Digitalization Must Become a Matter for the Boss - But in a Different Way!

06.05.2021

I seem to have hit the mark with my article "Kagermann and Wahlster are wrong - The digitalization of industry is faltering" from April 27 of this year. Apparently, it is clear to a great many people that even ten years after Industry 4.0 was proclaimed, little or nothing has fundamentally changed in Germany. The digitalization of industry demands that we embark on a new path never before taken in industry: from tangible to intangible value creation. This will only work if industry itself makes it a top priority. But in a different way than before.

The post from April 27(Screenshot: My linkedIn post on 27.4.2021 and the feedback)

Industrial value creation in Germany still means almost exclusively product manufacturing and sales. Services based on industrial products have hardly been invented, let alone are available, and still play a completely insignificant role. What has long been a matter of course for smartphones and PCs is not even conceivable for most people when it comes to industrial products. Because it hasn't existed yet, it's also hard to imagine. The Internet of Things is still mainly a marketing slogan.

On top of that: In many companies, controlling has had the loudest voice again for years. And not just since Corona. For years, when someone in engineering, development, production, or strategic planning puts digitalization on the agenda - and many do at the moment - business managers and CFOs have been saying, out of their quarterly thinking, "Yeah, sure. That's a very important topic. And what costs are we cutting in development? And what are we saving in terms of money and time in production?"

This is fatal. Because without the continuous further development of the high-end mechatronic products that made Germany the world export champion and whose quality makes them as popular around the world today as U.S. products were in the middle of the last century - they would lose market value just as quickly as the Cadillac and the entire American way of life did in the last thirty years.

A product design that enables value-added services

We need both: products that work perfectly and can be networked with anything and everything. Products whose data become the source of new value for users and society alike. Take mobility, for example: a bicycle, an e-scooter, a scooter or motorcycle, a car, a public transportation system, a long-distance train, an airplane - each of these products and all the components required for them could be integrated into a service that helps people find the shortest, fastest, safest, most energy-efficient and most convenient route. Using the most environmentally friendly means of transport for the particular journey. Mobility would no longer be in conflict with climate neutrality.

That will be worth a lot to society and the users of the products and services. But for this to happen, the products and services must be designed from the ground up to deliver this value. The current form of digitalization - the continuously improved use of IT to automate all processes in the company more efficiently - is obviously not working. Even though this is still a very high priority. After all, the bulk of sales will still depend on it for a while.

There is another problem with the conventional way of digitalization: The remaining major suppliers of industrial software - Dassault Systèmes, PTC, SAP and Siemens - are more or less drastically reducing the autonomy of marketing in Germany. Budgets are increasingly being determined in the USA or in Paris. In my experience over many years, however, this means that the development of their software is less and less oriented to the concrete needs of the local industry, especially the medium-sized ones. The fact that this is now true even for Siemens Digital Industries software is frightening.

the digital twin at SiemensIncidentally, Siemens shows that even there, end-to-end digitalization is primarily understood to mean classic product value creation. In the infinite loop that symbolizes digitalized value creation (image: screenshot of Siemens homepage), product-based services are not even mentioned.

In addition, the traditional IT providers for industry today make up only a portion of the software suppliers needed. Cloud infrastructure, machine learning and artificial intelligence providers are at least as important. However, for those responsible in industrial companies, they are still mostly only on the very periphery of their field of vision. The weighting is not right here.

Do it together!

With finding solutions, it's like it is often: If you wait for the associations, responsible organizations and political leaders to make smart, well-thought-out decisions that are helpful for everyone and set the optimal direction, you find that they often lack the expertise and in many cases - such as in Germany in the major election year of 2021 - the willingness to do so.

The industry, which is itself actively shaping its digital transformation, will have to bring those responsible to the table and tell them what it urgently needs and where. Organizing this round or square table is now my offer. There is a kind of manifesto for this on my homepage: "I have a dream: Digital Industry Circle". Because the common table should be more. It should be the basis for the exchange of responsible persons with each other and with research, teaching and IT providers of all kinds.

At the moment, I'm looking for those to start with. Anyone who is a boss who wants to be one of them, or who has or knows one - I look forward to hearing names and contacts. Digitalization absolutely has to become a matter for the boss. In a completely different way than we have defined it so far. Creative. Responsible. Not only for the future of the own company. For the future of the industrial location as well.

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