When your industrial business is about to change dramatically, don’t try to survive alone

Amazon, Uber and Airbnb are often mentioned examples of disruptive innovations. They also are so-called “platform ecosystem models”.

First, we must realize that companies like Amazon are operating in a very different playground and have much shorter development paths than the traditional industry actors. Because of path dependency, the challenge of disruption is huge in established companies compared to newcomers.

Disruptive innovation = Business model + Technology + Agility

Transformation requires a business model that links new technology to an emerging market need. Within industrial ecosystems, disruptive business models are driven by the emergence of data-driven economies as well as servitisation, i.e. offering operational excellence

In order to renew, and survive, an organization needs to balance stability and change. Business disruption requires changes in the organization’s processes – at the same time it requires changes in the capabilities of individuals. Especially it requires a well-grounded understanding of the wider ecosystem – which enables turning disruptive technologies to novel business models together with new partners, for new customers, while the playground is changing. Success in global competition of industrial ecosystems requires deep understanding of customer value, an ability to utilize technological developments in products and services, and renewal of operations with digitalization.

valkokari_katri_kuva

Transformation requires co-evolution of ecosystem

The disruption means that the future structure and paths of change are always unknowable and actors need tools to understand how these systems co-evolve, while their actions – both intentional and emerging – are connected to each other. The forerunners need agility to change their path. Just ask yourself: are you able to kill your well-planned business model within a week – and create a new one the week after that? And with whom you should scan the new opportunities arising from technology?

Future is built together – and we are here to help you

Key for ecosystem composing and orchestration is to generate shared meanings together with key actors. This becomes crucial – so does the need for effective boundary spanning when parties have different interests and those interests collide.

Finland with high innovation capability and skilled workforce is in a strong position to be a frontrunner in the next generation manufacturing and service business. VTT supports this transformation of Finnish industrial companies.
Katri Valkokari
Katri Valkokari
Research Manager
katri.valkokari(a)vtt.fi
Twitter: @valkatti

Rebirth of manufacturing in the digitalized world

Manufacturers need to change rapidly because digital technologies are disrupting not only the way to do business and to collaborate with customers but also the manufacturing supply chains and manufacturing operations. If manufacturing truly adopts the next ware of digital technologies, productivity will explode.

According to IDC FutureScape Worldwide Manufacturing Predictions 2018, already by 2020, 60% of manufacturers will rely on digital platforms, which will support as much as 30% of their overall revenue. By 2021, 20% of the top manufacturers will depend on a secure backbone of embedded intelligence to automate large-scale processes and speed execution times by up to 25%. The main innovation accelerators are:

* IoT
* cognitive computing
* next-generation security
* 3D printing
* robotics, and
* augmented and virtual reality.

Furthermore, cognitive technologies will drive towards highly automated supply chains with optimized asset utilization.

Productivity explodes

The speed of the change predicted is huge. Can we understand what this actually means for industry? For quite some time, productivity has been stagnated or only slowly increased. One of the reasons is that the current digitalization development has reached a mature level, where most of our practical operations work well even when using slightly outdated computers, smart phones, software and connections. Advances in such technologies do not necessarily add much to effectiveness or disrupt current operations.

The next, already ongoing, wave of digitalization (IoT, big data, digital platforms etc.) is different. We are witnessing the convergence of digital and physical worlds where decision-making is based on full situation awareness and where actions are optimally automatized. As traditional sectors, such as manufacturing, truly adopt the next ware of digital technologies, productivity will explode.

Customers and ecosystems are central

This is a great opportunity for agile actors to make manufacturing in high-cost countries profitable again. It also enables true customer-centricity where consumers’ and users’ individual needs are followed and future desires anticipated.

As a result of the increased overall efficiency due to the adoption of digital technologies, automation and material and manufacturing innovations, unique products can be produced with mass production efficiency. Cognitive technologies support fast product introductions and delivery, which in turn increase customer satisfaction and profitability.

Those companies that want to belong to the 60% share of manufacturers that adopt digital platforms by 2020 to support their business, need to act. The change is hardly carried out alone but in ecosystem with other companies and partners.

At VTT, we study and develop digital platforms, cognitive methods, robotics and many other enabling technologies in manufacturing context. A VTT-funded strategic project on Cognitive Factories has been started and companies are welcome to join. We also continue to define digitalization pathways for manufacturing companies in a European project Connected Factories where input from Finnish companies is gathered. Would you like to know more? Please contact us. We step forward to support the manufacturing companies in the rapid and profound change.

Read more: VTT Lighthouses – Industrial Renewal
image
Riikka Virkkunen
Manager, Digitalising industries
riikka.virkkunen(a)vtt.fi
@VirkkunenRiikka

How can industry be included in the sharing economy?

