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Digital Strategies: Why is this on top of the C-level agenda?

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My presentation for the PLM Innovation Forum in Stockholm, Sweden in October 2017, http://www.plminnovationforum.com/

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Digital Strategies: Why is this on top of the C-level agenda?

  1. 1. Why is this on top of the C-level agenda? October 2017
  2. 2. Halloween in Nashville, 1974 2016
  3. 3. FUNDAMENTAL SHIFT IN STRATEGY MOVING FORWARD INCUMBENT BUSINESS MODELS
  4. 4. If the rate of change on the outside (of an organization) exceeds the rate of change on the inside, the end is near.... -Jack Welch
  5. 5. Digital is the main reason just over half the Fortune 500 companies have disappeared since the year 2000. -Pierre Nanterme, CEO Accenture, 2016 Yet..Digital disruption has only just begun.
  6. 6. Digital penetration has only just begun http://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/the-case-for-digital-reinvention#0
  7. 7. Digitalization pressures revenue and profit growth http://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/the-case-for-digital-reinvention#0
  8. 8. All our knowledge is about the past, but all our strategic decisions are about the future. What we don’t know we don’t know Outside our comprehension What we know What we know we don’t know Conway 2003
  9. 9. Thx to R. Wieselfors, Ericsson for photos
  10. 10. Thx to R. Wieselfors, Ericsson for photos
  11. 11. “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten.” - Bill Gates, The Road Ahead, 1996
  12. 12. 2015
  13. 13. H.I.S. Co. has two Hen’na Hotels run entirely by robots and plans to open 100 hotels. Food deliveries Check-in Automated Tasks Concierge Porters Cleaning Lawnmowing Room Service Robot Trashcan Robot fish
  14. 14. People • “Net generation” • 24x7 “mobile” workforce • Knowledge via MOOCs • Sharing not owning • Sustainability • Gigs and not jobs Technology • Broadband/wifi • Smart phones • Cloud • Internet of Things • Data/ML/NN • Autonomous vehicles • Smart Robotics • VR/AR/Holography • 3D printing/ALM • Blockchains Open Source IP • Software • Hardware • Physibles Convergence of….. Finance • Microlending/microfinance • Crowdfunding/equity/P2P • Cryptocurrencies • Blockchains • Mobile money and payments • M2M and R2R payments
  15. 15. http://marketrealist.com/2016/01/fourth-industrial-revolution-need-know/
  16. 16. Evolution of transportation http://www.slideshare.net/MarketRevolution/shsu-sharing-economy-collaborative-consumption
  17. 17. Technology replacing Energy and Banking http://www.visualcapitalist.com/chart-largest-companies-market-cap-15-years/
  18. 18. Intangible assets 87% of S&P 500 Market Value
  19. 19. The New Multinationals CGE Platform Database with Quid visualization, 2015 Over $3 trillion in firm market cap Selected platform companies Emerging platform clusters 2016 Parker & Van Alstyne, with Choudary – licensed under Creative Commons Attribution-ShareAlike 4.0 International (CC BY-SA 4.0).
  20. 20. FIRM FOUNDED EMPLOYEES MKT CAP BMW 1916 122,000 $56B UBER 2009 7,000 $62B MARRIOTT 1927 200,000 $32B AIRBNB 2008 5,000 $21B WALT DISNEY 1923 185,000 $172B FACEBOOK 2004 15,000 $369B WALMART 1962 2,300,000 $206B ALIBABA 1999 36,000 $241B Adapted from Parker & Van Alstyne, with Choudary, 2016, and updated January 2017 Something fundamental is changing
  21. 21. Design thinking turns needs into demand 22 IDEO “Jobs to be done” – Clayton Christensen
  22. 22. AirBnB sports experiences https://www.airbnb.com/experiences/233
  23. 23. Pipeline – Traditional linear value chain Supply-side economies of scale
  24. 24. Platform-based business models Demand-side economies of scale
  25. 25. Platforms leverage Network Effects Value rises as more people use the platform
  26. 26. Interpersonal trust Institutional trust - brand Institutional trust – platform Enabling trust between strangers 1rst 2nd 3rd Changing nature of trust
  27. 27. Exploitation Improving existing value creation activities Exploration Developing new value creation activities Adapted from March 1991
  28. 28. Banking is essential, but banks are not. Bill Gates
  29. 29. From the north of Sweden
  30. 30. Crowd equity financing enabling new entrants
  31. 31. Elio Motors becoming a reality https://www.eliomotors.com/
  32. 32. Community platform Hierarchicalfirm VS E.g., Ford ~ Created by employees within organizational boundaries E.g., Local Motors ~ Created by community collaborators regardless of affiliation Teigland, Di Gangi, & Yetis 2012 The Flipped Firm: New model of value creation?
