The Executive’s three-dimensional digital moat – why and how?
By Jani Ojala, Country Manager of EDRMedeso in Finland and the United Kingdom
The way products are designed, manufactured and operated is changing quicker than ever. We are experiencing a number of megatrends right now. Some of them appear on Gartner’s hype cycle while others have already matured. Disruptive technologies such as Industry 4.0, mass customisation by additive manufacturing and autonomous products open new, great opportunities to grow businesses.
From an Executive’s perspective, these disruptive technologies introduce a completely new level of challenges. We’ve all seen numerous examples of how visionary companies, who are not even current competitors, disrupt an industry and take a big slice of the pie faster than the existing players can adopt to the change.
At the same time, when companies are exploring and developing new offerings and new business models around digitization, it also provides opportunities to protect and enhance their current business. These oppertunities could be called “digital moats”, i.e. the digital versions of the traditional moat used to protect the castle.
There are three dimensions requiered to build a digital moat: a digital twin of your product, data and digital products:
The digital prototype
A digital prototype is a digital representation of your physical product. It is the foundation of digitally driven product development which can help you get products faster to market and ensure quality. By using a digital prototype, you do not need to create a separate physical prototype for each adjustment to the product – and you can test factors that may not be available at the test facilities. For example, how much will the wind tear on your product when it is deployed over the course of a 10-year period? How much faster will the product wear down, if your customers are using it above maximum recommended capacity?
The collection and deployment of data are the next steps. Most companies suffer from too many unused data. However, for anyone in the manufacturing industry, one specfic type of data is key: Data from your products in the field. Businesswise data are basically useless until you process them – but if you manage to do so, you can gain insights that bring you miles ahead of the competition.
By connecting your digital prototype with data from the field, you will create a digital representation of your asset in use. This digital twin experiences exactly the same operating conditions as the physical asset in the field resulting in a much better ability to predict the need for maintenance or service cycles. This opens the door for new business models based on services instead of products. An example of this is Rolls Royce that offers ”Power by the Hour” as a solution for their clients. Instead of simply providing a product such as a jet engine, Rolls Royce can also provide scheduled and unscheduled maintenance – enabled by the insights from data.
The digital product
The third dimension of your digital moat will be to create true digital products and digital services. This can be a variety of things, but let’s run through an example:
Your digital product is a dashboard showing the actual product performance to your customer based on data and their digital twin. Now imagine your customer needs to buy a spare part. He can choose between your original spare part and a cheaper copy. The original spare part connects to the digital twin, which is adopted into the dashboard and immediately runs the same lifecycle digitally. If the customer instead chooses the cheaper copy, he only gets a physical component that cannot connect to the digital twin. Consequently, the customer no longer harvest the value of the product operating dashboard. Which alternative would you choose for your company? Exactly. The original spare part. In this example, your digital product – combined with the digital prototype and data – ensured that your client would choose your product instead of a competitor’s product.
The three dimensions of buliding a digital moat are not that difficult , and this is something that should definitely be on the C-level agenda in manufacturing companies. Otherwise, you may see competitors “storm your castle” and tap into your market share quicker than you can react. It is all about being prepared – and in this case being prepared can also bring your company ahead.
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