Digital or Dead! Our section for the megatrend.

Hardly anything embodies as much potential for innovation and growth as digital intelligence. And there is little else that will effect as much change: business models, rules of the game, competition.

FAQ Digital Transformation and Artificial Intelligence

 

101 Questions – 101 Answers

 

 

 

Many firms that were once successful have been marginalized by competitors, and such an evolution may potentially affect the majority of large established companies in many sectors. The underlying reasons for this threat are the trends towards digitization, the Internet of Things, Industry 4.0 and artificial intelligence. Consequently, most firms simply do not have a choice. They need to respond by means of digital trans- formation. By now, most firms are aware of the challenges, but they struggle with developing appropriate strategies and managerial responses.

 

Hardcover: 122 pages
Publisher: ILI CONSULTING AG; 1. Edition (May 2017)
Editor: Dr. Serhan Ili, Dr. Ulrich Lichtenthaler
ISBN: 978-3981879100

 

DAX 30
Death by Digital Disruption?

 

The findings of our survey of the German DAX 30 corporations underscore the importance of innovation and digitization in these firms.

 

The findings of our ‘Death by Digital Disruption?’ survey of the German DAX 30 corporations underscore the importance of innovation and digitization in these firms. Both activities are becoming increasingly inseparable, and they are the keys to sustaining superior financial performance over time. Experts from all 30 DAX corporations participated in the survey, which is complemented by insights from additional interviews of experts, and by our project experience. Moreover, a peer evaluation by industry experts identifies the top five digital transformers among the DAX 30 firms.

 

> Download DAX 30 ‘Death by Digital Disruption?‘ Study

 

 

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Infographic about digital transformation in German enterprises


DIGITAL OR DEAD BOOK

How digital transformation opens up blue oceans to survive in the future.

Digital initiatives need to fit into the corporate environment in three ways. First, a digital initiative needs to work on paper. Second, it needs to work in the market. Third, it needs to work by growing a firm’s bank balance.

 

To fully profit from digitization, firms need to develop digital intelligence. This is the central capability needed to gain digital momentum and to facilitate a game change.

 

The book shows in a practice-oriented way how leading firms manage innovation, digital transformation, and disruptive business models. It includes contributions by renowned experts at innovative firms, such as Allianz SE, Cisco Systems, comdirect bank AG, Deutsche Lufthansa AG, Evonik Industries AG, Oracle, Terex Corporation, TRUMPF GmbH + Co. KG, Turkish Airlines, and Volvo Car Group.

 

Doç. Dr. Temel Kotil, CEO, Turkish Airlines: “The digital tsunami is

going to deeply affect every industry.”

 

Doris Krüger, Senior Director Future Innovation Strategy and Member of Group Supervisory Board, Deutsche Lufthansa AG:“And the aviation sector, too, will simply not survive if it clings to its ‘old’ business models.”

 

Andreas Mai, Director Smart Connected Vehicles, Cisco Systems:“Digitization is enabling exponential innovation.”

 

Hardcover: 249 pages
Publisher: ILI CONSULTING AG; 1. Edition (December 2016)
Editor: Dr. Serhan Ili, Dr. Ulrich Lichtenthaler
Language: English
ISBN: 978-3000544149

 

> Order at AMAZON


DIGITAL OR DEAD STUDY

The Digital Innovation Compass: Expert Study by ILI CONSULTING AG

Nearly all executives have acknowledged the relevance of digitization and related trends, such as the Internet of Things, connectivity, and industry 4.0. However, the full impact of digitization has usually not been understood in detail. Moreover, most firms struggle to implement digitization initiatives successfully. Therefore, ILI CONSULTING AG conducted the ’Digital Innovation Compass 2016’ study, built on three complementary pillars: over 100 interviews of experts, project expertise from more than 150 innovation projects and 57 digitization projects by ILI CONSULTING AG, and extensive desk research.

 

The study substantially advances the insights from previous studies on two dimensions. First, it provides specific action items for

managing digitization rather than merely trying to understand the general phenomenon. Second, it considers the need for innovation in order to capture growth opportunities, rather than merely taking into account potential efficiency gains from industry 4.0. In this regard, the findings of the study underscore the importance of innovation for the success of digitization. Starting a digitization initiative is an important initial step, but focusing purely on efficiency drastically limits the potential benefits. The innovation dimension is neglected too often.

 

> Download Digital or Dead Study

 


“We have to work with the technology of today and tomorrow to deliver our guests a great experience.“

An Interview with Michael Mack
Chief Executive Officer at Europa-Park

There is no consistent definition of digitization. Every industry and every department perceive it and react differently. What does digitization mean for MackMedia and the well-known Europa-Park in Rust?

