How—and Why—Industry Convergence Is Powering Innovation

May 6, 2021 Alex Stern

What Is Industry Convergence?

Industry convergence stands for new connections emerging between previously unrelated technology areas, work processes, businesses, supply chains, and even entire industry sectors. Each new connection sparks innovation and can result in significant disruption.

The Oxford Learner’s Dictionary defines convergence as:

  • The process of moving together from different directions and meeting; the point where this happens
  • The process of becoming very similar or the same

This process of moving together can increasingly be observed in business. Industry convergence happens as technologies, processes, businesses, and industries blend into each other, to a point where they become the same. This is by no means a new phenomenon, but convergence is considerably affected and accelerated by digitalization.

The smartphone is a powerful example of digital industry convergence, and the acceleration of digitalization is driving similar shifts across all kinds of industries. The implications are profound—industry boundaries no longer matter, and competition can strike from anywhere. For example, in the case of the smartphone, Nokia faced a new competitor from a different industry—computer hardware—and grossly underestimated Apple’s potential to push Nokia off the market-leading top spot.

Developments similar to the mobile-phone industry in the 2000s are now happening all over the map. Cars are now considered smartphones on wheels, and traditional manufacturers need to contend with tech companies encroaching on their turf. To keep up with convergence and the acceleration of innovation and disruption, businesses need to adapt their ways of working. In the era of digital industry convergence, standing still is no longer an option. Agility, flexibility, and innovation need to become more than just empty phrases, because new competitors compete on precisely those capabilities.

industry convergence car
The technology and automobile industries have converged: Today’s cars come loaded with built-in technology—they’re essentially smartphones on wheels.

To ensure a higher rate of agility, flexibility, and innovation, ways of working need to converge, too: Silos between industries, disciplines, and businesses need to be dissolved. In the case of construction, for example, new ways of making need to bring together architects, engineers, fabricators, subcontractors, contractors, and owners to work together more seamlessly through process and technology.

Businesses can take advantage of convergence by harnessing data, its resulting insights, and automation to transform how things are designed, made, owned, and operated. By drawing on best practices from converging industries and bringing together multidisciplinary functions, businesses can do the following:

  • Differentiate products and services
  • Improve customer experiences
  • Drive efficiency, sustainability, and growth like never before

History of Converging Industries

Creating new combinations by blending technologies, processes, and business models is the basis of innovation, and innovation has been happening since the dawn of humankind. However, digital transformation is proving to be a powerful rocket fuel, changing the pace of convergence from linear to exponential. Blending things from different industries has become fast and easy, and digital assets have no limit as to how many things can be combined.

Auto Industry

New blends of technologies or processes—or just ideas—have always been at the core of innovation and progress. Take the automobile: It’s one of the major innovations of the 20th century, and it’s an excellent example of industry convergence. The early automobile was a convergence of the carriage and a new propulsion system that originated in the early railway industry. Cars have been a central locus for convergence ever since. Material breakthroughs in metallurgy and rubber-making led to better materials for car bodies and tires. Eventually, the consumer electronics and telecommunications industries converged with the auto industry, producing car stereos and car phones.

Today, however, convergence within the auto industry has gone digital. Car companies must also be (or partner closely with) technology companies, as automobiles have become full-scale, upgradable computers as well as vehicles. To stay competitive, they must offer the most advanced self-driving features, as well as integration with mobile technology and apps. Because this convergence of automobile manufacturing and technology industries is digital, there are no constraints on how many physical connections that can be made to the dashboard; it’s now possible to connect infinite things to a car.

Telephones

The telephone may be the best example of industry convergence. The corded phone once only made calls, and then it converged with wireless and digital technologies to become a mobile device that could send text messages. Things really exploded when bandwidth and processing power, multitouch display technology, and camera miniaturization created a supernova of convergence called the smartphone.

