The Future of Competitive Strategy

14

Introduction

©2022 MIT. This excerpt is from The Future of Competitive Strategy by Mohan Subramaniam, published by The MIT Press.

Consumption ecosystems

Production ecosystems

Interactive data from products/users

Interactive data from assets

Advanced Operational Efficiencies

Data-driven Services from Value Chains

Data-driven

Operational Efficiencies

1

2

3

4

Services from Digital Platforms

e.g., Reducing manufacturing defects

e.g., Improving R&D/product development productivity

e.g., Annuity- driven outcome- based sales

e.g., Connecting smart product users to third party-entities

Figure 0.2 Four tiers of digital transformation.

Tier 1 in figure 0.2 entails leveraging sensor- or IoT-based interactive data from assets andmachines in the value chain to improve value chain efficiencies. For example, Ford uses automated vision-based inspection of paint jobs in its plants (through sensors, the IoT, augmented reality, or virtual reality and AI) to improve detection of defects in its cars. Tier 2 entails leveraging interactive data from product users to fur- ther advance value chain activity efficiencies. An example is Caterpillar designing a new, cost-efficient motor grader that more effectively moves gravel rather than dirt, based on insights developed from product-user interactive data. Using interactive data from product users as opposed to its assets poses greater challenges. In tier 2 a firm also expands the scope of its efficiency gains beyond asset utilization to broader proc- esses such as R&D and product development. Tier 3 entails leveraging interactive data from product users to gen- erate new data-driven services. An example is GE using product-user interactive data to improve fuel efficiencies and appropriating a part