  33. 33. “Local Motors is the place for people to create influential vehicles together.” • 100xs lower capital cost • 5xs faster production
  34. 34. Local Motors to print 3D cars in its micro-factories
  35. 35. Olli - 3D printed autonomous vehicle with IBM Watson https://www.3dprintingbusiness.directory/news/local-motors-prepares-serial-production-ollie-3d-printed-smart-vehicles/ From 25-30,000 parts to 50 parts
  36. 36. Point of Demand: Local and mobile factories Integrating offline and online communities Arizona Maryland Tennessee Germany
  37. 37. No one owns everything, Everyone owns something, all resources reside in networks. Adapted from Lévy 1997Image: Krebs Access, not ownership
  38. 38. FUNDAMENTAL SHIFT IN STRATEGY MOVING FORWARD INCUMBENT BUSINESS MODELS
  39. 39. MANY INCUMBENTS HAVE UNLOCKED THE VALUE OF DIGITAL…
  40. 40. Omnichannel Business -”Life events” -Own customer relationship -Multiproduct, multichannel -Integrated value chain e.g., ING, Schindler Supplier -Products/services -Sell through another -Low-cost producer -Incremental innovation e.g., Sony Ecosystem Driver -One stop destination -Branded platform -Great customer experience -3rd party plug’n plays -Matchmaker e.g., Amazon, John Deere Modular Producer -Ecosystem plug’n play -Niche plug’n play -Adapt to ecosystems -Continuous innovation e.g., Paypal MIT study: Four incumbent digital business models Weill & Woerner 2015 Needs Life Events Demographics Purchase history Control over decisions on brand, price, quality, etc. * 32% Higher growth * 27% Higher profit margin
  41. 41. Betting on “The winner takes all” Immelt’s goal: “A top 10 software company” by 2020 • Predix: USD 1 bln investment • Open-source model, e.g., Android • 19,000 developers + 3rd party developers • Software building blocks (e.g., blockchain)
  42. 42. CDO From elevators and escalators to “Moving humanity digitally” -Digital Officer
  43. 43. Many new data platforms emerging yet the winner will be the one that turns insight into customer productivity and efficiency
  44. 44. Separate unit with 17,500 software engineers and 160 data scientists Connects over 300,000 devices, e.g., wind turbines, buildings, trains Higher availability, improved performance and security, and decreased costs Increased ability to innovate products and services Connectivity Innovation Customer Outcomes Big data analytics Source/Adaption: https://www.siemens.com/digitalisierung/public/pdf/Sinalytics-and-Digital-Services-Presentation.pdf Know-how Siemens’ Sinayltics platform
  45. 45. B2B digital leaders: 5Xs more revenue growth than their peers B2B B2B2C Leadership • Commit to digital at strategic level • Create culture anchored on innovation and execution • Shake up organizational structure and metrics to support digital aspirations Digital operational excellence • Create consistent online and offline experiences • Enable and empower sales force through data • Improve insight and decision making through end-to-end connection of processeshttp://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/how-b2b-digital-leaders-drive-five-times-more-revenue-growth-than-
  46. 46. FUNDAMENTAL SHIFT IN STRATEGY MOVING FORWARD INCUMBENT BUSINESS MODELS
  47. 47. Exploitation Improving existing value creation activities Exploration Developing new value creation activities Adapted from March 1991
  48. 48. Crowdfunding of revenue generating machines (IoT assets) with blockchain technology https://mybit.io/
  49. 49. http://marketrealist.com/2016/01/fourth-industrial-revolution-need-know/
  50. 50. Decline in routine jobs, even after recovery H. Siu (Univ of BC) & N. Jaimovich (Duke Univ), 2015