With the success of innovative ventures such as the carpooling platform BlaBlaCar, and the shared office environment WorkAround, the sharing economy is turning into a booming business for B2C. The concept of sharing  goods and services is perfectly suited to consumers who would rather handle their business themselves than go through a middleman. But how would it be possible to get the B2B sector involved?

The Ministry of Economic Affairs and Employment estimated that the sharing economy in Finland will be worth (TEM 9/2017) 1.3 billion euros in 2020. Based on the report, the biggest sectors are crowdfunding, peer-to-peer mobility and car sharing, and household management and other micro tasks.  These calculations are strongly based on the current situation in which the sharing economy is mainly B2C business. However, there is one area that seems to be lagging behind B2C when it comes to the sharing economy: B2B.

 

Sharing economy refers to a common or communal economy that includes the production, consumption and use of commodities. It is based on temporary access instead of ownership, by utilizing the development of technology and the popularity of social media, such as sharing platforms. Since the B2B sector does not function on the same peer-to-peer business model that suits B2C, it makes sense that this sector has not yet seen as much success in the sharing economy. Different drivers, such as the economic situation, facilitate the need to share. Furthermore, change of mindset and existing practices in companies towards the sharing economy require progress, which can be challenging and take time. However, as technology develops, the B2B sector is looking to evolve in a way that will also allow it to partake in the lucrative sharing economy. The long-term vision is that current industrial value networks will evolve into business ecosystems in which the resources of individual companies can be shared on demand, making the network more responsive and efficient.

Platforms as enablers

The platforms are enablers for the B2B sharing economy. New business rules of the platform economy include generating network value, enabling of scale-up, and asymmetric competition in which companies pursue market opportunities with different resources and approaches. The ideal platform ecosystem in the B2B sharing economy includes 1) external resource orchestration instead of controlling internal resources, 2) external interactions between producers and customers instead of internal optimization, and 3) focusing on ecosystem value instead of on individual customers. The sharing business models are often triadic models consisting of a service enabler (platform), a service provider (supply / owner) and the customer (demand / seeker).

share_eng

Unique business models that maximize the utilization of idle assets differentiate the sharing economy from traditional business models. Most sharing economy businesses use online platforms or applications for collecting and sharing real-time data, and maximizing the use of assets. Based on the platform guidelines, digital leaders design and optimize platform ecosystems that scale exponentially without incurring the diminishing returns typically associated with traditional business models. The shift towards sharing economy business models is a big step for traditional companies, and new knowledge is needed to advance the transformation.

Benefits and challenges in the B2B sharing economy

Capture_eng
SHARE -research project

B2B sharing economy in the industrial context is researched in the SHARE -research project. The aim of the project is to create and demonstrate a digital sharing platform concept for a circular economy business ecosystem in which collaborating industrial organizations can easily co-innovate and share knowledge, production capacity, resources, services and logistic networks through interoperable systems, connected intelligent objects and blockchain technology. We are designing a set of rapid experimentations and initial solution designs for a sharing economy platform, testing and analyzing the designed solutions and analyzing in-depth sharing economy experiments. We are also organizing a series of workshops for advancing sharing economy knowledge and solutions, and analyzing business potential opportunities and business models.

For more information, please visit: www.vtt.fi/share

Salla Paajanen
Research Scientist, VTT
salla.paajanen(a)vtt.fi
Twitter: @PaajanenSalla

Anna Aminoff
Senior Scientist, VTT
anna.aminoff(a)vtt.fi
Twitter: @AminoffAnna

Maria Antikainen
Senior Scientist, VTT
maria.antikainen(a)vtt.fi
Twitter: @MariaAntikainen

This is the first text of a blog series addressing topics related to the SHARE -research project.

Alustat eivät ilmesty tyhjästä!

Kohti uusia ja radikaaleja liiketoimintamahdollisuuksia digitaalisilla alustoilla: Ei ole olemassa yhtä ainoaa tietä menestykseen vaan reittejä on monia!

Alustojen ytimestä löytyvät tuotteet ja palvelut, jotka liittävät toimijat yhteen – kohti saumattomia asiakaskokemuksia. Nämä saumattomat palvelukokemukset tuottavat tietoa, joka voi jaettuna, integroituna, tai analysoituna luoda uusia liiketoimintamahdollisuuksia alustan omistajalle ja liiketoimintakumppaneille.  Useiden alustojen ja niiden digitaalisen vuorovaikutuksen rajoja ylitettäessä syntyy lisää tietoa – laajaa dataa – joka mahdollistaa monimuotoisen tiedon integroimisen. Haluamamme radikaalisti uudenlaiset liiketoimintamahdollisuudet odottavat eri tietoaineistojen ja tietolähteiden yhtymäkohdassa. Mutta kuinka tavoitteeseen päästään?

