Digitalization and new technologies contribute to better products and better services, but also better product and service development. This is driven by the fact that today both products and services rely on technology, and that technology is an enabler to developing new products and services.
Nowadays, “services account for more than 70% of world GDP but only for around 20% of world trade in balance of payments terms”.WTO, 2015
Firms that are widely known for the technological products they manufacture are switching towards a focus on services, as additions ‘around the product’. Innovations are both product and service related; they require:
- A robust product development strategy.
- An aligned digitization strategy to adopt relevant technologies which contribute to developing and sustaining competitive advantage with new products and services.
- An enabling and ongoing transformation strategy to implement the digital roadmap, continually adapt to change, and ensure that people-process-technology are aligned.
- An effective data management, collaboration and knowledge platform (a.k.a. a Product Lifecycle Management (PLM)platform).
“As digitalization moves from an innovative trend to a core competency, enterprises need to understand and exploit platform effects throughout all aspects of their businesses” (Gartner, 2016).
The traditional perception based on Michael Porter’s value chain model is that the primary organizational functions are driving value while the other secondary functions are supportive capabilities. Today, innovation is not the sole accountability of the product development teams and the primary business functions; it concerns the entire enterprise, including the supportive functions and the supply chain – ref. open innovation.
To that effect, many manufacturing organizations have put innovation, and PLM as its enabling platform, on every executive’s agenda; from CEOs to their executive first line, and including CIOs who, in their quest for ‘speed versus stability‘, often prioritise Enterprise Resource Planning (ERP), infrastructure, data connectivity and other core-IT enterprise system implementation, integration and maintenance.
“Since executives are expecting revenue growth from new products, PLM has never been more crucial to business and innovation and, as a result, has been swept onto the CIO’s strategic agenda” (The Aberdeen Group, 2010).
To be clear, fostering innovation and creativity cannot be effective by applying simplistic process management tools to the discovery process. PLM solutions are similar to operating models that contribute to creating positive environments for value creation and collaboration.
What are your thoughts?
- The Aberdeen Group (2010) The CIO’s Role in PLM
- Gartner (2016) Building the Digital Platform: Insights From the 2016 Gartner CIO Agenda Report
- World Trade Organisation (2015) Services and Global Value Chains – Some Evidence on Servicification of Manufacturing and Services Networks
This post was originally published on LinkedIn on 25 May 2016.