Media and Entertainment Industry

Another example of industry convergence lies in the visual-effects industry. Technological progress beginning in the early 1990s hastened the convergence of formerly separated teams working in parallel. Consider teh movie Terminator 2: Judgment Day, which featured breakthroughs in computer-generated imagery (CGI). When it was released in 1991, filming was still fully analog, and movie production workflows were highly sequential, with built-in waiting periods for film printing, sharing, and reviewing.

The digitization of film production and visual effects dramatically increased productivity by eliminating non-value-adding tasks such as distributing and digitizing physical film. Workflows became parallel rather than sequential as multiple teams could work simultaneously on different aspects of the project. Those parallel workflows and increased demand for slick visual effects led to the increased specialization of tools and skills, concentrated in third-party production shops outside of the major studios. Because of convergence, the industry went from a proprietary, in-house workflow with everything done inside one studio to a universal creative marketplace based on outsourcing and open data standardization.

industry convergence media and entertainment
In the media and entertainment industry, workflows have become parallel rather than sequential—multiple artists can work on different parts of the same project at the same time thanks to convergence.

How Can Businesses Adapt to Keep Up With Converging Industries?

A key lever for businesses to keep up with convergence is to adapt their ways of working. Companies need to move away from linear processes and business practices that are siloed, often resulting in a general lack of collaboration and ownership.

A better way of working is digital, automated, based on a consistent information model, agile, and integrated, focused on leveraging best practices from across industries. There are four main aspects of these new ways of working that can help businesses become more agile, flexible, and innovative: workflow coordination, on-demand customization, virtual creation, and continuous reshaping.

New Ways of Working: The 4 Points of Industry Convergence

1. Workflow Coordination

The architecture, engineering, and construction (AEC) industry; product design and manufacturing; and media and entertainment (M&E) increasingly use digital tools, such as Autodesk BIM 360 or other BIM applications, to coordinate and track workflows. With digital tools, teams can coordinate processes with other teams, ecosystems, and supply chains to automate tasks and discover data insights for outcomes they never thought possible.

One powerful digital tool is the digital twin of a product or building. A digital twin is a constantly updated, data-integrated model powered by AI and machine learning that can monitor, maintain, and optimize the performance of its physical counterpart. A digital twin gives everyone access to the same data so they can coordinate and collaborate more efficiently.

Autodesk Shotgun, a project-management application for creative studios, exemplifies convergence-enabling digital tools. The platform brings all the information from different parts of visual production together in one place, so studios can coordinate workflows between people in different companies and in different time zones. This helps teams finish work faster and save everyone money.

Workflow coordination lets businesses capture past work processes, analyze their relationship to outcomes, and use insights to implement better approaches. Workflow coordination also allows teams in all industries to make things better, whether it’s six visual-effects studios using Shotgun to work on the same episode of Game of Thrones, coordinating a complex manufacturing assembly, or blending construction logic into a building’s design.

2. On-Demand Customization

Today, customers of all stripes expect more choices and customization options. Providing these options, however, is generally costly because businesses need to make those customizations at scale. But with artificial intelligence (AI) converging into more industries, processes can become more flexible and adaptable. Manufacturers are implementing the mass assembly of more tailored products and precision-crafting unique components with CNC machines.

Generative design helps designers and fabricators find solutions that meet unique design criteria—it can also be an ally to customization. Digital twins are also crucial. For example, a building project uses a design-for-manufacturing (DfM) vendor that builds components, such as bathroom pods, off-site. If the pods’ dimensions suddenly change, the off-site fabricator will be notified immediately through the digital twin, so incorrect pods won’t be built.

In the analog world, a building project was set up with all the details laid out, and it was very difficult to change. Now, a digital twin is like a living thing that evolves all the time. It’s iterative and agile, so it’s not a problem to customize the design. If the customer opts last-minute for a different building facade, you can quickly adapt the digital twin, which relays the new information to your flexible prefab manufacturing setup.

The future will be customized—whether it’s a post-production house that edits different cuts of films to appeal to different geographic regions, a company that can do just-in-time replacement of machine parts using additive manufacturing, or a contractor that offers varied modular building components manufactured off-site.

