Digital Improvement Program-DIP

[email protected] 2016

Creating the learning Enterprise

The TMG Approach

DIPDigital Improvement Program

for becoming a lead provider of Smart Services

Smart Service Management

2

Content

1. DIP Approach and Outcome

2. Tuning-in: Smart Service Strategy

3. Phase I: Business Model

4. Phase II: Digital Capabilities

5. Phase III: Entrepreneurship

DIPDigital Improvement Program

3

For Companies who want to become Lead Providerof Smart Services, TMG provides a Digital Improvement Program which enables dynamic value creation through the integrative Management cloud-based Network Design and Community Coaching

4

Smart Products Smart ServicesCustomer

Initiatives

Revenue Impact

Profit Impact

Smart Product Initiatives Smart Service Initiatives

86 % 14 %

62 % 38 %

39 % 61 %

The Profit and growth consequences of Smart Services

The Emergence of the Smart Service Market

DIP focuses on the fast growing global Smart Service Market

Source:Kim, Chan et al: Blue Ocean Strategy, Harvard Business School, 2015Base: 150 global companies in 30 industries

• Smart Service Lead Market• Smart Service Lead Provider

Smart Service Leadership

The linear Business Model

The German Approach to Smart Service :The Product World Mindset

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Value Chain Operation

Value Chain Design

Production Engineering

Marketing & Sales

Integrated Supply

Product Strategy

Product Design

Research

IT

HR

Shared Services

FI

Inbound-Logistic

Production(Digital Twin)

Outbound-Logistic

SupplierSmart

Service

Product support-based Smart Services are not very profitable at present: Customer expect high up-time for

“Made-in-Germany” Products

Representative Smart Service Solution

Communication andAnalytics Hardware

Temperature Sensors

Source: ABB

• Product Connection• Remote Services • Condition Monitoring• Predictive Maintenance• Pay per Use

The Product World Mindset leads to a lack of preparedness for digital Disruption

Key Driver:• Efficiency• Automation

6

The US Approach to Smart ServiceThe Digital World Mindset

The Platform Business Model

The Value Eco-System

Compensates

Creates Connects

Consumes

VALUE-UNIT:Smart Services

Producer Team

2

Customer Team

Supply Demand

Art of the Possible (Non)Customer Pain

Platform

Sales

Physical World Mindset

DigitalWorld Mindset

Physical Key

DigitalKey

Representative Smart Service Solution

Key App

• Customer Experience• Customer Connection

Think different

The Digital World Mindset focuses on Customer Connection & Experience which reshapes Industries

Key Driver:• Network Effects• Fast Learning

DIP addresses the Key Performance Gaps of German Firms Germany as an international player has key engineering strengths –

Pressure to move to digital Improvements continues to grow

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Relative German Strength vs. USA & Chinahighlow

Futu

re B

usi

ne

ss I

mp

ort

ance high

low

International Digital Benchmark Result

Key Strengths• Engineering

Capability• Importance of

Production• Sustainability

No focus field No focus field

Source: Industrie 4.0 Internationaler Benchmark, Zukunftsoptionen und Handlungsempfehlungen für die Produktionsforschung; acatech, Nixdorf Institut

?

Growing Pressure• Business Models• Digital Capabilities• Entrepreneurship

German Firms have to improve in three key action fields in order to become a lead provider:• Business Models• Digital Capabilities• Entrepreneurship

Implication

DIP is an integrative Approach to Smart Service Management

DIP Phases in the evolution of smart services

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ImplementationPhases

Smart Service Strategy

PHASE IBusiness Model

PHASE IIDigital Capabilities

PHASE IIIEntrepreneurship

DIP Workshop I• Segmentation• Scenarios• Evaluation

DIP Workshop II• Initiative Scope• Talent Pool• Network• Blueprint

DIP Workshop III• Platform

Prototyping• Plan Activation

Sessions

Design the Hybrid Business Model

Shaping superior Value-Ecosystems

Fostering Empowered Execution

• Aligning Strategy with Business System

• Smart Service Scenario

• Design Work-Graph

• Focus on Key Goals

• Apply Digital Leadership Framework

• Architecture of Participation

• Set-up Digital Design Platform

• Design Digital Network

• Governance System of Community

• Activating Competence Network

• Joint Consciousness

• Achieving goal by driving Lead measures

External Smart Service 1 2 3

Internal Smart Service 1 2 3

9

DIP provides an cloud-based Design Platform

PERIPHERY

Competence Teams

MARKET• Customers• Stakeholder

Customer Teams

Supply Demand


CENTER

Digital Design Platform(Network Prototyping)

