industry 4.0: smart service with insideout ecosystem

[email protected] 2016

Creating the learning Enterprise

Industry 4.0

Smart Services

The TMG Approach-for discussion-

Building effective InsideOut Eco-systemsto disrupt existing markets and create new ones

2

Content

1. The InsideOut Ecosystem Approach

2. The Digital Challenge

3. Pre-empting the Digital Competition

4. Disrupt inside out : making it happen

The InsideOut Ecosystem Value Proposition

3

For Companies who want to build Smart Services, the InsideOut Ecosystem integrates digital business models, organization and infrastructure which drives dynamic value creation through the unity-of-effort of smart talents

4

Design, enable and build the InsideOut Ecosystem

The TMG Approach

Value Creation byInformation & Knowledge

The Platform Business System

• Resource orchestration: Unity-of-effort • Cross-boundary interaction: Demand & Supply Roles• Focus on ecosystem value: Smart Service Growth

VALUE-UNIT

Boundary to Market

External Digital Team

Central Smart Services

Roles

Internal Digital Team

MARKET• Customers• Competition• Stakeholder• Society… PERIPHERY

CENTER

Supply

Demand

Phase I

Phase II

Supply

Inside Out Ecosystem Solution

Front-Line Roles

Demand

• Governance System • Joint Consciousness• Empowered Execution

• Company Standard Platform• Cloud-based TMG Platform

The Digital Team Platform

1 2

3

Design Enable

Build

5

The Digital Team Advantage Freeing Knowledge Resources for value-creating Activities and Growth

Res

ou

rces

(co

sts,

em

ail t

ime.

.)

Cooperation

Management-driven Hierarchy

Digital Teams

The Effect on Business Performance

Digital Transformation

Time-Reduction

30 -50%

SpeedFast Responses

Reduction of

non-value added expenses

25 -30%

Efficiency Work Productivity

Additional Value-Creation

by Cooperation between “Boxes”

20 -25%

GrowthCollective Creativity

Limits of Growth: Knowledge Resources

Growth Effect

6

Content





The Digital Challenge: Germany as an international player has key engineering strengths –Pressure to do move to digital Business Models continues to grow

7

Relative German Strength vs. USA & Chinahighlow

Futu

re B

usi

ne

ss I

mp

ort

ance high

low

International Benchmark Result of acatech Digital Performance study

Key Strengths• Engineering

Capability• Importance of

Production• Sustainability

• No focus field • No focus field

Source: Industrie 4.0 Internationaler Benchmark, Zukunftsoptionen und Handlungsempfehlungen für die Produktionsforschung; acatech

?

Growing Pressure1. Business Models2. Organization3. Infrastructure4. Digital Talent

8

Digital Leadership Implication:Focus narrowly on product-centric market leadership is no longer a viable option

CapturingDigital Potential

with…

8

The Value Ecosystem

Outside Value Creation byInformation & Knowledge

The Value Chain

Inside Value Creation by Material & Energy

Source: acatech

The Platform Model

Value-unit

The linear Business Model

Smart Service

Smart Data

Smart Products

Smart Infrastructure

Smart Talents

Digital Business Layer Framework

Optimization of new business processes and

product features

New Business Models by adding communities and network effects

The Digital Value-Creation Model

The Emergence of the hybrid Digital Business Model

? How to leverage the strength in process and product engineering ?

Lead:

Lead:

9

Germany is leading the linear Business Model Paradigm

Source: Siemens

Digital Space Physical Space

Digital Space Physical Space

Industry 4.0 Assembly Industry

Industry 4.0 Process Industry


Value Creation by Material & Energy


Value Creation by Material & Energy

Industry 4.0: The Digitization of the product support-based business models

10

Competition moves from Products to Platforms :US Smart services start-ups are unleashing a wave of disruptive

business model innovations

Smart Products Smart Service

Year: 1916Empl: 116,000Mkt Cap: 53B

Traditional Business

Year: 2009Empl: 5,000Mkt Cap: 60B

New Business

Transformation of Business ModelsExample Mobility

Hard Assets Soft Assets

Whoever controls the service platforms will also gain control of the entire value chain……the global race for control of the data and platforms is already truly underway…

11

The German Business Model Trap:German companies appear to be “trapped” by their product support-

based business models

Source: acatech

The linear Business Model

Value Net Design & Engineering

Value Net Service

Focus Smart Products/Industry 4.0

Focus Smart Services

Product support-based Smart Services are not very profitable at present

The German product-centric Business Model

Digital Focus today: Optimize and increase the efficiency of existing processes

New Competition is driven by hybrid Digital Business ModelsBlending of Smart Products and Smart Services creates new competitors

Smart Product Smart Service

12We have seen this before in the Handset Market: Apple vs Nokia/Blackberry

13

Content





14

Pre-empt the new competition by Disrupting Inside-out Leverage Industry 4.0 Smart Services Development by integrating the

Business Model, Organization, Infrastructure & Talents

Disrupting Inside-Out Framework

Business Model

Organization Infrastructure

Smart TalentEcosystem

1

2 3

4

Disrupting Inside-Out Approach

Smart Service Idea

People(Customer)

Smart Products

Smart Services

The Internet of Things, Service &

People(IoTSP)

