Spring forum at Fraunhofer headquarters on the role of the CTO in digital transformation, Rittal reports on Industry 4.0 strategy
12-13 April, more than 60 technology directors met at the CTO spring forum at the headquarters of the Fraunhofer Society in Munich. This meeting dealt with the question of the role of the CTO in digitization. Is it primarily a technical challenge or is it a cultural task and the opportunity to enable new business models for the company? In fact, this is a question of how CTOs see themselves. What is the relationship between the two terms technology manager and business developer and the associated perspectives on management? Dichotomous – surely, but maybe even adversarial? The dichotomy becomes apparent when one examines the question of which perspectives are hidden behind the terms. In many boards, digital transformation is primarily perceived as a technical phenomenon and a challenge in technology management.
Technology management is primarily intended to make technologies available to the company.
In the context of digital transformation, this is a Herculean task for many companies. Digital technologies relate to hardware, software and networks and they fundamentally change the way we live and work. The mechanical work is no longer automated by machines, now it is the brain work. By shifting the main effects of further development to chip-based technologies, we are using the sustained exponential dynamics of computer technology to process unbelievable amounts of digital data and create innovation through new combinations. Having access to technologies such as software engineering, systems engineering, IT security, data analysis and big data, cloud computing, M2M communication, etc. is increasingly becoming a central strategic competitive issue. In addition, there is the construction and use of the digital infrastructure with a wide range of access and end devices such as smartphones, tablets, desktop and laptop computers, data glasses and embedded systems, buildings, plants, devices, vehicles and machines. Technology management must analyze and evaluate the possibilities, availabilities and effects of these technologies and develop investment and usage strategies. Ultimately, digital technologies create a multitude of possible uses that are basically technically feasible. The question, however, is whether they also make economic sense. This is where the second perspective comes into play, which is fundamentally different from the first, business development.
Digital technologies have potentially disruptive effects on the question of how business processes are designed. Anyone who thinks through digital technologies for their own eco-system will immediately come up with business model innovations. Digital Darwinism teaches us that when it comes to innovation, progress, and growth, we have no choice. If we don’t, competition will. The digital transformation of industry gives growth and innovation options. But it is difficult to extrapolate this from the knowledge of the past of the mechanical-electrical-electronic age into a virtual-digital world. An old and well-known problem. When the visionary inventor and entrepreneur Gottlieb Daimler (1834-1900) was asked how he imagined the market for motor vehicles, he replied: “The global demand for motor vehicles will not exceed one million – simply due to the lack of available chauffeurs”. This shows the classic problem of extrapolating from experience. We solved the problem a first time by driving ourselves and are now in the process of solving the problem a second time with autonomous driving.
The challenge is that we cannot separate technology and business; we have to think of it as an integrated part. The question is, how do the technical possibilities create value and how do you get the willingness to pay for customer benefits. Digital business models are fundamentally “different” just like digital technologies are immaterial and therefore fundamentally “different”. We must not be satisfied with simple linear extrapolations from experience. Digital technologies increase their possibilities exponentially. The CTO forum helped to exchange ideas and to get new impulses to meet this challenge of thinking.
As part of a lecture, Dr. Thomas Steffen talks about product configuration as a component of the Industry 4.0 strategy. Rittal GmbH & Co. KG offers its customers in the core market of industrial control and switch cabinet construction a comprehensive product portfolio of infrastructure solutions. The core elements of the market strategy are high-quality standard components, available from stock thanks to a 24-hour delivery concept. As part of the strategic discussions with regard to future market requirements, the product configuration was defined as an essential element as early as 2009 and since then it has been worked on as part of an extensive project.
In the course of the dynamic developments in recent years, triggered by the discussion about future scenarios in the context of Industry 4.0, this topic has become an essential component of the Rittal strategy. The lecture describes the path and the essential work packages up to the current status, both from the user’s point of view as well as from the provider point of view. The following implementation steps were described:
- Introduction of variant management
- Digitization of the products:
- Introduction of a product data management system
- Conversion of all development areas to 3D CAD
- Establishing processes for the complete “filling” of data portals (EDP, Cadenas, …)
- Development of a methodology for the creation of technical regulations
- Development of a first configurator as a “proof of concept”
- Structure of the web-based configurator with:
- Online shop connection
- Automated generation of all technical Data as the basis for the “Industry 4.0 plant” in Haiger
The panel discussion was about evolution, disruption or substitution: the CTO as a translator between market and technology in digital change. The discussion was moderated by Mr. Anatol Siegel from Bertrandt AG. On the podium sat (from right) Dr. Holfelder, Vice President Engineering at Google Germany, Mr. Schnatz, Member of the Board of Management of Hansgrohe, Dr. Kampmann, CTO of OSRAM Licht and Mr. Dankwerth; Executive Vice President Research & Development at RECARO Aircraft Seating. The main questions discussed in the panel discussion were:
- Do we carry the necessary knowledge about the new technological possibilities into our organization – and give it sufficient space?
- How do we succeed in understanding the needs of our customers, detached from our previous products and services – and in making the findings from them sufficiently heard?
- How can we accelerate the clock rate of our organizations at the relevant points so that we can keep up with the speed of change?
Finally, Prof. Wurzer presented the position paper on “IP as a competitive instrument in Industry 4.0”.
This position paper of the Diesel Board of Trustees shows the status of the discussion in the Competition Industry Council. It summarizes the results of the empirical preliminary study, meetings for the exchange of experiences with companies on the board of trustees, discussions with experts, as well as interviews with CTOs and technical managers of medium-sized companies from various industries. The results show that the digital transformation is a phenomenon that is spreading with increasing dynamism across all company sizes and industry boundaries. This not only presents companies with the challenge of developing appropriate technologies, software solutions and business models, IP management must also be adapted to the new framework conditions in Industry 4.0. So far, German companies have not yet fully exploited their potential here. The position paper shows the neuralgic points as well as available best practice solutions and formulates the tasks that have to be solved in order to make Germany permanently competitive in the competition for patent positions in digitization.