Digital Design Platform Architecture

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Digital -Management

Smart Service Steering Committee

Frame the Smart Service Vision/Strategy

Crafing the Business Model

Foster Cross-Unit Engagement

Strengthen IT-Business Relationship

Set Smart Service Priorities

Set Objectives & Focus Investments

Review of Smart Service Case results

Establishing Roll-out direction

Ensuring IT perspective

Faster access to expertise / data

Functional driver

Set-up Digital Platform (“as-a-Service or “Ownership Model”)

…

Team Coaching

Digital Platform

Community Integrator

Set-up the Digital Team Community

Provide Cross-Unit Governance System

Integrate across Center & Regions & Customers

Drive Results by aligning Goals, Resources and Constraints

Support Communities / virtual reviews

Set-up Digital Execution

On-Boarding

Launching Team

Execution with Coaching

Result Presentation

Communities• Center • Periphery• Customer

A

B

C

D

Roles

Smart Service Governance Model

DIP coaches four roles for moving the company forward Four Leadership Roles for achieving the joint Goals

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Digitally Engage Customers

Value Creation: Periphery Value Creation: CustomerValue Creation: Center

Enabling the Periphery Teams

Phase I: Connect Employees Phase II: Connect Customers

Digital Team Platform

Enabling the Center Team

2

Customer TeamCompany TeamCompany Team



The DIP Outcome: Collective-Intelligence@Scale

The Digital Team Platform for creating Smart Services

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The Collective-Intelligence@Scale AdvantageFreeing Resources for value-creating Activities and Growth

Res

ou

rces

(co

sts,

em

ail t

ime.

.)

Cooperation

Linear Business Model

Platform Business Model

The Effect on Business Performance

Digital Transformation

Time-Reduction

30 -50%

SpeedFast Responses

Reduction of

non-value added expenses

25 -30%

Efficiency Work Productivity

Additional Value-Creation

by Cooperation between Teams

30 -35%

GrowthCollective Creativity

Limits of Growth: Knowledge Resources

Growth Effect

Source: Morieux, Yves: Six Simple Rules

13

Content






Tuning-in: Smart Service Strategy


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Fostering Empowered ExecutionExternal Smart Service

1 2 3


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The German Engineering Example

How to escape the sandwich position ?

?

?

Strategic Challenge:

Basis: Thomas Sattelberger

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Two Strategic Directions to escape the sandwich position

Aligning Strategic Priorities with Business Model

1 2

3

(Re)Shapethe product portfolio

• sustaining Leadership • building competitive Position• exploring strategic Options

Differentiate with Smart Services

Orchestrating the value-eco-system

Build an hybrid business model

The Value Ecosystem

Outside Value Creation byInformation & Knowledge

The Platform Model16

The Value Chain

Inside Value Creation by Material & Energy

The linear Business Model

+

Adaptability & InnovationEfficiency & Excellence

Context of Smart Services

Smart Services Portfolio

Act

ivit

y Le

vel o

f Sm

art

Serv

ice

s(C

ou

ntr

ies)

XY

Revenue Potential

The external Smart Service Strategy

Understanding the external Smart Services Opportunities

Opportunities

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2Differentiate with

Smart ServicesOrchestrating the value-

eco-system

Strategic Priority

• Resource orchestration • External interaction• Focus on ecosystem value

Versus• Resource control• Internal optimization• Focus on customer value

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External Smart Service: Innovative Application Development

Leverage German Engineering Capability for Smart Services:Support Customer Engineers to solve though challenges

segmented in developed and emerging Markets

Source: Schaeffler

Smart Products

Smart Services

Electric-engineMachine-Tool

Gear-Box

Impact: Online Sharing of best practice applications with connected Customer Engineers

Portal

GermanEngineering

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The Economics of Smart Services

Smart Service Driver• Demand-Side Economics of Scale• Customer Experience/Learning• Network Effects/Feedback

More Demand

MoreInnovative

Applications

Network Effects of Smart Services lead to more Demand of Smart Products

More innovativePlatform Content

More interested Customer Engineers

Lower problem solving time

Lower Costs, higher Speed

Project Management

InnovationManagement

Business Process

Management

Topic –specific Networks Expert

NetworksInformation

Management

Stakeholder Management

Real-time Strategy

Councils, Boards,

Committees

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2Differentiate with

Smart ServicesOrchestrating the value-

eco-system

Strategic Priority

• Resource orchestration • Cross-boundary interaction• Focus on ecosystem value

The internal Smart Service Strategy: Cross-boundary Synergies

Internal Smart Service Portfolio:

