Factories Are Becoming Innovation Platforms

Heavy industry with its rigid processes has a reputation of being an antithesis of dynamic startup world. People think that a factory does not exactly perform agile pilots but stays the course dictated by its huge investments. This image is somewhat outdated.

Factories are becoming innovation platforms where several stakeholders can develop and try out new things. One central enabler for these activities is the Internet of Things (IoT). Furthermore, wireless networks, augmented reality, big data, or even artificial intelligence can create significant added value in a factory setting. Bringing these technologies to factories in an agile fashion is very attractive for startups.

Cooperation between heavy industry and startups requires planning and facilitation. A large corporation operates differently than a small company of two or three people, there’s no denying of that. Investment capabilities are on a completely other level, planning cycles differ, as do the capabilities for pivots. The most important thing to address is whether the factory and the startup both can identify enough business potential in their cooperation.

It is crucial to reach a situation where the risks and the benefits of cooperation are in a good balance for all participants. This way the “factory – IoT company mismatch” can be avoided. Together the consortium can pinpoint the grand challenges and go about solving them together. This is a three-step process:

  1. Scale-in: identifying the grand challenges and solving them with new technologies and pilots
  2. Scale-up: expanding the pilot results and new operating models throughout the factory
  3. Scale-out: exporting the new processes and operating models to other factories in Finland and abroad

It is not free to set up this kind of a program. A common goal is necessary but not enough; funding and risk-taking is also needed. To get things rolling, funding for pilots and business model development is a must.

Running a program like this in one factory costs roughly a million euros annually. This lump sum includes factory’s own projects, project coordination, and research modules supporting the projects. Part of the investment comes from the factory itself, part from public funding institutions like Tekes. Coordination and research is carried out by VTT and universities.

If planned and constructed well, an ecosystem as described above would create a virtuous cycle: startups expand their operations and get important references, factories obtain new innovations and operating models, and research institutions have an environment for validating their technologies. Finally, Finland will have new business to export.

Read more at: www.vttresearch.com/services/smart-industry

Marko Jurvansuu


Marko Jurvansuu
Principal Scientist, VTT

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