More than 236 years ago, my family declared its goal to provide people unforgettable moments. Since then, the company motto has been “The wide world is my field”. The Mack family always tried to expand their offer to respond to the customers demand. As Charles Darwin said: „It is not the strongest of the species that survives, nor the most intelligent. It is the one that is the most adaptable to change.” And that is key to the success!

Thinking about how to define “digitization” in the context of Europa-Park and MackMedia, I would tend to say that it´s about creating a digital world of adventure which delivers emotional moments visitors have known and appreciated from Europa-Park. We have to work with the technology of today and tomorrow to deliver our guests a great experience not only in the park itself, but also in the digital world.

In September 2015 you introduced your Virtual Reality Coaster − COASTIALITY − a rollercoaster that combines the traditional rollercoaster with virtual worlds. What have been the main challenges? What are your customer’s reactions?

Our world premiere of the first virtual reality rollercoaster Alpenexpress Coastiality caused a stir among visitors and in the media last year. Since the beginning of this season, two attractions have been showcasing the incredible experience…

 

To read the complete interview, visit: innoboard.de


“By providing new service business models, we empower companies to turn their ideas and concepts into reality.”

An Interview with Dieter Donis
Head of Engineering at Bosch Connected Devices and Solutions GmbH

There is no consistent definition of digitization. Every industry and every department perceive it and react differently. What does digitization mean for Bosch Connected Devices and Solutions GmbH?

Each year, more and more people and things are connected to the internet. By 2020, we expect around 7 billion people and 20 billion things to be online. A large variety of devices are connected over the Internet of Things (IoT): computers and smartphones, vehicles and household appliances, as well as industrial machinery, work pieces and transport boxes. Bosch is one of the world’s leading enablers of the IoT. At Bosch Connected Devices and Solutions we design, develop and market innovative connected devices and tailor-made solutions for the IoT. The trend towards digitization will have a tremendous impact on our daily lives, on how we interact with each other, and on the way we manufacture and distribute things. The IoT will include all electronic devices, industries and areas of life. It is a revolutionary opportunity for the entire economy.

In your opinion, what are the greatest opportunities of digitization for Bosch? Which main barriers have to be overcome?

The framework is changing – new challenges cannot be met with old answers…

 

To read the complete interview, visit: innoboard.de


“Success factors and challenges of MAN Truck & Bus on the way to become a digital organization.”

An Interview with Andreas Lawrenz
VP, Head of Digital Innovation Lab (X-Lab) at MAN Truck & Bus

There is no consistent definition for innovation. Every industry and every department perceive it differently. How do you define innovation at MAN?

At MAN, we define and describe innovation in the classic sense as the improvement or optimisation of a product, a feature or an additional or novel feature that up to now has not existed in its function or capacity. However, it does not necessarily have to have a new technology behind it; it can also be a combination of existing technologies. What is particularly important to us is that above all, these innovations are understood and rewarded by our customers. Rewards would preferably be in monetary form, which of course is not always the case. Some matters are worked out differently.

We have noticed that digital innovations and digital products demand another approach and another constellation. In most cases you have functionality that is compiled of completely different digital properties that contain no mechanics at all.

Thus, we are not able to deal with this with the classic approach. Moreover, it has been said that we have to take a different stance on these matters when grasping, defining and making a decision on them.

Upon going digital, I now have several customers or suppliers within the eco system who are in contact with one another, and they have an additional value that is generated at various different ends…

 

To read the complete interview, visit: innoboard.de


”Industry 4.0 is considered a major disruption.”

An Interview with Dr.-Ing. E.h. Peter Leibinger
Vice Chairman of the TRUMPF GmbH + Co. KG
President of the Laser Technology and Electronics Division

There is no consistent definition for innovation. Every industry and every department perceive it differently. How would you define innovation with respect to your industry?

Dr.-Ing. E.h. Peter Leibinger: There are three possible answers to this question. Firstly, obvious and well known is the definition by Schumpeter that innovation is a new technical solution that successfully establishes itself in the marketplace. Secondly, innovation is any substantial technological novelty or new combination of existing technologies that are the basis for progress regarding the major requirements that a product has to fulfill. In our case, the laser industry, this would be productivity, usability, reliability, etc. Thirdly, and equally important is the definition of innovation as a benefit that the customer actually experiences as a benefit. This can be a small progress technologically, however, small differences in products can yield dramatic differences in customer experience. In such, the “feelability” of the innovation is very important as well.