3. Virtual Creation

Digital twins and the virtual environments possible through extended reality (XR)—the combined term for virtual reality (VR), augmented reality (AR), and mixed reality (MR)—let innovators embody their creativity in immersive experiences. Virtual creation links digital and physical worlds in new, beneficial ways. Digital twins visualize real-time operations of a building or product. Simulations of a product’s performance in changing environments show the product’s viability. And hyperrealistic worlds onscreen or in XR enthrall users through visually rich, multisensory experiences. Virtual creation is permanently transforming experiences and expectations.

For example, multi-user VR can let groups of people “walk around” a building before it’s built or analyze current and future stages of a building in progress. Collaborators in any location can share their experiences of a building without ever setting foot in it. Simulations can test ramps or other features and evaluate earthquake or fire safety.

industry convergence virtual reality
Virtual reality in construction allows users to tour a building without ever setting foot inside of it.

Virtual creation tools, such as digital twins for manufacturing and product development, can simulate options to examine how the product would perform in the real world. They can also show which design aspects might minimize real-world maintenance or create the most efficient manufacturing process. The automotive and aviation industries are using digital twins to explore next-generation vehicles. In the energy sector, highly detailed digital replicas of complex systems like oil rigs can anticipate which aspects are prone to accident or failure.

4. Continuous Reshaping

Owners and operators can modify existing products and projects beyond the construction site, factory floor, or production studio. These changes might be based on performance, customer experience, or changing needs.

In AEC, an example of continuous reshaping is building performance management: improving and adapting a building after it’s finished and in use. Sensor data flowing into the building’s digital twin can continuously optimize performance—for example, suggesting changes to the HVAC system or creating a schedule for opening and closing windows to improve energy efficiency. It may also recommend new building components or update software throughout the building.

Tesla’s electric vehicles show how software and data monitoring can continuously reshape a manufactured product. The vehicles’ operating system adds new features and improvements over time; as more data is collected, functions like autonomous driving capabilities are updated. Other popular and copied products such as Peloton exercise bikes add new experiences to the connected display—continuous reshaping of products is already a competitive necessity in some areas.

Benefits of Adapting to New Ways of Working

As the example of the visual-effects industry showed, convergence universally affects the processes, multidisciplinary boundaries, and relevant technologies of an industry.

More Efficient Processes

One of its biggest benefits is the efficiencies created by allowing different people and teams to work in parallel on the same project. Similar digitization and digitalization processes that changed movie production have also transformed the ways people make anything.

Within one construction project, there can be an architect working on one part of a building, an engineer working on another part, and an off-site fabricator working on industrialized-construction prefabrication elements. This ability comes from the convergence of what happens in the design, construction, and operation of the building, letting owners coordinate the work, customize experiences, and continuously optimize and reshape it.

Owners Have More Control

This way of working helps building owners understand the whole process and, hence, have more control over it. They can also standardize and modularize everything being done. As a result, they can better control the user experience, quality, operation costs, capital expenditures, sustainability, and carbon footprint.

industry convergence smart city
The design and operation of a smart city is based on data and digital services.

The Smart City: An Example of Industry Convergence

The emerging movement of “smart cities” is one of the greatest trends in industry convergence.

There are five defining smart-city principles:

  • Digital transformation based on data collection and pattern analysis
  • An urban environment
  • Mobility, including intelligent public transportation networks, automated traffic management, and walkable or bikeable streets
  • Governance and finance
  • Inclusiveness (sharing public spaces and resources)

As opposed to traditional cities, the design and operation of a smart city is based much more on data and digital services. This creates a better experience for the citizens—and for municipalities, infrastructure and transportation providers, and others.

Many of the tenets of potential smart cities are still years away from implementation: smart electrical and water grids, street-embedded wireless charging for electric vehicles, and AI-supported automation of city systems, including lighting and traffic. But the momentum is underway and requires a different—and better—way of collaborating among architects, civil engineers, designers, fabricators, contractors, subcontractors, and owners that includes data and workflow convergence.