Industry 4.0 Elements

From passive targets… to dynamic networks

Shift

The Disrupting Inside-Out Ecosystem Building Blocks

15

Business Model: Hybrid Solution Organization: Dual Management

Infrastructure: Digital Team Platform Smart Talent: Global Ecosystem

1 2

3 4

Creating Smart Services with four Ecosystem Building Blocks to disrupt existing markets and create new ones

The Value Ecosystem

Outside Value Creation byInformation & Knowledge

The Value Chain

Inside Value Creation by Material & Energy

Smart Products Smart Services

Linear Business Model Platform Business Model

Smart ServicesSmart Products

Management-driven hierarchy Leadership-driven network

+

+

Lead Lead

Smart Services Smart Services

16

Building the disrupting InsideOut Ecosystem The simultaneous development of business model, organization,

infrastructure and smart talent is key success factor

Integrated Smart Service Development Outcome: Value Based Customer Service

Source: Nike

Best Practice Disrupting Inside-Out Example: Nike Digital Sport

Smart Products

Smart Services

People(Customer)

17

Content





18

Typical Digital Team areas:

• High degree of creative work• Global business areas• Cross-boundary work• Large basic processes• Areas with knowledge gaps

AccelerateEco-Systems

Build the Smart Service Organization

Provide Digital Team Platform

Generate Smart Service Ideas

Design Digital Business Model

The InsideOut Ecosystem building process

1 2 3 4Start here

Disrupt inside out : making it happenLeveraging the Capabilities of the Disrupting Inside-Out Framework to

accelerate the Smart Service Strategy Execution

Design Thinking Iteration

http://intecapps.cloudapp.net:8080/tmgamitliberty/login.do


The Smart Service Strategy: Pipeline of competitive advantages

Start here:Generate Smart Service Portfolio as “Market of ideas” around the Customer

Smart Service Portfolio: The Market of Ideas around the Customer

Example

19

Generate Smart Service Ideas

Start here

Context of Smart Services

Smart Services Portfolio

Act

ivit

y Le

vel o

f Sm

art

Serv

ices

(Co

un

trie

s)

XY

Revenue Potential

(Non)Customer Pain

Art of the Possible

Smart Service Idea

20

Step 1: Design the Digital Business ModelThe Smart Service Growth Engine

Job-to-be-done Sphere

Sales

(+)Compensates

Creates Connects

Consumes

Smart Service Business Model: The Platform

VALUE-UNIT:Smart Services

Company Team

Digital Team Platform

2

Customer Team

SupplyDemand

Design Digital Business Model

1

Art of the Possible (Non)Customer Pain

21

Step 2: Build the Smart Service Organization The Dual Management System

Build the Smart Service Organization

2

80%

20%Task X

Management-driven hierarchy

Smart Products Smart Services

Efficiency & Excellence

Social Marketing

The Value Chain: Nike Example

DigitalProduct Design

Customized Manufacturing

Adaptability & Innovation

The Value Ecosystem: Nike Example

Cross-functional Community• Digital marketing• Digital product innovation• Digital commerce• Digital Technologies• Customer analytics

The hierarchy-network dualism of the organization

Smart TalentsSmart Talents

Leadership-driven network

22

Step 3: Provide the Digital Team PlatformThe Infrastructure as third Operating Dimension

Provide Digital Team Platform

3

The enabling Infrastructure Dimension

Self

-Org

aniz

ed

Creator: Innovation


Smart Factory/ERP

1

23

• Transparency• Cooperation• Feedback• Learning• Coordination

Digital Leadership-driven network

Smart ServiceWork 4.0

Management-driven hierarchy

Doer: Duplication

Co

ntr

olle

d

Role of the employee

Company Infrastructure

Smart ProductsIndustry 4.0

Go

vern

ance

Sys

tem



23

Step 4: Accelerate Eco-Systems

Accelerate Eco-Systems

4

Inside-out scaling of the Digital Team-of-Teams Governance

Governance: Weekly

Activation Sessions

Doing Work in

clear roles

I) Empowered Execution

to act on tensions

II) Joint Consciousness on achieving the goalsJob-to-be-done

Tension drives progress

Community Integrator

Sensing Tensionas Challenges or

opportunities

Governance System

The Goal Lead measures

The Eco-System: Team-of-Teams


24

Build new Smart Services(Example)

Outcome:Integrated Smart Service Development is key factor of success

Patient

Demand

Supply

Non-Consumer

Value Based Health Care

Smart Service Platform

Disrupting InsideOut Process

From 5% market-penetration to

25%…

25

The Advantage of Smart Service Value Creation: Smart Service Business Models create Growth and Profit

Source:Kim, Chan et al: Blue Ocean Strategy, Harvard Business School, 2015Base: 150 global companies in 30 industries

Initiatives

Revenue Impact

The Profit and growth consequences of Smart Services

Profit Impact

Smart Product Initiatives Smart Service Initiatives

86 % 14 %

62 % 38 %

39 % 61 %

Capturing Smart Service Business Model Potential : US Perspective

People(Customer)

Smart Products

Smart Services

The Internet of Things, Service &

People(IoTSP)

From passive targets… to dynamic networks

Industry 4.0 Elements

LeadLead

26

Automotive Engineering

Other Industries

Technology Management Group Profile

Competences- Internet Driven Strategic Changes- Business Development- Accelerating Innovation Process- Mobilizing People in Networks

FactsOffice: München founded 1987

TMG helps companies create, build and launch new digital initiatives from within their organization