How does TRUMPF react to the general trends of digitization, connectivity and ’Industry 4.0’?

Industry 4.0 is considered a major disruption by TRUMPF and we are convinced it will bring substantial changes to our products and the way in which they are used.

 

To read the complete interview, visit: innoboard.de


“The new race for business model evolution.”

An Interview with Michael Bednar-Brandt
Director Digital Transformation EMEA at Oracle

There is no consistent definition for innovation. Every industry and every department has their own definition. How would you define innovation with respect to the software industry and Oracle?

Ed Roberts from MIT famously defined Innovation as Invention times Commercialization (Innovation = Invention x Commercialization). And usually we treat Invention as the glory part of Innovation – most believe that inventing something new is the holy grail.

But looking at history there are so many cases from Thomas Edison to Apple where the Commercialization part actually was where the magic happened, not the idea itself.

Commercialization I believe includes all the hard work it takes to successfully bring a new invention to market – to fine tune it to really solve a problem, to ensure it can be easily handled by the target audience, and also to care for monetization and promotion.

What is different today is the sheer speed at which Innovation happens. Major digital technologies have marginalized cost, cut development time and multiplied reach – allowing anybody from multinational companies down to garage based startups to create the next Uber or Airbnb…

 

 

To read the complete interview, visit: innoboard.de

 


Our new Project Study: Digital or Dead

The openness to digital solutions provides the basis for achieving a new type of competitive advantage in a digital environment. What is an advantage? Changing something. In the world. In our heads. Fundamentally. This ability as well as the courage to radically change one’s perspective are the keys to setting trends of your own.

digital_dead_bro_sw

Nearly all executives have acknowledged the relevance of digitization and related trends, such as the Internet of Things, connectivity, and industry 4.0. However, the full impact of digitization has usually not been understood in detail. Moreover, most firms struggle to implement digitization initiatives successfully. Therefore, ILI CONSULTING AG conducted the ’Digital Innovation Compass 2016’ study, built on three complementary pillars: over 100 interviews of experts, project expertise from more than 150 innovation projects and 57 digitization projects by ILI CONSULTING AG, and extensive desk research.

 

> Download Digital or Dead Study (english)

 


“Innovation in the Age of Hyper-Connectivity.”

An Interview with Andreas Mai
Director Smart Connected Vehicles at Cisco Systems

There is no consistent definition for innovation. Every industry and every department has its own definition. How would you define innovation with respect to the software industry and Cisco?

The Internet of Everything, the connection of things, data, processes and people continues to transform industries and to redefine the traditional dimensions of innovation. Standalone products are being connected to the value chains of the enterprises that produce them, and are also increasingly connected to products of non-traditional ecosystem partners and their value chains. This hyper-connectivity  helps enable the creation of completely new services, but also drives the need to digitize the business operations.

Hyper-connectivity is disrupting the automotive and insurance industries. For example, the emergence of connected autonomous vehicles is driving a fundamental business model transformation – from building cars to selling personal travel time well spent – and will propel the convergence of personal and public transportation. Eliminating human error from driving will help eradicate nearly 90 percent of car crashes caused by human error, which will transform the traditional auto insurance value chain and business model.

Scale and speed of these disruptions requires new approaches to innovation. At Cisco, we use multiple innovation centers around the globe to work closely with customers and partners to develop proofs of concept for new technologies…

 

To read the complete interview, visit: innoboard.de

 

 


“You have to disrupt yourself, before
someone disrupts you.”

An Interview with Marc Randolph
Co-Founder of Netflix

What was the biggest challenge when you transformed your business model from an ‘ordinary’ service to the “game changing” streaming service we use today?

When we started Netflix as a DVD by mail service, everyone agreed that eventually movies would be delivered digitally, rather than on physical media. But what no one could agree on was when that was going to happen. Although some people thought it was right around the corner, Reed Hastings and I were pretty sure that it would take much longer than everyone thought. So the big challenge was how do you build a brand when it was just a matter of time before your entire world shifted.

Although we could easily have positioned the early Netflix as “the fastest way to rent DVDs”, or the “easiest way to rent DVDs”, that would mean nothing once things went digital. So our biggest challenge was building a company that was relevant in a DVD universe, but stayed just as relevant in a digital one. Our solution was to position Netflix as delivery agnostic. We said we didn’t care how people chose to receive their movies – we would just concern ourselves with helping them find great things to watch. That worked with DVD. It works for streaming. And it will work with whatever new distribution techniques may arrive in the future.

Why, do you think, has Blockbuster not recognized the new technology curve? What can other companies learn from Netflix’s success story?

