Today, Siemens is organized into 10 divisions, most of which offer highly complicated products.
The company is putting lots of time, effort, and talent into marrying information technology to the process by which it designs, builds, and delivers its highly sophisticated products. To a large degree, the company is already operating digital factories.
But then again, the ones who survive will change the world
There are two aspects to managing today. The information comes faster and is more accessible than ever before. Thereâ€™s a lot of data, and the challenge is how to prioritize information.
The second aspect to managing: How do you manage your company using the data you collect? Thereâ€™s a technocratic approach in which you look at the numbers. But by the time you get the numbers, itâ€™s too late already because the numbers only reflect what happened in the past.
But in a business like ours, which has cycles from two to seven years, itâ€™s much more important to understand the markets. How do we recognize early indicators of a changing world?
. So today, we build manufacturing automation lines and design processes before a manufacturing plant has been built.
And when we simulate processes in manufacturing and in engineering, in R&D, we can go from destructive to nondestructive testing. Together with Boeing, we simulate the whole development and engineering process for new airplanes. And then, we [do simulations that test] whether the airplane can fly or not.
People say they are getting the data from their customers. But when I ask who and what is providing the data, they respond, â€œItâ€™s the machines and stuff.â€ E
And thatâ€™s what many people donâ€™t understand when they talk about the Internet of Things or open platforms. â€œIâ€™ve got data, but why would someone pay me for that data?â€
It changes the relationship massively because data analytics gives a company a lot of information [it can use] to optimize and shorten the value chain.
You can cut out different links of the value chain. And the links that get cut out provide the least value in the value chain. And thatâ€™s what you need to understand. â€œWhere am I in the value chain? How can I remain a strong link by providing more value than anyone else in there?
We created that term â€” business to society â€” because we have B2C (business to consumer) and B2B (business to business) offerings. But we are a business that contributes to societyâ€™s development in the world,
Our perspective is that we now sell solutions, applications, and comprehensive systems as opposed to just selling the product.
Industrie 4.0 is the German version of the first generation of manufacturing automation.
Industrie 4.0 basically takes the cost of scale close to zero.
We use a lot of 3D printing already.
If you shorten the value chain by cutting out links, as we discussed earlier, it results in lower cost, and that means fewer resources are being used.
This is just the way it works. Furthermore, the remaining human resources will need different skills than blue-collar workers used to have.
. People will still be in the factory, but they will doing different work than they used to.
By tearing down the cost barrier, you enable more people to afford it and thus you secure growth.
And the reality is that we donâ€™t know the outcome [of these technological advances].
What do we mean by platform? I particularly like this definition by MIT Professor Michael Cusumano: â€œA platform or complement strategy differs from a product strategy in that it requires an external ecosystem to generate complementary product or service innovations and build positive feedback between the complements and the platform. The effect is much greater potential for innovation and growth than a single product-oriented firm can generate alone.â€
What do we mean by platform?I particularly like this definition by MIT Professor Michael Cusumano: â€œA platform or complement strategy differs from a product strategy in that it requires an external ecosystem to generate complementary product or service innovations and build positive feedback between the complements and the platform. The effect is much greater potential for innovation and growth than a single product-oriented firm can generate alone.â€
The importance of platforms is closely linked to the concept of network effects – the more products or services it offers, the more users it will attract
The power of platforms has grown even more dramatically over the past decade, with billions of users now connecting via smart mobile devices to all kinds of cloud-based applications and services.
Innovation platforms serve as the foundation on top of which developers offer complementary products and services.
Transaction platforms help individuals and institutions find each other, facilitating their various interactions and commercial transactions.
A few large companies offer the capabilities of both transaction and innovation platforms in their integration platforms.
Finally, some of the companies included in the survey are essentially investment platforms, who have invested in, and/or are managing a portfolio of platform companies.
Asia has the largest number of platforms, but the US leads in aggregate market value.Of the $4.3 trillion total global valuation, US platform companies comprise over 70%, compared to Asiaâ€™s 22% and Europeâ€™s 4%.
Platform companies are major drivers of innovation.The top such companies, – e.g., Amazon, Google, Facebook, Apple, – are setting the standards for the digital transformation taking place around the world.
â€œApproaches to platform governance must also consider the way value is created.While traditional business models would incent managers to maximize the price of each product or services, different approaches are needed to manage platformsâ€¦