Utilizing data and platforms — how SMEs can benefit from the opportunities offered by digitization

Michael Hilb
Feb 9 · 3 min read
Christoph Ruckstuhl NZZ

The waves of digitization cannot be ignored by the “old” industry. “Datafication” and “platformization” are the key developments. They are increasingly becoming the key value drivers — especially for SMEs.

Digitization seems to be gradually catching up with all sectors of the economy, including industry. And indeed, the transformation in the various industries follows similar rules. Datafication and platformization are the key developments. Data is increasingly becoming a key value driver, even in industry.

The added value arises from the collection of data by sensors as well as the use of artificial intelligence in development, production and sales. In turn, platformization is fundamentally transforming industrial logic: away from traditional value chains to integrated ecosystems where partnering with companies from different industries becomes a competitive advantage.

Advantages thanks to experience advantage

In addition to the above parallels, there are some important distinguishing features in the industry that are of benefit to them. Even in a fully digitized world, the physical is needed, albeit in a different form. The physical products become part of the internet of things. In addition, digitization is nothing new for many industrial companies. Digital twins, robots and sensors have been used successfully for decades and constantly developed. Above all, however, industry is already “industrialized” to a large extent, which means that the processes are largely standardized and automated — important prerequisites for successful digitization.

China, the US and the EU have recognized that competitive advantages in the future will depend more on data flows and less on flows of goods.

Nonetheless, there are many challenges to overcome. Speed as a key competitive advantage in the digital economy is not always compatible with the optimization and perfection culture that prevails in many engineering-focused companies. Although the industry already has considerable experience in robotics or sensor technology, other digitalization capabilities are increasingly in demand, especially in the field of analytics and artificial intelligence. In addition, the transformation of many industries into ecosystems requires openness to partnerships and cooperation, which is not always fully developed, especially in successful companies with strong culture.

Even with the best conditions, the industry is not immune to external developments. As customer industries such as the automotive industry are also undergoing profound changes, industry is challenged to anticipate and find its position in the new ecosystems at an early stage. It is also important to define the relationship with the tech industry, which, because of its sheer size and availability of capital, can make huge investments in future technologies such as artificial intelligence. The handling of data increasingly calls the state on the scene, which also geopolitical considerations come into play. China, the US and the EU have recognized that future competitive advantages will primarily derive from data flows and less from flows of goods.

Differentiated use of future opportunities

Against this background, it is important to look at the future scenarios for industry in a differentiated manner. In that context, it will be crucial to identify which digital skills are to be acquired via the market, which are should be developed in partnerships and which ones have to be developed independently.

The tremendous investment that is currently being made in research and development by digital players, primarily in the field of artificial intelligence and distributed networks, means that many ready-to-use applications will be available to industry in the near future. On the other hand, there will also be many areas that can only be developed in close cooperation with partners, be they suppliers, customers or research institutions. Here industrial companies are predestined to take a leading role if they focus on their core competences. Finally, there will also be technologies in which industry must position itself as an integrator so as not to become marginalized.

Digitization is thus an opportunity, above all, for agile, globally oriented companies with strong industrial competence, affinity for technological developments and cultural readiness to change, since they will benefit more than others from the commodification of future technologies as well as the emergence of new digital ecosystems.

Michael Hilb is an entrepreneur, titular professor at the University of Fribourg, Switzerland and member of various supervisory boards and expert committees.

This article appeared in German in the NZZ on August 24, 2018.

Michael Hilb

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Entrepreneur, Board Member and Professor | hilb.com

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