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)

Yksi slide tulevista surveystä ja haastatteluista joka presataan panelin jälkeen

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