IN INTERVIEW: HARALD LOOS, Siemens
Question to the technical specialist: What does digitisation still have to offer industry?
More possibilities. As things currently stand, accurate determination of the current status of product development or production requires a great deal of time and effort. Forecasts are even harder. The possibilities resulting from increased memory capacity and processing power mean that data can be used and exploited in ways quite different from what used to be the case. And at some point you will easily be able to lay your hands on a digital representation of production.
But does the time and effort still stack up in relation to be benefit?
Quite. Here’s an example from the chemicals industry. In many places today, so-called world-scale plants are being constructed, capable of producing large quantities of a given substance at a low price. But would it not be more sensible to produce the substance where it is actually needed? And would not a plant that is only available for a given period of time do the job? Do I actually have to own the plant, or could I maybe rent or lease it? I’m suddenly in a completely different business model. I’m now focusing on the product and no longer on production.
Does the future lie in the separation of product development and production?
Nowadays, industry does not just plan the product; it operates and also owns production. The prime example of this is the car industry. But here in particular we should ask whether this would still make sense in the future. Local Motors, for instance, does not yet produce any cars of Mercedes E Class quality using 3D printers, but the idea of having cars manufactured to custom specifications is worth looking at. The same applies to medicinal products. Pharmaceuticals are standardised, although their effect on people varies. Would it not be a better idea to produce medicines whose efficacy is tailored to the individual or at least a smallish group of people with similar genetic predisposition?
That turns the business model on its head.
Yes, the link between product and production is being broken in some high-profit industries, and the value creation chains are being redesigned. Digitisation will also make it easier and more interesting for traditional business sectors to outsource their production to others. In the case of sports equipment, for instance, this has been happening for some time. The firms that sell the products put a lot of effort into branding and lifestyle marketing, but production takes place elsewhere. In this context, it is often smaller firms that are successful in taking a new direction and can set an example.
What is more important for a business: small steps or a big leap?
Both. But it’s a tightrope walk – becoming more efficient, better and quicker, but not forgetting disruptive changes along the way. A lot of important developments have taken place at times of extreme economic pressure. You need to make sure you continue being good at selling those things that you are already good at selling and carry on refining the things you sell for as long as you can sell them.
So why should it be so difficult to accommodate both these aspects in the same business?
Because the processes are completely different. It depends on whether you are after continuous improvement or more interested in the clean sheet of paper on which the next big thing is to be created. Large corporations all appear to react pretty much the same to this dilemma – parallel to their existing structures, they develop incubators for start-ups, in order to bring prototypes to market quicker. It also allows them to throw off the standard way of looking at things, the short-term thinking and quest for efficiency of a business already in existence. Just talk to a few start-ups – at the beginning hardly anyone has a clearly worked-out business plan. But a business plan is the be all and end all of a going concern. So, these things need to be pursued separately, but in parallel.
Finally, what is efficiency?
A necessity. But the best organised process is useless if it has no impact. This is true of internal process sequences as much as of technical developments – without the relevant demand, everything prior to it was unnecessary.