  51. 51. All jobs have been created within non-routine Food service Housekeeper Programmers Data scientist Admin Assistant Manufacturing
  52. 52. Jobs that did not exist in 2006  App developer  Social media manager  Uber driver  Driverless car engineer  Cloud computing specialist  Big data analyst/data scientist  Sustainability manager  YouTube content creators  Drone operators  Millennial generational expert https://www.weforum.org/agenda/2016/06/10-jobs-that-didn-t-exist-10-years-ago/
  53. 53. Trading one job for a number of “gigs”…
  54. 54. Rethinkery enables the AI CEO through “work looking for people” on Upwork
  55. 55. “Flash organization” created with Foundry staffing Upwork freelancers Valentine et al., 2017, http://hci.stanford.edu/publications/2017/flashorgs/flash-orgs-chi-2017.pdf
  56. 56. Knowledge through MOOCs (Massively Open Online Courses)
  57. 57. Self-employed by Firms
  58. 58. Rethinkery enables the AI CEO through “work looking for people” on Upwork
  59. 59. From offices to…
  60. 60. “Third Places” and co-working spaces
  61. 61. Sharing economy for workspace? http://www.bbc.com/news/business-35246320
  62. 62. Hoffices – a Swedish concept gone global
  63. 63. Increasing forces for local community and circular economies
  64. 64. Global DIY microfactory networks enable circular economies
  65. 65. Digitalizing distributed ownership with no central actor other than a computer network?
  66. 66. Smart cities and microgrids Brooklyn Microgrid aims to create a local, neighborhood- powered grid that could operate in parallel to the main grid. One of the appeals of a microgrid is its potential to provide electricity to homes even if the main grid goes down. -NPR
  67. 67. http://marketrealist.com/2016/01/fourth-industrial-revolution-need-know/
  68. 68. No one owns everything, Everyone owns something, all resources reside in networks. Adapted from Lévy 1997Image: Krebs Access, not ownership
  69. 69. The role of universities?
  70. 70. Digitalizing the Investor network
  71. 71. Tremendous progress
  72. 72. Knowledge through MOOCs (Massively Open Online Courses)
  73. 73. What progress is this? https://sv.wikipedia.org/wiki/Handelsh%C3%B6gskolan_i_Stockholms_historia
  74. 74. Changes in the top 10 skills
  75. 75. https://www.wsj.com/articles/how-to-manage-robots-and-people-working-together-1433301051
  76. 76. Learning soft skills
  77. 77. Facilitating innovation at a makerspace at Georgia Institute of Technology https://smartech.gatech.edu/bitstream/handle/1853/53813/a_review_of_university_maker_spaces.pdf
  78. 78. Enabling problem-based learning Asmen Gül <asmen@kth.se>
  79. 79. Exploitation Improving existing value creation activities Exploration Developing new value creation activities Adapted from March 1991
  80. 80. If replace 1000 workers with one more robot Data from 1990 to 2007 in the USA 1) Employment to population ratio down by 0.18-0.34 PPt 2) Wages down by 0.25-0.50% D. Acemoglu (MIT) & P. Restrepo (Boston Univ), Robots and Jobs: Evidence from US Labor Markets 2017, Natl Bureau of Economic Research Working Paper.
  81. 81. • Automation • Globalization • Rising productivity of select few -Ryan Avent Increasing social responsibility An increasing abundance of labor
  82. 82. “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten.” - Bill Gates, The Road Ahead, 1996 Scenario Thinking
  83. 83. Robin Teigland robin.teigland@hhs.se www.slideshare.net/eteigland @robin.teigland If you love knowledge, set it free… If you like this presentation and would like to contribute to our research, we accept bitcoins: 14hs4JbnQLXE87GGzu84uXGaspmxmnLpwC. Thank you!!!!!

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