Heavy Machinery Meets AI

Combining digital and analog machines will upend industrial companies.

by

Vijay Govindarajan

and

Venkat Venkatraman

by

Vijay Govindarajan

and

Venkat Venkatraman

From the Magazine (March–April 2024) · Long read

Daniel Stier

Summary.

Until recently most incumbent industrial companies didn’t use highly advanced software in their products. But now the sector’s leaders have begun applying generative AI and machine learning to all kinds of data—including text, 3D images, video, and sound—to create complex, innovative designs and solve customer problems with unprecedented speed.

Success involves much more than installing computers in products, however. It requires fusion strategies, which join what manufacturers do best—creating physical products—with what digital firms do best: mining giant data sets for critical insights. There are four kinds of fusion strategies: Fusion products, like smart glass, are designed from scratch to collect and leverage information on product use in real time. Fusion services, like Rolls-Royce’s service for increasing the fuel efficiency of aircraft, deliver immediate customized recommendations from AI. Fusion systems, like Honeywell’s for building management, integrate machines from multiple suppliers in ways that enhance them all. And fusion solutions, such as Deere’s for increasing yields for farmers, combine products, services, and systems with partner companies’ innovations in ways that greatly improve customers’ performance.

Idea in Brief

The Problem

Until recently most incumbent industrial companies didn’t use the most advanced software in their products. But competitors that can extract complex designs, insights, and trends using generative AI have emerged to challenge them.

The Solution

Industrial companies must develop strategies that fuse what they do best—creating physical products—with what digital companies do best: using data and AI to parse enormous, interconnected data sets and develop innovative insights.

The Changes Required

Companies will have to reimagine analog products and services as digitally enabled offerings, learn to create new value from data generated by the combination of physical and digital assets, and partner with other companies to create ecosystems with an unwavering focus on helping customers solve problems.

For more than 187 years, Deere & Company has simplified farmwork. From the advent of the first self-scouring plow, in 1837, to the launch of its first fully self-driving tractor, in 2022, the company has built advanced industrial technology. The See & Spray is an excellent contemporary example. The automated weed killer features a self-propelled, 120-foot carbon-fiber boom lined with 36 cameras capable of scanning 2,100 square feet per second. Powered by 10 onboard vision-processing units handling almost four gigabytes of data per second, the system uses AI and deep learning to distinguish crops from weeds. Once a weed is identified, a command is sent to spray and kill it. The machine moves through a field at 12 miles per hour without stopping. Manual labor would be more expensive, more time-consuming, and less reliable than the See & Spray. By fusing computer hardware and software with industrial machinery, it has helped farmers decrease their use of herbicide by more than two-thirds and exponentially increase productivity.

A version of this article appeared in the March–April 2024 issue of Harvard Business Review.

Vijay Govindarajan is the Coxe Distinguished Professor at Dartmouth College’s Tuck School of Business, a Dartmouth-wide chair and the highest distinction awarded to Dartmouth faculty, a Faculty Partner in the Silicon Valley incubator Mach49, and a Senior Advisor at the strategy consulting firm Acropolis Advisors. He is a New York Times and Wall Street Journal bestselling author. His latest book is Fusion Strategy: How Real-Time Data and AI Will Power the Industrial Future. His Harvard Business Review articles “Engineering Reverse Innovations” and “Stop the Innovation Wars” won McKinsey Awards for best article published in HBR. His HBR articles “How GE Is Disrupting Itself” and “The CEO’s Role in Business Model Reinvention” are HBR all-time top-50 bestsellers. Follow him on LinkedIn.
vgovindarajan
Venkat Venkatraman is the David J. McGrath Professor at Boston University’s Questrom School of Business, where he is a member of both the information systems and strategy and innovation departments. His current research focuses on how companies develop winning digital strategies. His latest book is Fusion Strategy: How Real-Time Data and AI Will Power the Industrial Future. Follow him on LinkedIn.
NVenkatraman

Heavy Machinery Meets AI

Idea in Brief

The Problem

The Solution

The Changes Required

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