Understanding the internal Smart Services Opportunities

Continuous active Strategy

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The internal Smart Service Strategy: Cross-boundary Synergies

1. Country Success Planning

2. Develop Market Strategy

3. Translate Market Strategy

4. Plan Market Execution

7. Test and Adapt Strategy

6. Monitor and Learn

5. Execute Market Initiatives

Fulfillment

Country ManagementCorporate HQ

Regional Sales

BUBU StrategyInnovation

Controlling

Operations

RegionalStrategy

Regional Sales

BU

SCM

BU Operation

Country Industry Manager

Market Mgr.

Sales Mgr.

Business Interface Process

New Process

New Process

Focus Field

Established Process

CorporateStrategy

Internal Smart Service: Continuous active Strategy

Impact: Quick Cycle of Business Strategy to master Complexity

GermanEngineering

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Content






Phase I: Business Model


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Hybrid Business Model: German EngineeringThe Digital Value Creation augments and differentiates existing Smart Products

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The Hybrid Business Model

Bearings

Linear Business Model

Platform Business Model

Physical World: Value Creation with Material & Energy

Digital World: Value Creation with Information & Knowledge

Smart Products

Smart ServicesVALUE-UNIT:Smart Services

Supply 2

Engineering App

Value Chain

Value Eco-System

Demand

Platform

Think different:Digital

Complement

Inbound-Logistic

ProductionOutbound-

LogisticSupplier Customer

Customer ConnectionZero marginal costsMicro-SegmentsModular Contracts/RulesDurable RevenueHigher Margins

GermanEngineering

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Smart Service Scenario

Platform Business Model : Innovative Application Development

Value Proposition: Co-Creation of superior applications with connected Customer Engineers

CENTER

PM

Platform Provider

PERIPHERY

Competence Teams


Customer Teams

Supply Demand


GermanEngineering

Work Graph for achieving the Goal

Competence Area 1

C

• Workstream a • Workstream b • Workstream c

o Task 1o Task 2

Job-to-be done : Smart Service C

OBJECTIVE OF THE INITIATIVE:Increasing Sales by 30% through Cross-Selling of merged

Company

Design the “Job-to-be-done” Work Graph

Competence Area 2 Competence Area 3 Competence Area 4


o Task 1o Task 2


o Task 1o Task 2


o Task 1o Task 2

Define Lead measures to get the “Job done”

Setting Directions to achieve the goal

Collective Goal:Capture Cross-Selling Potential of 30% Sales

IncreaserPredictive

Predictive and Influenceable Lead Measures

Lead Measures

Predictive: Measures something that leads to the goalInfluenceable: Something we can influence

A)No. of internal Interactions

B) No of smart service ideas

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Content






Phase II: Digital Capabilities


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Digital Leadership Framework for Disrupting InsideOut

The Dual Work Organization of the Hybrid Business ModelOrchestrating the hybrid Business Model of Smart Products and Smart Services

Leadership-driven network

Smart Services

Mastering the Slide Control

Digital Leadership as…

Adaptability & InnovationNon-Routine & un-predictable

The Value Ecosystem

Management-driven hierarchy

Smart Products

Efficiency & ExcellenceRepeatable & Predictable

The Value Chain

TMG Focus

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Enable the Competence Network

enablemotivate

Architecture of Participation Governance

of Execution

The Value Ecosystem: Collective-Intelligence@Scale

Leadership-driven network

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The Digital Team Building Blocks

The three Building Blocks for the Digital Team

Matchmaking

Roles

Digital Team

Job-to-be-done Global Talent Pool

Scope of Initiative1

2 3

Work Graph

Talent

Customer

Periphery

Center

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The Digital Leadership Platform

Digital Design Platform as a Service

CENTER

Digital Design Platform(Network Prototyping)

Competence Teams


Customer Teams

Supply Demand


GermanEngineering

PERIPHERY

Task 1: Design the Work Graph

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The Work Graph with 4 Network Levels

Level I: Job

Level II: Competence Area

Level III: Work Stream

Level IV: Activity

Task 2: Assign Responsibilities from the Global Talent Pool

Competence Area Level

Save

35

80%

Task 3: Set Start and End of Task Timeline

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Save

Task Timeline Traffic Light

Traffic Light turns yellow 7 Days before Deadline

Connected Traffic Light Timing

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Level I: Job

Level II: Competence


Level IV: Task

-5 -4 -3 -2 -1 0 1 2 3 4 5 6 7

Day to Deadline (example)

