Brown Field Vs. Green Field: The Startup Trap

The vast majority of the Industrial & manufacturing sector still relies on traditional equipment and facilities, which lack smart IoT devices and connectivity features. These facilities are known as "Brown Fields".

OEM manufacturers are gradually adopting the latest technologies, implementing smart sensors, and allowing the extraction and analysis of valuable data. The factories of the next generation will be constructed of such smart equipment. These facilities are known as "Green Fields".

Thousands of startups around the world are developing solutions aimed at closing the time gap until smart equipment would become a standard. They do that by offering external IoT devices that are connected to non-smart equipment, transforming it to smart (or at least semi-smart) devices.

These startups focus on Brown Fields, or retrofit projects, aimed at the "smartening" of many legacy manufacturing plants.

Taking into consideration the current relative disinterest shown by large parts of the industrial sector, it would probably be a while until such implementations would occur in large numbers.

On the other hand, as already mentioned, OEM manufacturers are not standing still, and machines are increasingly becoming smart as a standard.

That leaves these startups with quite a narrow window for a scale-up, starting when the market is ready to invest and ending when legacy equipment will not be so widespread.

Industry 4.0 startups should avoid the trap of investing their entire resources in Brown Field projects, despite the potential quicker revenue. Doing that would mean sacrificing the long term for short term benefits. In contrast, they should invest in parallel in Green Field projects, in the form of implementing their technology in OEM equipment, though not offering a quick return.

Such an approach can generate value for decades, while the OEM is selling the equipment and its successors, relying on the startup technology. Startups that will do so will remain relevant, even once the market will complete its transformation to introduce a majority of smart facilities.