before the next technological wave makes them obsolete.

Consider that during the decades-long lifespan of a commercial building, several cycles of major innovation will occur in various embedded devices and equipment. Power distribution and HVAC systems have remained more or less constant, but many other sub-systems—such as LED lighting—are now designed in a modular way and can be swapped out when they become superseded.

In addition, the increasingly software-controlled nature of these components is making them rapidly displace hardware-based control and communications, resulting in many building sub-systems being re-programmable and updatable.

THE SPECIAL ROLE OF THE INNOVATION ORCHESTRATOR

Even though no one can predict precisely what the innovations will be, or when they will come, the process by which they will be delivered is becoming clearer. Digital transformation and Smart Systems innovation are creating the potential for visionary players in the smart facilities ecosystem to step into the important role of “innovation orchestrator”—that is, to become the facilitators of the whole evolutionary process.

Leadership companies that aspire to become innovation orchestrators need to stand in their prospective partners’ shoes and work through the logic of how these collaborative systems get designed, procured, and deployed. It won’t be a classic linear cycle this time around. Old-fashioned “customization” will give way to personalized configuration, while the technology itself makes everything much more programmable.

Understanding this gives the orchestrator-leader an opportunity to reach out to new ecosystem participants and build empathy with potential partners who haven’t thought through these disruptions yet. Innovation orchestrators who facilitate and leverage digital platforms will enable new alliances based upon information-sharing and co-creation, and these partnerships will become increasingly important from a B2B perspective.

SIMPLE, COMPOUND, COMPLEX: GREATER VALUE FOR MORE STAKEHOLDERS

Simple, Compound, Complex

Source: Harbor Research, Inc.

SYNCHRONIZING PLAYERS AND INNOVATIONS

Orchestrators will also need to help facilitate changes in how building systems and sub-system elements are specified, helping to synchronize diverse players and innovations. They will now take the lead in helping to evolve solution delivery processes and policies. They will become educators to their ecosystem peers on challenging issues such as data privacy and data usage, as well as the inherent contention between collaborating parties regarding personalization.

Creative players in the smart building ecosystem are in an ideal position to become innovation orchestrators, but they must learn to be responsive to new trends, technologies, and evolving user preferences. In this fast-changing environment, the orchestrator’s ability to identify emergent trends and see potential discontinuities “around corners” will become minimum requirements.

This capability is more art than science and requires very acute observation of the external world. Staying close to customers, vigilantly tracking emergent technologies, and tapping alliance and ecosystem partners for new insights and perspective are ways to stay acutely aware of change.

SHARING SMART BUILDING SYSTEMS DESTINIES

Forging collaborative innovation communities means managing uncertainty. In the buildings arena this will both inform and express strategy. Built to pursue multiple aims simultaneously, a dynamic network of connected products, developers, users and stakeholders will drive new information values which, in turn, create new influences in the marketplace.

To achieve success, companies will need to recognize the opportunities offered by these collaborative relationships. Power in these new structures will fall to those who best understand how to use information and influence to get and keep key positions. More and more, business success will be about appreciating shared destinies.


















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