The one crucial factor is trust
Digital solutions are everywhere now, bringing about fundamental change not only in value creation processes but also in entire business ecosystems. This is resulting in the emergence of new business models, a challenge that only few companies know how to deal with. The Ferdinand-Steinbeis-Institute (FSTI) saw this problem coming and now offers companies a “forum of knowledge and trust” – a protected place where business models can be thought up and tried out.
One indication that digital solutions are now central to everyday life is that the trash can for recycling cardboard boxes is full again. It’s a subtle thing, but a reflection of a dramatic change in consumer behavior. Ecommerce is currently growing at over 20% year on year – in stark contrast to plunging sales in bricks-and-mortar stores. It would be simplifying things to assume that substitution has been like for like. Ecommerce companies are not just wholesalers, which typically stock a wide range of items (from books to food). They are also involved in shipping, transportation, banking, big data analysis, and a lot of other fields of business. Of course digital solutions are not just found in (online) trade, but there is a good example that highlights an important feature of digital transformation: Value chains are changing and entire business ecosystems are now entering into competition with one another, involving a large number of different business capabilities. It’s difficult to respond to the changes that are going on in the same way businesses used to react. Very few companies in the current business environment are in a position to rethink an entire ecosystem and reorganize it by themselves.
Digital transformation is not actually a technological challenge; it’s an extreme change affecting our entire social and economic environment. In business, this will have an impact on organizations, how companies are managed, entire business processes, and the underlying process of value creation. Sweeping changes in value creation structures pose a fundamental challenge to previous organizational and management structures and as a result, this spells a loss of control on all kinds of levels. The Ferdinand- Steinbeis- Institute has been working on a variety of domestic and international projects that put it in a position to recognize the typical patterns of digital transformation and express this in abstract form. Building on this makes it possible to develop and subsequently introduce methods that allow knowledge regarding digital transformation to be shared with others, including SMEs where Micro Testbeds can be introduced. To set the ball rolling, consortia are regularly formed consisting of different types of companies, reflecting all business capabilities that would potentially be required within an ecosystem. Because Steinbeis is a neutral partner in this process, it is possible to identify medium-sized companies with complementary capabilities and get them to work together in a “safe area” based on mutual trust.
Working within the context of a Micro Testbed is always a decision of an entrepreneurial nature, and it also calls for trust in the abilities of Steinbeis – that means trust in the scientific and methodical know-how of Steinbeis and its ability to identify the right companies to be part of an ecosystem and motivate them to join in. Usually, neither the problem nor the solution are actually known when a Micro Testbed is being set up, so one challenge companies face is that they have to agree to take part in a project even though it’s still not possible to say in tangible terms what financial benefit there will be for the individual companies involved. There’s no point in going through the standard ritual of calculating economic viability or doing a cost-benefit analysis. Despite this, the potential pressure coming from the (digital) market to make a change and, perhaps more importantly, the reputation of the FSTI, do lower the hurdles for companies to take part in a Micro Testbed.
Thinking in terms of ecosystems is not a new-fangled idea that has stemmed from digital transformation, but for companies it’s not a central element of traditional practice either. Even major German companies find it difficult to set up teams that go beyond just thinking about the relationship between customers and suppliers, because there’s no obvious neutral authority in this area. This is why the Ferdinand-Steinbeis-Institute has established the ideal vehicle in its unique “forum of knowledge and trust.” It may sound trivial that a solution in one ecosystem is fundamentally different to a solution in an ecosystem developed through bilateral collaboration, because the overall know-how regarding a process or market cannot be pooled. Even if it is initially difficult for entrepreneurs to understand the potential benefits of a certain system, and even if they have to share a system with other companies because Steinbeis is involved as a moderator, it is actually possible to add value for everyone concerned.
Digital transformation is not restricted to an individual sector of industry or a certain manufacturing method. It is about adding capabilities to an ecosystem in order to enjoy the spoils of success in that ecosystem. One of the most important questions faced with all Micro Testbeds is which business capabilities mark out the individual companies involved in the process and how these can be used as part of a new business model. To demonstrate this, typical patterns and mechanisms are provided to show how the process works in other sectors of industry or application areas. The experience and the knowledge gained from the Industrial Internet Consortium (IIC) and other Micro Testbeds provide a good basis for this. Recognizing typical patterns and applying them within a different context is one of the important areas of support the project team gives with the transfer process. The task involves ensuring all parties and their business capabilities are integrated into processes in such a way that they develop one or several application scenarios, thus delivering benefit for all members and the system itself. One or some of these use cases are then tested by companies involved in a real business environment (brownfield). Only then do the companies move on from the business model for the ecosystem, entering the proof of concept phase by using different technologies. The aim now is to check the assumptions that were made when drafting the business model.
Experience with more than 15 Micro Testbed projects, which have spanned a variety of sectors of industry (the retail trade, manual trades, service provision, machine and plant construction, hotels and gastronomy, manufacturing, wholesaling, the automotive sector), clearly shows that small and medium-sized enterprises can learn to understand the facts about digital transformation and methods and apply these methods. They also learn how to re-examine their own business capabilities in the context of digital technology and adjust accordingly. Companies quickly learn that not all of the skills they will need to create an ecosystem can come from their own resources and that solutions that can be developed in an ecosystem go a lot further than the things that would be possible in their own company. There are knowledge gains in many areas, from how to pull together a testbed to identifying use cases and checking feasibilities. Also, companies get to try out new cultural skills. Modeling a new ecosystem, carefully checking assumptions, and understanding one’s own capabilities provide a good foundation for finding a successful position for the company in the face of competition in the ecosystems of tomorrow. Micro Testbeds are like a research and transfer lab in one. They deliver benefit for science and academia on the one hand, and the world of business on the other. In its role as a scientific advisor, a developer of the ecosystem, and a neutral moderator of its Forum of Trust, the Ferdinand- Steinbeis-Institute has worked its way into a unique position as a research and transfer institute in German-speaking countries.