Digitaaliset alustat ovat paikkoja digitaaliselle kanssakäymiselle ja ne koostuvat erilaisista arvoa tuottavista rakennuspalikoista.  Näiden rakennuspalikoiden on toimittava yhdessä! Niin kutsuttujen rajaresurssien täytyy mahdollistaa saumaton tekninen ja yhteistoiminnallinen vuorovaikutus. Jos siis tarjoamasi saumaton asiakaskokemus hyötyisi täydentävistä mikropalveluista (microservices), niin niiden tulee olla käytettävissä ratkaisuunne yhteensopivien ohjelmointirajapintojen (API) kautta.

Tarkistuslista

Jos et ole tutustunut alustaratkaisujen vuorovaikutuksen ja rajaresurssien tärkeyteen, ota ensimmäinen askel oheisen tarkistuslistan avulla! Se perustuu tutkimustyöhön, teollisuuden ja muiden sidosryhmien näkemyksiin ja kokemuksiin sekä Suomessa että muualla.

  • Mikä on se ongelma, jota olette ratkaisemassa alustoilla?
  • Millaiseen vuorovaikutukseen haluatte osallistua?
  • Mikä on vahvuutenne?
  • Oletteko valmiita globaaliin toimintaan?
  • Missä kohtaa digitaalista evoluutiota olette tällä hetkellä?
  • Oletteko määritelleet tekniset ja yhteistoiminnalliset resurssinne?
  • Miten osaatte tarttua ohjelmointirajapintojen tarjoamiin liiketoimintamahdollisuuksiin?
  • Miten osaatte tukea ei-teknisiä rajaresursseja?
  • Mikä on skaalattavuustavoitteenne?
  • Onko teiltä datastrategia?
  • Millainen on alustanne ekosysteemi?
  • Millainen toimija haluatte olla perustuen resursseihinne ja verkostoasemaanne?
  • Oletteko miettineet asemaanne alustaekosysteemissä?
  • Tiedättekö mistä lähteä liikkeelle – ja kuinka edetä?

Lisätietoa aiheesta löytyy julkaisusta: Platform Economy Interactions & Boundary Resources

Ajattelun muutos

Digitaalisten alustojen myötä pelin logiikka on muuttunut, eivätkä kaikki toimijat voi omistaa tai tarjota alustoja. Ei siis ole olemassa yhtä ainoaa tietä menestykseen!

Tutustu myös aiempiin alustoja koskeviin postauksiin:

Alustaekosysteemi määrittelee uuden talouden keskeiset tekijät

Avoimuus on avain alustatalouteen

Kaikki liittyy alustoihin – ja alustat kaikkeen

 

Katri Valkokari
Katri Valkokari
Tutkimuspäällikkö, VTT
katri.valkokari(a)vtt.fi

 

marko-seppänen-3
Marko Seppänen
Professori, TUT
marko.seppanen(a)tut.fi

 

vttblog_kaisa_still_marko_seppanen_katri_valkokari_crop
Kaisa Still
Erikoistutkija, VTT
kaisa.still(a)vtt.fi

Finland could be the next Silicon Valley: Lessons from Silicon Valley – speed, flexibility and boldness

piilaakso

Silicon Valley is a great place to see first-hand how technology can be turned into success stories. As a small, pilot-scale country and a pioneer in digitalisation, Finland is in an excellent position to take advantage of the growth opportunities presented by technological development.

I had the pleasure of attending the Silicon Valley Experience 2017 event in September. The momentum there is certainly mind-blowing. And thankfully also inspiring. I want to take this opportunity to share my experience with you and draw a few comparisons between the atmosphere in Silicon Valley and Finland’s current situation and possibilities.

Time is not your friend in innovation

Are we quick enough and does our culture encourage experimentation?

Finland has given birth to a wonderful start-up culture, with organisations such as Aalto University leading the way through the transformation. Thumbs up to them. We are on the right track. However, we need to be bolder and throw ourselves into new things even faster and on a more international scale.

How can we inject this same enthusiasm into larger corporations as well?

We were introduced to the philosophy and business of two Silicon Valley enterprises that still consider themselves start-ups. Google and Facebook are both growing at a rate of tens of thousands of employees per year. However, their corporate cultures are firmly rooted in open-minded experimentation, and the staff are led on the basis of targets and results, not procedures.

