The benefits of digitally enhanced operations are clear. Through AI and the use of more powerful predictive models, capital-intensive manufacturing industries can optimize asset productivity by minimizing equipment failure and disruptions in production flows. In distribution and retail, data analytics allow firms to build more customer-centric supply chains by providing greater visibility of risks and opportunities. In the construction and building sectors, the extensive use of AI can prevent building equipment downtime, optimize space, reduce costs and improve sustainability.

However, the digital revolution is also disrupting existing business models and creating opportunities for new entrants. In the energy sector, the digital revolution supports the diffusion of smart grids, while the Blockchain technology is facilitating the emergence of new and disruptive peer-to-peer electricity exchange systems. In the transportation sector, autonomous vehicles are redesigning the rules of the game, while V2G technologies are creating opportunities for new synergies between electricity network operators and electric vehicle manufacturers. In health care, the use of smart technologies to administer medication is forcing pharmaceutical companies to move from product-based to service-based models, in a new and customer-centric environment.

To profit from such a revolution, firms not only need a deep understanding of technologies, they also need to develop new competencies, new organizational structures and new business models. Using examples from a variety of industries, we will discuss the advantages and risks of the digital revolution and its implication for the competiveness of firms in the manufacturing and service sectors.