Blockbuster was clearly slow to recognize the threat that Netflix was to their business, and by the time they sufficiently responded it was too late.

 

To read the complete interview, visit: innoboard.de

 


“Digitization is very important for determining the current status digitally and foreseeing the future in light of these data. More digitization means more data and this means better prediction of the future.”

An Interview with Doc. Dr. Temel Kotil
Member of the Board of Directors and Executive Committee, CEO, Turkish Airlines

How does your company react to the general trends of digitization and connectivity?
We are fully aware of the fact that the digital tsunami is going to deeply affect and disrupt every industry in the next decade. Many companies that fail to execute this digital transition are either going to be destroyed or will face survival challenges. For this reason, in the leadership of our recently established Corporate Innovation Directorate, we have been simultaneously standardizing steps, processes and information, while discarding non-value adding activities along with sub-processes to achieve automation via digitization of our processes. With this digital transition, we are willing to answer the needs of the industry and speed up our decision-making processes through real-time communication and reporting.

 

How can firms benefit from digitization in terms of enhancing efficiency?
Digitization is very important for determining the current status digitally and foreseeing the future in light of these data. More digitization means more data and this means better prediction of the future. Foreseeing the future is of vital importance to a company. Imagine a company where the corporate structure and unproductive mutual control mechanisms are very strong. Except for simple digital products, every process is run manually. Reports for top management are prepared on Excel sheets by specialists – manually with hand calculations. No customer definitions or information. Customer needs and wishes are unknown. Returns to complaints are far from enough. Cutting unnecessary use of paper documents via founding of digital platforms would not only reduce the waste of qualified manpower, but also add great value to the company. Bright specialists would then be working in more analytical positions. On the other hand, platforms for identifying customers would allow the company to communicate better and get back to them faster. For this reason, we believe that organizations have no choice but to abandon traditional business processes and start adapting to smart systems.

 

How can digitization further contribute to innovation and new business development?
Here, we need to talk about more than just contribution. Innovation and digital transition are two inseparable notions. I do not know if you had the chance to read the book by George Westerman, Didier Bonnet and Andrew McAfee “Leading Digital: Turning Technology into Business Transformation”? In the book you can easily replace every single word “digital” with “innovation” without anyone noticing. For a product or improvement produced in the company, it needs to be based on data. At Turkish Airlines, when developing an innovative product, we make use of all the data about customer satisfaction, flight attendant reports and anything we can relate to products. We analyze all these to see if we really need the product. Digitization lets us read our company better, while giving us the opportunity to build better business models and products.

 

How can digitization further contribute to innovation and new business development?
Here, we need to talk about more than just contribution. Innovation and digital transition are two inseparable notions. I do not know if you had the chance to read the book by George Westerman, Didier Bonnet and Andrew McAfee “Leading Digital: Turning Technology into Business Transformation”? In the book you can easily replace every single word “digital” with “innovation” without anyone noticing. For a product or improvement produced in the company, it needs to be based on data. At Turkish Airlines, when developing an innovative product, we make use of all the data about customer satisfaction, flight attendant reports and anything we can relate to products. We analyze all these to see if we really need the product. Digitization lets us read our company better, while giving us the opportunity to build better business models and products.

What particular challenges do you see in strengthening innovation based on new digital opportunities?
It is not possible to change all the processes that we have been using for many years so quickly. In some cases, it is easier to change things at a micro level and manually. Depending on the work, some part of it is done digitally and the remaining part conventionally. In this regard, we could say that the biggest setback we encounter, like many other companies, is the adaptation of human resources and the resistance to change.

 

How can firms successfully cope with new digital competitors, e.g. IT companies from the US?
It is obvious that the digital tsunami is going to fundamentally influence and disrupt every industry in the next decade. In response to this digital tsunami coming largely from Silicon Valley in the US, firms in the entire world must develop their digital strategies and manage their digital transition to meet market requirements and the conditions of competition.

 

What are your own personal goals with respect to innovation in the next year or so?
To get our company into a faster, plain, quick and proactive shape by offering high value products, state-of-the-art technology and services to both our customers and co-workers. When doing this, we aim to achieve corporate automation by transforming every digitizable process we have. As a result of these innovation efforts, we plan on building a real-time reporting system for new processes to gain proactivity. Since aviation is a fast and dynamic industry, in order to be able to cope with global economic changes, industrial challenges and legacy carriers along with LCC companies, innovation through organizational digital transition is one of our fundamental instruments. To increase our muscle power down the road, we will be doing more innovative projects, and digital and smart systems are going to be at the center of this.