In our own work community, we made a decision to devote even more energy to the cultural transformation:

  • Setting ambitious goals and making sure that they are reached, but with freedom in the implementation.
  • Fewer written plans and reports.
  • More flexibility, learning and choices.
  • The first step was a decision taken by VTT’s management team there and then to radically revise the way we approach innovative research.

Thumbs up to us! 🙂

I am personally very keen on the idea that you need to be leaning forward by so much that you have no choice but to run. Otherwise you fall flat on your face.

Pay it forward

Would we Finns be able to work together in a new way?

In Silicon Valley they believe that altruistic good deeds come back to you when needed.

We know that there is immense potential in new ecosystems, i.e. organisations’ partnership networks, and their disruptive value networks. This refers to new technology that transforms business and markets by making old technology, techniques or business models redundant. As a small, pilot-scale country and a pioneer in digitalisation, Finland is in an excellent position to take advantage of these opportunities. This requires the courage to put enough data into circulation.Think about all the new start-ups and services that could be found in the gaps! Surely everyone, or at least enough people, would ultimately win. I cannot see anyone suffering great losses in any case.

Are we bold enough to throw ourselves in with different partners and see what happens? Without demanding too linear and short-term a return – paying it forward.

Artificial intelligence changes everything: “50% taking action”

Artificial intelligence, machine learning and virtual reality. Almost every message centred around these concepts. Silicon Valley is a firm believer in the role of new technologies in bringing about the next big transformation since the internet.  This is evident in absolutely everywhere.

To summarise a lesson from Google: 1.7 megabytes of new data are created every second for every person on the planet. By 2020, the speed of data creation will be 44 times greater than in 2007. While today the focus between data accumulation, reporting and analysis is split at a ratio of 50/40/10, in the very near future “taking action” will account for 50% and data accumulation and reporting for only 20%.

Finland’s big chance definitely lies in applying artificial intelligence. Google alone spends more than Finland’s national budget on the development of core artificial intelligence technologies. We have strong domain know-how (e.g. autonomous systems, smart energy, health, the forest value chain). We are top experts and users of digital technology, and we have a culture that fosters broad-based cooperation.

How could we create an opportunity for world-class innovation ecosystems that are carried by a culture of experimentation to be born in Finland? How could we give just enough support to networks to overcome the initial friction and get moving? We already have the building blocks. Innovation ecosystems are practice platforms. Now is the time to launch them!

The focus of Silicon Valley has widened, and the cost of being based there has got out of control. This could be a sign of an approaching Big Bang. How about we get our hooks in now? And not wait until tomorrow. Finland could be the next Silicon Valley!

A big thank you to Boardman and #SVExperience17 for the wonderful Silicon Valley 2017 experience!

Erja Turunen VTTErja Turunen
Executive Vice President, Smart Industry and Energy Systems
Cell +358 50 380 9671
erja.turunen@vtt.fi
Twitter @turunen_erja

Has a new money spinner been found – can big data be turned into business?

A few weeks ago, Mika Toikka, Vice President, Sales and Business Development, reminded us in our blog how big data provides a multitude of answers, but you also need to remember to consider your questions carefully. Research Manager Katri Valkokari continues on the same subject, presenting different business benefits big data could offer.

Data is the new oil, and the possibilities of data economy are limitless. However, to seize the opportunities you must be able to identify the data that is essential for your business operations from among the data available via various sources (e.g. IoT data, customer/CRM data, service log data, data from public sources).  In addition, you need understanding of the validity of data and the possibilities of analysing it from the perspective of both the company’s internal and the customer’s development needs.

Even more important for finding new opportunities is asking the right questions, asking why and what kind of data or information you need, what you are aiming at with the data and where can you acquire the data you need. You should also boldly consider what you do not yet know, and thus identify which data you are still missing and what kind of new data sources could be used.

To find new business opportunities you rather need to combine several different data sources than more of similar data or deeper analysis of the existing one. In other words, you should consider wide data in addition to big data. In Figure 1, the process of use of data summarises the main phases that explain why data is needed (understanding the current state and forecasting the future trends), and how and for what it is used (choices and decision-making).

Use of big data

 

When the strategic goal for use of data is to identify new business opportunities, the viewpoints for questions and answers presented in Figure 1 include the following:

  • Increasing customer understanding and finding leads
  • Identifying potential customers and markets
  • Forecasting trends within the sector and collecting competitor information, as well as forecasting the future customer needs
  • The benefits provided by use of various data sources for the identification of new innovations or business opportunities
  • Development of the processes for use of internal data

Katri Valkokari VTT

Katri Valkokari
Research Manager
Twitter: @valkatti