Tasks trigger the progress of the Initiative

Automated Escalation Mechanism for all to see

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Country ShareRoom Screenshot

Task 4: Keeping the Scoreboard for all to see

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Aggregation of the Scoreboards Level I: Job

Level II: Competence


Scoring

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Digital Design Platform: User Functionality Overview

Work Navigation

Job-to-be-done Name

Job Owner

Job Arena

Comments/Info/Chat

View Job Scoreboard View Job Task/Activity Status

Job-to-be-done

Click to Navigate

Click on +

Click to Minimize

Click to Minimize

Digital Design Platform

Enabler of the Value Eco-System

Work Status

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Content






Phase III: Entrepreneurship


42








Fostering Empowered Execution

• Governance System of Community

• Activating Competence Network

• Joint Consciousness

• Achieving goal by driving Lead measures











DIP Workshop III• Platform

Prototyping• Plan Activation

Sessions



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Entrepreneurship: Evolve the Eco-Systems

Interplay of Architecture and Governance

enablemotivate

Architecture of Participation Governance

of Execution

LaunchOn-Boarding Adoption Optimization

• Match global talent with sub-jobs, workstreams and tasks

• Explain the key goal

• Agree on Lead-Measures

• Train the Team to use the ShareRoom

• Launch the Team into Action

• Create Scoreboard

• Align Roles and Expectations

• Schedule Activation Sessions for Shared Consciousness

• Focus on empowered Execution

• Track results on the scoreboard

• Additional training and mentoring

• Clearing the path by sharing

• Optimizing Team Performance

• Encourage creative ideas to move the lead measures

• Celebrate wins and accomplishments

• Enable agile work

The Ramp-up Process

Support ActivitiesImplement the four stages of Digital Team performance

Activating the Competence Network for dynamic value creation

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The Team-of-Teams Sphere of Activity


PERIPHERY

CENTER

Competence Team I Competence Team II Competence Team n

Smart Service App

Machine Tool Smart Service

• Customer Competence• Workstreams/Tasks of the Periphery

• Competence Development• Work Graph of the Center

• Job-to-be-done Competence• Co-Creation of Smart Service

PM

GermanEngineering

Basis: Winfried Felser, Niels Pfläging

The Tasks of the Community Integrator

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• He/she matches Tasks with Experts for enabling top-line growth

• He/she takes part directly in the planning/coordination of the Journey to achieve Business Goals by creating Job content

• He/she allows each one in the Community to benefit form the cooperation of others by creating the context of cooperation.

• He/she is at the same time a Resource and a Constraint for Community Member.

• He/she is supported by the Governance System/Scoreboards for achieving the Community Goals

• It is not a dedicated job. It is a role in the organization system that an individual plays as part of his usual job.

• He/she plays the role of a „new Human Resource Manager”

Community Integrator is critical to Digital Team Success

Community Integration : Empowered by the Cloud

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DIGITAL DESIGN PLATFORM

Online-Learning and Prototyping

Community Integrator : Leading the Digital Team of Teams

GermanEngineering

Playbook 1

Repository of repeatable best practices and re-usable components




Playbook 2 Playbook 3

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Enable Platform-based Competence Network Interactions

Driving Competence Network Interactions for dynamic value creation

Compensates

Creates Connects

Consumes


Competence Teams

2

Job-to-be-done Team

SupplyDemand

Art of the Possible (Non)Customer Pain

Sales

Key Driver:• Network Effects• Fast Learning

PERIPHERY

CENTER


GermanEngineering

Platform

TMG: Coaching The Digital Team Implementation

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TMG helps Clients to build Digital Management Skills by providing • Online Leadership Workshops for the Community Integrators of the Digital Teams• Coaching of the Digital Team Implementation and• Digital Design Platform as a Service

The following TMG services helps the Management to build Digital Leadership Skills for

Community Integrators :

• Selecting the “Digital Team Opportunities”: Providing Methods for framing the Digital opportunity/challenge

• Strengthening the Digital Leadership Skills: Co-Creation of the Design of the Project Work Graph and supporting Community Integrator in designing primary activities and managing the support activities.

