Mastering the Digital Transformation

How companies develop successful products faster.

 

Contents

●  Digital Transformation: Hype or real? ●  Elements of the Digital Transformation ●  Digital Transformation &

How to develop successful products faster

In Germany, exports have reached record levels, economy has seen substantial growth and

so has employment. This is what makes Germans skeptical in terms of digital revolution.

At the same time, digitization has changed our life circumstances and that is where we

experience a big awakening.

“ ”

Germany is not yet ready for the Digital Revolution

Hannover: Chancellor Angela Merkel has criticized Germany’s resources in digitizing.

"We just need to go up a gear in Europe, just as we need to set a goal in Germany", the

CDU - Politician said on Sunday at the opening of national industrial exhibition Hannover Messe.

“ ”

Europe and Germany Need to Catch Up with Digitalisation

Search Trends  Germany

Search for „Digitale Transformation“ Search for „Internet of Things “

Search Trends  Germany

Hype Cycle for Emerging Technologies, 2014

Why is so little happening?

Speed of Innovation Increases

Faster speed of innovation = shortened lifespan for companies

It is not the strongest of the species that survives,

nor the most intelligent that survives.

It is the one that is most adaptable to change.

Charles Darwin

“ ”

Lower Barriers to Entry than Ever Before

Innovation Comes out of Nowhere

„I looked at the numbers and was speechless “ A programmer’s experiment

Duration of actual development: 6h

Result: 2 Mio. App-Downloads, $72.000 Dollar Revenue + Exit- Revenue

Gründerszene, 07.04.15

App name: 7 Minute Workout

2003 - the company was founded

2008 - they released their first car, Tesla Roadster; 2.400

Roadsters produced so far

2012 - they released Model S

2013 - Car of the Year (German Automagazin Motor

Trend); 50.000 Model S produced so far

2014 - the company reached 6.000 employees

2015 - they announced the production start for Model X

Competitors Come out of Nowhere Tesla Motors

Roadster

Model S

0  

10000  

20000  

30000  

40000  

50000  

60000  

Audi  A7   Audi  A8   Porsche  Panamera  

Phateon   BMW  7er   Tesla    Model  S  

Car  ProducAon  worldwide  luxury  class      2013   2014  

Competitors Come out of Nowhere Tesla Motors

Tesla’s advantages over traditional automobile manufacturers:

•  Does not have to develop engines, transmissions;

•  Not obliged to observe emission values; •  The software is their core value, besides

the batteries; it scales better on all models and is cheaper to produce.

* Not shown: Mercedes S-Class

●  High-End-Technologies easily available

●  Software allows for fast productisation

●  Internet allows for global distribution

Lower Barriers to Entry than Ever Before

Digitalisation Germany vs World

Why is so little happening?

Innovator’s Dilemma

Innovator's Dilemma Example:

Aftenposten‘s Strategy: Set up a separate entity to go after a market that was undesirable and low margin from

the perspective of its newspaper business. The new brand was allowed and even encouraged to cannibalise the

older, higher margin parent company, Aftenposten.

Escaping the Innovator’s Dilemma by Excubation

•  Telekom: hub:raum

•  ProSiebenSat.1-Accelerator

•  Axel Springer: Plug’n’Play

•  Rocket Internet: ProjectA

•  Scout24-Gruppe: You Is Now

•  SAP Startup.Focus.

•  Burda-Media: dldventures

•  REWE

•  Coca-Cola

•  Bayer Health Care

•  Allianz

•  Siemens Technology Accelerator

20.0%  25.0%  30.0%  35.0%  40.0%  45.0%  50.0%  55.0%  60.0%  

2008   2009   2010   2011   2012   2013   2014  

   

Germany     UK   USA  

Missing Fault-Tolerance Share of 18 to 64 year old people who do not establish a company due to the fear to fail.

Product  

InformaAon   Info  only  =    Pure  Player  Physical    

Product  /  Service,    +InformaAon  

Software is eating the world. Marc Andreesen

“ ”

The size of the screen in an average

car today shows the importance of

software to the manufacturer.

The big screen shows the importance Tesla

Places on software. Just like the big screen

of the iPhone shows the importance of

its Operating System.

In addition to traditional engineers, we are mainly looking for IT specialists and software

developers. It is important for us to develop software ourselves. “ ”

BMW Hires 8000 New Employees in 2015

Misconception: New Product Development is Costly

Agile Development

Agile Development

60%-90% of ideas do not improve the metrics they were intended to improve.

Ronny Kohavi Microsoft’s General Manager Experimentation Platform (before: Amazon's Data Mining and Personalization group)

What Improves a Software Product?

“ ”

Research results presented by Ronny Kohavi:

Why Lean and Agile Product Development?

80% of startups are successful with another product than the one they initially started with.

The Lean Startup Cycle

Slide  40  refa  grafic  

Minimum Viable Product (MVP)

The Lean Startup Cycle

Lean and Agile Product Development

Check your idea with a Minimum Viable Product (MVP)

Refa  graphic  slide  42  

analog

digital Agile Software Development

Lean Enterprise

Levels of Digital Transformation

Lean & Agile Product Development

Elements of the Digital Transformation

Digital Strategy •  Digital targets •  Digital ways to reach the targets •  Methods to implement the strategy.

Lean Leadership •  Leading and enabling instead of giving orders •  Decisions are oftentimes made in teams.

Digital Products •  For digital markets and customers •  Digital business models •  The user is the king – again!

Agile Operations •  Fastest time to market •  Fast response to market requirements.

Digital Culture •  Sharing knowledge instead of hoarding •  Cooperation instead of demarcation •  Two-way communication with customers.

Digital Employees •  Love to learn •  Able to work independently •  Flexible in time, location and know-how.

Digital Governance •  New targets for the company and employees •  Digital, business-relevant KPIs •  Open and continuous monitoring of all KPIs.

Digital Technologies •  E.g. cloud instead of own hardware racks •  Responsive and mobile-enabled products.

Talent & the Digital Transformation “An employer without sufficient Digital Competitiveness is not the right employer for me.”

https://www.prophet.com/about/news/552-wie-gut-meistert-ihr-arbeitgeber-den-technologischen-wandel

14%

42%

33%

11%

   

strongly agree

tend to agree

disagree

strongly disagree

In an industrial company, avoid software at your own peril . . .

A software company could disintermediate GE someday,

and we're better off being paranoid about that.

Jeff Immelt

“

”

Product  

InformaAon   Info  only  =    Pure  Player  Physical    

Product  /  Service,    +  InformaAon  

Sony tried to sell hardware

Amazon sells info and provides the right hardware.

Google looks for more possibilities to

sell ads and to understand the user.

VW builds cars.

Do you see the analogy?

Culture eats Strategy for Lunch Peter Drucker

“ ”

The autocratic behavior of Piech represented a crisis at Volkswagen.

Global corporations that want to be successful in the 21st century

must perform differently.

Piech has recently resigned.

The End

gero.lueben@ingasol.com