Digitalization causes a complete paradigm shift of production and innovation options. In a digital environment, innovation systems and management of technology face new challenges. Product development and engineering departments across the globe need to master three fundamental challenges:
- Developing innovative, connected, customer-centric and personalized products and solutions
- Driving efficiency and digitalization of core product development and engineering processes
- Integrating their departments into an agile and integrated partner ecosystem
Digitalization understood as the use of digital technologies to change a business model provides new revenue and value-producing opportunities. Digitalization processes accelerate the need for innovation and for innovating faster. Great digital products don’t suddenly appear out of nowhere. In fact, they are sophisticated artifacts that have successfully grown into great products after a careful product discovery process. They are delightful experiences, easy to use, and beautiful to look at, providing outstanding value to its users. The vast majority of products fail during the discovery process or shortly after launch. Either they fail at providing a meaningful user value, people do not use them frequently, or the number of users does not grow properly. Few products will serve the market: Meaningful products that have mainstream attention, innovative solutions no one imagined before, causing a change in people’s behavior. These are the products we commonly know, admire, and remember. These are the products we want to build.
In this module the difference between disruptive and sustaining innovation, radical and incremental innovation and architectural and modular innovation was discussed. Clayton Christensen was the first to introduce the concept of disruptive innovation in 1995. Disruptive innovation, by definition, refers to a concept, product or service that creates a new value network either by disrupting an existing market or creating a completely new market. In the beginning of the life cycle of an innovation, disruptive innovation generally provides lower performance, and while these kinds of innovations often aren’t “good enough” to satisfy current customers, they appeal to a different market instead.
In today’s world of rapid technological innovations, customers demand products and integrated solutions that are always up-to-date, complete with the latest designs and technologies. This shortens established product life-cycles and drives demand, not just for frequent product updates and incremental improvements but also for complete makeovers and breakthrough technology innovation. For industrial customers, “traditional” products often need to be digitally enhanced in a whole range of ways, including the addition of apps, human-machine interfaces, remote access and surveillance, predictive maintenance, self-learning adaptive parameter configuration, virtual assistance services, and other digital services that can be integrated seamlessly into existing and evolving full solution ecosystems.
In addition, customers are increasingly demanding personalized products and services that are tailored to their specific requirements. This creates challenges for developers and manufacturers who need to establish a modular product strategy that can be individually tailored to the specific features, designs, services and integrated solutions that customers require. Without digitized product development processes, engineering changes become too costly and time-consuming. Customers expect their orders to be fulfilled instantly – with same-day delivery now the new norm. In some industries, just-in-time delivery has already shifted to just-in-sequence delivery where suppliers need to deliver their parts or components within a very short window in the right sequence. All of these trends are dramatically increasing the challenges for product development so companies are looking to increase the efficiency and output of their product development function while keeping costs under control. The answer lies in enhancing product development with digital tools, new agile development methodologies and automated processes. Digital Champions are already deploying key technologies including web-based, next generation product development techniques, data analytics and AI-based solution design, integrated product lifecycle management (PLM) systems and agile development techniques. And leading companies are using digitally-enabled tools to better capture customer needs and design products and integrated solutions that are individualized for specific customers. Most importantly, companies leading digital product development are integrating their activities with key partners and becoming leaders of an integrated development ecosystem, which provides customers with integrated complete solutions, rather than individual products and services. Effective co-creation tools, common standards and simultaneous access to joint product development platforms then become part of an integrated eco-system.