 

 

About the interviewee

 

Mr. Kotil was born in Rize in 1959. In 1983, he graduated from the Aeronautical Engineering Department at Istanbul Technical University (ITU). In 1986, he received his first Master’s degree in the United States from the Aircraft Engineering Department of Michigan University Ann Arbor, followed in 1987 by his second Master’s degree in Mechanical Engineering, and his Doctorate in Mechanical Engineering in 1991 at the same university. From 1991-93, Kotil established and managed the Aviation and Advanced Composite Laboratories of ITU’s Faculty of Aeronautics and Astronautics, where he also served as Assistant Professor and Associate Professor. From 1993-94, he served as the Department Faculty Vice President and as the Faculty Assistant Dean. Mr. Kotil also served as Head of the Research, Planning and Coordination Department of the Istanbul Metropolitan Municipality. He then served as a Guest Professor at Illinois University, and later as the Department Head at the Research and Engineering Department of AIT Inc. New York. In 2003, he began his career with Turkish Airlines as Vice President of the Technical Department. In 2005, Mr. Kotil was appointed as the General Manager. In 2006, he was elected as a Member of the IATA Boards of Directors. In 2010, he was appointed as a Board Member of the Association of European Airlines and as Vice President from 2012–2013 and as Chairman in 2014. Mr. Kotil, married with four children, has authored many articles and publications.


Statements: Digital Innovation Compass 2016

“With the adidas SPEEDFACTORY we are deliberately challenging conventions. This process is enabled by our unique innovation culture that is based on the firm belief that we can deliver extraordinary results to our athletes.” – Gerd Manz, VP Technology Innovation, adidas AG. Read more statements in this article.

“The topic of digitization offers great opportunities for Schaeffler in terms of products, all major processes and new business fields, such as services.”
Gerhard Baum, Chief Digital Officer, Schaeffler AG

 

 


“Great innovation occurs when you get to the next curve. Firms should not try to do things just some 10 percent better. Instead, you need to jump curves rather than staying on the same stupid curve you are on.”
Guy Kawasaki, Chief Evangelist of Canva, Mercedes-Benz Brand Ambassador, and former Chief Evangelist of Apple

 

 

 


“Digitization initiatives and the information business are a new core activity of manufacturing companies in many industries – whether the executives want to or not.”
Dr. Ulrich Lichtenthaler, Senior Consultant, ILI CONSULTING AG


“Based on a data-driven and progressive ecosystem, we will reimagine how we connect with our consumers across key digital touch-points on the path to a purchase.”
Kathryn Callow, Global Digital 2.0 Manager, Unilever

 

 


“The past decade has been characterized by internal cost reduction and muted innovation across large parts of the economy. The era of smart, connected products can change this trajectory, provided that companies move aggressively to embrace the opportunity.”
Michael E. Porter, Professor at Harvard Business School and the most cited author in business and economics

 

 


“A choice of either agile innovation processes or more traditional systematic innovation processes helps to find a suitable organizational solution for each particular project.”
Egon Steinkasserer, Head of Innovation, Swisscom AG


Digital Innovation Compass

Based on the digitization trend, companies need to cope with new developments from a large number of technology enablers and with new trends concerning a large number of market applications. The multiple combinations of technology enablers, such as big data analytics, and of market applications, such as smart home, further increase management challenges.

Based on the digitization trend, companies need to cope with new developments from a large number of technology enablers and with new trends concerning a large number of market applications. The multiple combinations of technology enablers, such as big data analytics, and of market applications, such as smart home, further increase management challenges. As such, the wide variety of opportunities and challenges requires a clear strategic direction, which is lacking in many companies. This limited strategic direction, along with substantial managerial challenges, strongly complicate successful digitization initiatives.

 

The innovation compass illustrates that firms cannot rely on a single competence to successfully manage their digitization initiatives. Instead, a technology push or market pull focus requires multiple competencies in a different order.

In case of a technology push approach, firms usually start with developing a concept based on the particular technology, such as 3D printing for sports equipment firms. On this basis, they should consider suitable business models at a relatively early stage. Then, the companies need sufficient digital intelligence and agile innovation processes to develop the new solution, which can be successfully commercialized based on a convincing innovation story.

 

In case of a market pull approach, firms start with a particular story, such as the smart home trend for a manufacturer of smoke detectors. In order to exploit such a trend, the firms need sufficiently agile innovation processes and digital intelligence. They need to consider potential business models at a relatively early stage to specify appropriate concepts. Moreover, due diligence and innovation KPIs are important additional competencies that provide internal support. Further, an innovation pulse and innovation catalyst are major competencies that can often be provided by means of external support.