For example, mobility companies could work with infrastructure providers or municipalities to design the best way to integrate their services into the smart city. The UK startup Arrival has started a process along those lines, making small, on-demand buses that eventually will drive autonomously. So the questions are: Where would these buses be used best? Where are they safe? Where and when are the best traffic patterns for the buses? Would they substitute for other forms of public transport?

Convergence Creates More “Platforms”—and Changes Industries Themselves

Smart-city mobility is writing yet another chapter in the long saga of convergence in the automotive industry, but it’s not the final chapter. Many businesses—including automotive, electronics, and even construction companies—are designing multifaceted “experiences” that may include add-ons, customizability, ongoing subscriptions, and more. These designed experiences are not single products so much as they are platforms.

When it comes to continued convergence within automotive companies, big automakers are positioning themselves as digital mobility or digital experience companies—meaning they have to invest in software engineering and building an ecosystem of services. New bells and whistles include AR-enhanced displays that monitor surroundings omnidirectionally and provide details about the immediate area and the entertainment system. These manufacturers become less like car companies and more like tech companies.

All of that investment is a huge expense for an existing company that still has a legacy business to run. Although these changes may be deemed necessary, they also open up companies to increased competition. The big automotive mobility-platform companies have their legacy competitors but also compete with newer companies that only do mobility services, such as Uber. And, of course, Uber is only possible in the first place because of the convergence of mobility and smartphones.

Tesla, which has always fancied itself a technology company, has a master plan that includes Tesla owners being able to rent out their cars to people using temporary digital keys. And, eventually, Tesla may be fully autonomous, so the renter would order an Uber-type ride from an autonomous Tesla owned by a single person, who in essence becomes a tiny ride-sharing service.

As the possibilities from convergence multiply, so will the possibilities for industry disruption.

The evolution from selling products to selling platforms is even happening in the AEC space. One large building-technology company in the process of creating a building-performance-management experience all based on data. Such systems are part of the convergence needed to handle 21st-century construction needs. However, that particular company becoming a data company in addition to a construction company could mean competition from a firm that does data and analytics even better, such as Google.

What Is the Future of Convergence?

For certain, the convergence of industries and of people from multiple disciplines working simultaneously on the same projects will roll on. The questions are, though, how fast and to what effect?

In the 2020 book The Future Is Faster Than You Think, Xprize founder and entrepreneur Peter Diamandis argued that waves of advanced technologies—AI, robotics, 3D printing, the Internet of Things (IoT), digital biology, XR, blockchain, global gigabit connectivity, and so on—are converging at a pace that’s accelerating exponentially and will affect every aspect of personal and societal life even sooner than many imagine.

As the possibilities from convergence multiply, so will the possibilities for industry disruption. Think of how the smartphone caused a huge disruption to cameras, computers, software, games, publishing, and other businesses at the same time that it changed people’s lives. With convergence affecting more industries, smartphone-level disruptions will continue and can happen anywhere. The exact nature of the disruptions is too hard to predict.

However, a field such as transportation will experience disruption from multiple angles. Hyperloop traveling at almost 700 mph could disrupt air travel, automotive travel, and every other form of public transit. And the old dream of flying cars could manifest in the form of autonomous passenger drones, disrupting other forms of transportation and ride-sharing services. But what if the simultaneous advancement of VR becomes so realistic and satisfying that fewer people need or want to commute to work, visit friends in person, or leave for vacation? That would in turn make Hyperloop and passenger drones less commercially viable.

No one can know if a better solution for one thing will be disrupted by another solution that eliminates the desire to do that thing. With convergence, there are conflicting worlds coming together and different approaches to similar problems. Technological disruptions can hurt some businesses while, on the other hand, being a net gain for the world. There are many problems to solve, and, fortunately, many industries, technologies, and human professions are converging to try to solve them.

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