Managing digital transformation in
manufacturing The concluding seminar of
Organizing for Digitalizationproject
http://www.digitalizationofmanagement.net
Professor Henri Schildt
Aalto University School of Business
18.1.2017
Digitalization is aboutreal-time data flowsinside and between
companies
Data creates ‘representations’ of entities, processes, and
relationships, providing the basis for control and automation.
New business models, process automation, and platform business models are all
borne out from the ability to represent the world through digital data.
Companies create interfaces that allow their products to be parts in smart systems.
Threats: Price-based competition
Advantage: Incremental and low risk
Core assets: Good relationships with key systems providers (ABB, Siemens, etc.), cost-efficient manufacturing, good design
Smart components
Each of these business approaches requires distinct skills
from technical and business/management perspectives
It seems unlikely that companies trying to do all three at
the same time will be very successful
Distinct roles in the manufacturing
Customer-centric services aimed for specific segments.
Threats: Difficult to compete with firms co-located with leading customers (U.S., Asia)
Advantage: High potential profit margin, dominance in a niche
Core assets: Great customer relationships, service design, dominant market share in niches
Customer-centric services
Open interfaces, flexibility and scalability allow firm to create “platforms” for others to use.
Threat: Strong winner-takes-all dynamic makes this a high risk business; significant investments
Advantage: Very high growth potential, high profit potential
Core assets: Orchestrating networks, system design
Smart enabler (platform)
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What are we up
to next?
4. Building new capabilities. We are publishing
a few articles on our study of top and middle
managers interactions in developing new
digital capabilities.
1. Organization-level surveys on
information sharing,
transparency and innovation. If
you want to understand how
good your organization is
generating and implementing
ideas, we want to collaborate.
2. In-depth interview-based study
of transparency and innovation.
We are interviewing top and
middle managers as well as
internal entrepreneurs to
understand challenges and
benefits of transparency.
3. Case studies on digital data and inter-firm
innovation. We study conditions under which
digital data flows between companies can
drive innovation.
Please see http://digitalizationofmanagement.net
As capabilities become
more narrow,
customizability and partner
networks allow the firm to
serve a greater number of
smaller segments
Service delivery through
digital channels
Data ownership defines
shorter or
Push towards time and usage based
pricing that scales up as business
grows
Digital technology decreases variable
costs and increases need for uncertain
fixed cost investments
Real-time data flows
across firm boundaries
make partnerships more
lucrative
As data becomes a key asset,
companies rush to secure
access
Rich data and configurability pushes towards
customer-specific solutions delivered as
services