• Executing the Digital Team Project: Coaching of the Execution Process• Preparation of Online Work and Training of the Core Digital Team• Providing “on-the- job”-Training of the Methods/Disciplines and solving open questions when they arise• Preparation and coaching of the online team sessions together with the Community Integrator • Integration of the Business-IT Work for tailoring the Digital Platform• Participation in Management Reviews

• Governing the Execution: Providing the cloud-based Digital Design Service for mobilizing the scalable Learning of the Digital Teams in the Value “Eco-System”

Engagement: Weekly Operating Rhythm with Online Activation Sessions

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Review

2

1

ReportReport on the tasks of

the last week

3

PlanCommittments for

the next tasks

1


the last week

3


the next tasks

2 2

1


the last week

3


the next tasks

Week 1 Week 2 Week 3…

Sprint Sprint Sprint

Management Task Level

2

1


the last week

3


the next tasks

Week 4…

Sprint

Operative Task Level

Review Review Review

Empowered Execution : German Engineering Example

GermanEngineering

Coaching/Guidance of the weekly Review Events

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TMG Online Coaching

• Pre-Session Coaching: updating scoreboard of every team member and preparing the session agenda with Community Integrator

• Session-Coaching: It ensures that members limit their status report to few minutes. For each goal members will focuses on objectives, status, issues and recommendations to ensure joint-problem solving instead of pure reporting. Guiding members to make commitments which have the highest possible impact.

• Post-Session-Coaching: Documenting the commitment as basis for next week and de-briefing/ counseling of the Community Integrator along a systematic method

• Between-Session Coaching: Answering questions of Community member when they arise and removing unexpected roadblocks.

• Preparation of senior-management Presentation: Ensure format, timeliness and quality of result presentation

De-Briefing Checklist

1) Meeting as scheduled ?2) Was the session brief, brisk, energetic?3) How die the Integrator played his role?4)How was the review of the scoreboard?5)Did we analyze who is winning, loosing?6)Did we celebrate success?7)Did the team hold each other accountable for commitments?8)Did everybody make commitments for next week?9) Did we clear the path for each other?10)Did we keep out low value issues?

10 Questions

Weekly „Review-Events“ as a ProcessAchieving the Goal in a continues process

Review of the Scoreboards

Learning from success and failure

2

1

ReportReport on the tasks of the last week

3

PlanCommittments for the next tasks

Session Agenda

Lync Invitation: When, Who

Goal:

Individual Reports:

Scoreboard Update:

Team Member: Commitment:Status:

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To build up the Digital Team Organization we cooperate with the Client Management in the following way:

• Supporting Management in building the right procedural and behavioral internal conditions

• Providing Digital Leadership education and tools

• Ensuring actual functioning of a job-specific Team-of-Teams as Deliverable

• Providing thoughts and insights

• Sharing expertise for creating and implementing of Digital Work

• Supporting IT in transferring the Design Prototype to Company Standard Platform

• Creating the conditions for continuous adaptation to the complex business environment – doing the right thing at the right time, constantly.

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Transfer Competence Network Prototype into the Company Standard Application

Transfer Optimized Application to Company IT

Optimized Design Specification(Network Prototype)

Digital Standard Platform of the Company

Prototype Functionality Transfer

DIGITAL DESIGN PLATFORM

Online-Learning andPrototyping

GermanEngineering

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The Smart Service Network: The Platform of Collective-Intelligence@ Scale

• High adaptability/agility for Customer Signals• Joint Consciousness of customers need• Mastering Complexity of dynamic value creation• Network Effects are key growth driver

• Controlled Platform Access for Firm & Customer• Knowledge/Benchmark Exchange is enabled• Unity-of-Effort across boundaries• Global synergies for local but common themes

Digitally Engage Customers

Value Creation: Periphery Value Creation: CustomerValue Creation: Center

Enabling the Periphery Teams

Phase I: Connect Employees Phase II: Connect Customers

Digital Team Platform

Enabling the Center Team

2

Customer TeamCompany TeamCompany Team



Outcome: Collective-Intelligence@Scale

The Digital Team Platform

GermanEngineering

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Top-Line Growth Driver

Digital Teams Building Blocks of Top-Line Growth

Driving Top-Line Growth

Top-Line Growth

Co-Creation

Network Effects

Employee Engagement

Cross-Country Synergies

Leadership-driven networks

Co-Creation Platform

Out-of-Office Work

Global Talent Pool

Digital Teams Building Blocks

Top-Line Growth Case

Result: Increasing Sales by 35% through Cross-Selling of merged Company

GermanEngineering

57

Automotive Engineering

Other Industries

Technology Management Group Profile

Competences- Internet Driven Strategic Changes- Business Development- Accelerating Innovation Process- Mobilizing People in Networks

FactsOffice: München founded 1987

TMG helps companies create, build and launch new digital initiatives from within their organization