How smart, connected products are transforming companies presentation (edited - non video)

How Smart, Connected Produces Are

Transforming CompaniesBy MICHAEL E. PORTER AND JAMES E. HEPPELMANN

Harvard Business Review

Fahmy Amrillah - 1506772744

Strategic Marketing

Background

Evolution of products into intelligent, connected devices is radically reshaping companies and competition

The relationship a firm has with products and customers is becoming continuous and open-ended.Smart, connected products substantially changes the work of virtually every function within the manufacturing firm.

What is smart, connected product ?

Smart, connected products have many of the same physical components that products have always had but also have new features that make them

more intelligent

Sensors and Software


Smart, connected products have three core elements

Physical components

Connectivity components

Smart components

SensorsMicroprocessorsData storageControlSoftwareEmbedded OSDigital UI

MechanicalElectrical parts

PortsAntennaeProtocolsNetworks


Many products are connected to the Internet and the “product cloud” which runs remote software connected to the products

named “Technology Stack”

It requires a whole new supporting technology infrastructure

provides a gateway for data exchangeintegrates data from business systems, external sources, and other related productsserves as the platform for data storage and analytics, runs applications, and safeguards access to products and the flowing data.

New Capabilites of Smart, Connected Products

Control

Optimization

Autonomy

MonitoringCan monitor and report on themselves and their environment in real time, creating new data and insights.

Can be controlled through software embedded within or in the cloud.Gives users the unprecedented ability to customize.And to operate them in hazardous or hard-to-reach environments.

Algorithms and analytics can optimize product operation, capacity utilization, and predictive maintenance

Enables autonomous operation, self-coordination, and self-diagnosis.

Data : reshaping the value chain

The new data resources

• In the past, data was generated primarily by internal operations, information gathered from surveys, research, and other external sources

• Now, sources of data are being supplemented by product itself

• Data now stands on par with people, technology, and capital as a core asset of the corporation

• its value increases exponentially when it is integrated with other data


Data Analytics

• Ability to unlock the full value of data becomes a key source of competitive advantage

• Powerful insights by identifying patterns in thousands of readings from many products over time

• Uses mathematics, computer science, and business analysis techniques

• Collected data are often unstructured -> emerging solution is a “data lake”


Data Analytics

• The data from “data lake” can be studied with a set of new data analytics tools

• Descriptive• Diagnostic• Predictive• Prescriptive.

Data Analytics

Transforming The Value Chain

Powerful new data and new capabilities of Smart, connected products, is restructuring the traditional functions of business

Product Development

Product development shifts from largely mechanical engineering to true interdisciplinary systems engineering

Design teams are shifting from a majority of mechanical engineers to a majority of software engineers


Low-cost variabilitySoftware makes variability far cheaper. Ex:

Product Development

Evergreen design

Software also makes it easier to localize products for different countries and languages

Companies will improve products continuously Can be updated via software in the cloud. Ex:

Product Development

New user interfaces and augmented reality

Augmented reality applications tap into the product cloud and generate a digital overlay of the product.

The digital user interface enabling remote operation and even eliminating the need for controls in the product itself

enabling continuous monitoring of real-world performance data

Product Development

Connected service

allowing companies to identify and address design problems that testing failed to expose

Product can be used to monitor product health and performance and warn service personnel of failures

Ongoing quality management

Support for new business modelSmart, connected products let companies switch from transactional selling to product-as-a-service models.

Product Development

System Interoperability

The responsibility for and associated cost of maintenance remain with the manufacturer

Through codesign, companies can simultaneously develop and enhance hardware and software across a family of products, including those of other companies.


Smart factories

Manufacturing

Simplified componentsSmart, connected machines are reshaping manufacturing plants

Machines increasingly can be linked together in systems

Shift from mechanical parts to software

Smart, connected products create new production requirements and opportunities. Such as shift final assembly to the customer

Physical complexity of products decreases but the quantity of sensors and software rises -> new complexity.

Reconfigured assembly processSoftware in the product or in the cloud can be loaded or configured well after the product leaves the factory


Manufacturing

Continuous product operations

manufacturing has been a discrete process that ended once the product was shipped

Smart, connected products create new production requirements and opportunities. Such as shift final assembly to the customer

operate and improve throughout the product’s life


it can be done continuously, wherever products are, and provides rich information – current and location history, condition (their temperature, say, or exposure to stresses), and surrounding environment.

Logistics


Marketing and Sales

Direct and ongoing dialogue with consumers through smart, connected products = new customer relationship

New business models will emerge as products can be o ered as a service.

As companies gather and analyze product data, they gain new insights into customer segmentation and product customization

Teams will need broader knowledge to position offerings as part of larger smart, connected systems.


After-sales service

Sensor data can predict when parts are about to break that makes predictive maintenance possible

Service technicians can use augmented reality applications that tap into the product cloud and generate a digital overlay of the product.

Smart, connected products make it feasible to deliver service remotely.


Security

Companies tasks are safeguarding firms’ data centers, business systems, computers, and networks

The job of ensuring IT security now cuts across all functions.

As IT is pushed into products, security concerns become important

New expertiseskills needed to design, sell, and service smart, connected products are in high demand but short supply

Human Resources

New Cultures

skill requirements shift from mechanical engineering to software engineering, from selling products to selling services.Establishing a physical presence in Boston and Sillicon Valley

Manufacturing smart products require far more coordination across functions and disciplines than traditional manufacturing doesIntegrating staff with varied work styles and from more-diverse backgrounds and cultures

New compensation modelNeed new approaches to attracting and motivating talent

Human Resources

Perks like job flexibility, concierge services, sabbaticals, and free time to work on side projects of personal interest are the norm in high-tech firms

Implication For Organizational Structure

As manufacturing firms become hybrid hardware and software companies, they must adopt new organizational structures.

Four new functions are developed

Unified data organizationA chief data officer leads this group, which captures, aggregates, and analyzes data for the entire organization.

Tighter IT-R&D CollaborationThe new need for IT in product development.


As manufacturing firms become hybrid hardware and software companies, they must adopt new organizational structures.

Four new functions are developed

Dev-opsDev-Ops groups manage the product cloud

Customer Success Management

Since smart, connected products stop functioning if the product cloud fails, companies must carefully maintain, upgrade, and find bugs in the product cloud.

Companies must ensure that customers receive full value from their products

Making The Transition

Smart, connected products will need to coexist with traditional products for a sustained period

At business level unit, IT might be assigned the lead role for product strategy and deployment.

Special steering committee made up of the functional heads may be asked to champion and oversee this effort

Organizational transformation will be evolutionary, not revolutionary,

Making The Transition

Stand-alone business unitseparate new unit, with profit-and-loss responsibility, is put in charge of supporting the company’s smart, connected products strategy

Center of excellence It does not have profit-and-loss responsibility but is a cost center that business units can count on.

At corporate level

Cross-business-unit steering committee Summoning a committee of thought leaders across the various business units

champion of opportunities, share expertise, and facilitate collaboration

usually lack formal decision-making authority

Broader Implication

Smart, connected products will free us to purchase only the goods and services we need, to share products that we do not use much, and to get more out of the products that we already have.

The effects are not confined to manufacturing, but are spreading to other industries that use—or could use—smart, connected products, including services.

Broader Implication

New industries, new services, and new roles will be created that can allow more people to work more productively and in less rote and repetitive ways.

Impact on employment and growth is likely to be positive

Companies and other institutions that can speed this journey will prosper and make a profound difference for society

Thank You

How smart, connected products are transforming companies presentation (edited - non video)

Education

Transcript of How smart, connected products are transforming companies presentation (edited - non video)