Deriving inspiration from a book which explains how innovation is the key to success in a saturated business, we shall see what action companies may take to open up uncharted markets, where growth is guaranteed
by Valerio Alessandroni
“Blue Ocean Strategy” is a book published a few years ago, written by W. Chan Kim and Renée Mauborgne, professors at INSEAD and co-directors of the INSEAD Blue Ocean Strategy Institute. This text states that companies may be successful not so much by beating competition but rather by creating new markets. The blue ocean, as defined in the book, represents an unexplored market, which differs from the red ocean, that is, the blood-stained ocean where competitor sharks swim and where companies need to settle for low profit margins, because the strategic approach is the traditional one, based on the defeat of competitors. Creating a blue ocean on the contrary implies using innovation to be successful in a market even if this is already saturated.
By means of these strategic moves, value is created in the company its clients and its employees, accessing new demand and reducing competition. Therefore, it is possible to be successful opening a business in an area already covered by competitors, or to offer services already available providing them with a new appearance.
This is an example of the “new business model” which is so often discussed within the Industry 4.0 framework.
Digital technologies and the categories which they affect the most
The “blue ocean” theme leads us to talk about Industry 4.0. According to a report by consulting firm McKinsey, new digital technologies will have a deep impact on four types of development: the first concerns the use of data, computing power and connectivity, including for instance Big Data, Internet of Things and m2m (machine-to-machine) communication. The second concerns analysis systems which allow to obtain value, that is information, from the data collected. The third development category concerns the interaction between man and machine, which requires increasingly intuitive interfaces, and augmented reality; for instance, to improve performances on the job using such tools as Google Glass.
Finally there is the segment dealing with the passage from digital to “real” which includes additive manufacturing, 3D printing, robotics, communication and new technologies to collect and use energy better.
Specifically, the report reveals that today only 1% of data collected is used by companies, which could indeed obtain advantages from “machine learning”, that is, by machines which learn form the data as they are collected and analyzed.
A growth opportunity for Italian SMEs
And what about Italy? The first Industry 4.0 report of Italian SMEs by the new Digital Manufacturing Laboratory of Padua’s University, created within the Marco Fanno Department for Economic Science, provides food for thought. The framework revealed by researchers, who concentrated on Norhern Italian companies, has two faces. The survey was carried out on a sample of 5,421 manufacturing companies from different segments of Made in Italy. Only about 19% of companies interviewed stated that they are using at least one of the Industry 4.0 technologies.
These companies started using these technologies some time ago, before the Government supported them, and they are not just the larger ones. Indeed, 40% of adopting companies are small enterprises.
Industry 4.0 technologies are adopted mainly to produce customized products. 68% of adopting companies creates tailor-made or customized products, while only 32% manufacture standard products. The reasons which led to adoption are linked, in 51.2% of cases, to the desire of improving the service provided to the client. This motivation is followed by efficiency in 43.4% of cases. In terms of impact, companies state that they have obtained three results: an increase in productivity (46%), efficiency (46 %) and an increase in the quality of the service provided to the client (45%).
A program which plans to encourage digital enterprises
What should be done, then? The answer may be provided by (from “What if I’” or “What would happen if I were to develop my idea and create a startup”?), a program promoted by the European Commission which has the purpose of raising awareness of SMEs as to the advantages of digitization by means of concrete examples. Indeed, the problem of European entrepreneurship is not so much a lack of ideas, which, on the contrary, abound, but the countless “doubts” which seize the would-be entrepreneurs when they must put their ideas into practice. Basically Watify aims at involving the main opinion leaders in digital innovation, thereby promoting an adequate training for young or not-so-young people wishing to renew exising SMEs or to develop new entrepreneurial ideas. The so-called “Watify Ambassadors” are professionals with proven experience who help companies to take their first steps in an environment rich in obstacles and in promises which are not always kept.
The project also envisages different sessions during which the experience of some entrepreneurs, who went beyond their doubts and started off digitization of their company, is shared with participants.
This is completed by a series of tools and services.
For instance, the “Selling online” tool provides information regarding the various legal obligations which companies, especially SMEs, should comply with, if they sell online or intend doing so.
This tool provides practical information on legal norms and practical action which companies should take in order to be compliant with the normative environment when starting off an online sales business, especially if such an activity occurs outside their own country.