I had the privilege of attending the 10th networking meeting of the Peter Pribilla Foundation on the 5-6 May, 2016 at two wonderful villas around Rome, Italy. Thanks Kathrin Möslein for inviting me again to participate in this wonderful network meetings in picturesque villas. This is not intended to be a minutes of the meetings, but my own notes and learning.
Manfred Broy’s keynote on Digital transformation
Digital transformation today is being driven by multiple forces: technology push, infrastructure maturity, market pulls, and startups that can leverage these business model opportunities. As markets, technology, and competence come together to create new business models, the economy is flooded with startups that could disrupt our lives in more ways than what we can imagine.
The talk brought to the fore three observations in my discussion.
- Software is eating our lives
As the digital transformation evolves driving on increased computing power, trnasmission power (bandwidth), and programming; Governments are struggling to regulate these business models. For instance, Skype as a software disrupted the international telecommunication industry that relied on massive investments in hardware at the backend and the consumer end. Blockchain has created an entire monetary system with no involvement/ interference of the State.
- From Internet-of-things to Internet-of-systems
More and more devices are being connected to the internet, and more and more data is being collected about every part of our lives. The evolution of the Internet has followed the linear path from (a) http or internet 1.0 that connected computers in a network, to (b) web 2.0 that allowed for interactive content in the form of search and social media, to (c) a semantic web 3.0 that allows for semantic search, including images, videos and other references, to (d) the mobile internet, that focuses on the App Economy – hyperlocal and mass-customized content, to (e) integration of IoT devices and servitization applications that lead the Interactive Industry or what is called Industry 4.0.
- Moral questions on how these data is used
As more and more data is being collected and collated by corporations, that are mostly monopolies in their markets, questions remain on the nature of consumer choice on what and how their personal data is being used, definition of trust and transparency of these data banks, and how these changes are affecting our professional, personal, and social lives.
Four sub-groups deliberated on actions, competencies, infrastructure, and promises around digital transformation.
- Has all this digital transformation driven us towards so much personalization and customisation that we excelled in marketing to a segment of one; while we have ended up destroying the social processes that form the basis of creating vibrant communities?
- With all these investments in digital transformation, what social problems are we solving in the developed and emerging economies? What are our contributions to sustainable management of our ecological environment, alleviate poverty, and manage active and forced migration of people across national and continental borders? What can we contribute to the improvement of human development, fostering inclusive growth, and evolve meaningful networks of social and economic competencies?
Albert Heuberger talked about the need to integrate research on hardware, software, and open problems. He talked about the various projects that Fraunhofer IIS was working in collaboration with the FAU Erlangen-Nuremberg and the Bavarian Government. His view of the future was to sustain research on
- Power consumption economics, including battery technology, to power smart devices that need to be ‘always on’.
- Devices, software, and problems that help improve mobility through increasing the digital range of smart devices.
- Integration of data from intrusive and non-intrusive biological data like glucose levels, fatigue)
- Consumer applications of hyperlocal environmental data, like pollution parameters (COx and NOx)
- Long range imaging, including gesture control
- 3D displays for mobile phones (VR apps for end consumers)
Peter McKiernan summarized the two talks about the need for engaged scholarship in the context of business research losing practical relevance. I could summarize the day’s discussion and thoughts as an interaction of two triads.
Our second day began with Mitchell Tseng talking about his rich experience of how the world has evolved in his talk on leveraging individual expertise in the context of global cooperation. As the world moves from optimizing supply chains to global value chains, we need to build three related capabilities
- Actively manage the shift from reducing waste, focus on core competence, and being responsive to customer needs to increasing the customer willingness-to-pay, focus on the value communication and delivery, and be responsive to changes in customer value perceptions over time.
- In a world dominated by network effects, value providers could realize value from even customer indifference. The old chinese proverb says, “the wool grows on dogs, and the pigs pay for it”.
- Rapid prototyping in a globalized world requires organizations to embed the product concept into the prototype and be able to test it across different parts of the value chain and in different cultures.
Hans Koller commented that even traditional businesses like aviation (free flights for passengers paid for by advertisements/ shopping), renewable energy (freebies for consumers who allow for installation of solar panels on their rooftops), and healthcare (providing free healthcare advise/ services in exchange for data collected from patients through embedded devices) are embracing two-sided markets. He also added that such rapid prototyping may leverage modularity (as propounded by Prof. Charles Baldwin) in product design and development. Building modularity across global products and value chains requires well-defined international standards for interfaces.
Peter McKiernan commented that research on value creation from the eyes of the consumers (perceived value) could learn a lot from the research on cognitive psychology literature. The definition of business value creation has over the years evolved from (a) the traditional industrial economics SCP paradigm to (b) Porter’s industry attractiveness frameworks to (c) mass customization and value creation to (d) the experience economy of the 21st century.
Members and fellows of the Peter Pribilla Stiftung (PPS) shared their wonderful work, research, and experiences. Unfortunately, the notes are not part of this document.
The afternoon was centered around two sub-groups working on (a) how the research group could work together in joint projects and (b) designing formats for digital transformation. It was discussed that the network should be largely expanded to include people from outside Germany, maybe leveraging each others’ personal networks. The need to collaborate with each other in applying for joint projects from organizations like the EU was emphasized. The group on designing formats elaborated on the need for an agency that could act as a platform that would evangalize, educate, and build strong networks of organisations that enable digital transformation with those that need their services like the Government, Universities, Schools, non-proifts, and corporations.
We have come a long way from when we started in the last ten meetings. Too much of our discussion was centered around white, middle-class caucasian world. We need to expand our focus to the globalized world that includes a lot of problem. The second problem is that we have been largely academic-centric. We are the product of a system that pushes us to be more theoretical, abstract, and less practical and working with the firms. It is imperative that we move more towards pragmatic application of our energies to solve the big bad world’s problems.
Dynamic capabilities is about how organization’s change and evolve over time. We need to adopt the same approach and ask ourselves, look at our own unconscious biases, shift from the technology level of analysis to the more micro-social levels, include people from more varied disciplines like Psychology and Sociology to educate us.
We have learnt a lot about technology, digital transformation, and new business models. We are so proud that we heard from our PPS Fellows. We have over 50 fellows right now working, and it is heartening to see them do so well in their research and careers.
Thanks to Claudia Lehmann and her team for the wonderful organization.
Comments, observations, edits, and additions welcome.