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Royal Philip's goal was to use innovation to improve the lives of three billion people a year by 2025. To reach that goal, the company was shifting from selling medical products in a transactional manner to providing integrated healthcare solutions based on digital health technology ("HealthTech").
This shift required a dual transformation. On one hand, the company needed to transform how healthcare was conducted. Healthcare professionals would have to change the way they worked and reimbursement schemes needed to change to incentivize payers, providers, and patients in vastly different ways. On the other hand, Philips needed to redesign how it worked internally. The company componentized its business, introduced digital platforms, and co-created solutions with the various stakeholders of the healthcare industry.
In other words: Royal Philips was transforming itself in order to reinvent healthcare in the digital age.
The conventional view of the value-creation chain suggests offering high-value propositions at the product level (in terms of benefits provided by elements of the product) to attain high-value perceptions at the customer level, which should ultimately result in high-value appropriation at the firm level (i.e. relationship, volume, pricing and financial success). This study challenges this view and provides a differentiated understanding of the value creation chain. With a multi-industry sample of 339 companies and a sample of 626 customers to validate managerial assessments, the authors apply a configurational approach to identify whether and to what extent offering high-value propositions at the product level is necessary or sufficient for achieving superior value perceptions at the customer level and high-value appropriation at the firm level. Taking into account the company-internal and company-external environment of the value-creation chain, the study identifies seven value creation chain constellations.
THE PROBLEM: Companies create problems for customers and employees when product innovation goes unmanaged. Eventually, excessive operational complexity hurts the bottom line.
THREE SOLUTIONS: Focus on product integration, not product proliferation. Make sure your product developers work closely with customerfacing and operational employees. And settle on a high-level purpose that can guide decision making.
The European Economic and Monetary Union (EMU) has been in turmoil for more than six years. The present governance rules do not seem to solve the problems neither permanently nor effectively. There is no vision about the future of Europe in the 21st century. This article describes a realignment of the economic governance, which does not necessarily lead to a transfer or political union. However, it solves the current and future challenges. In fact, the redesign of present rules is the most likely as well as legally and economically option today. The key ideais the detachment from the compulsive idea of an ever closer union. However, this vision requires boldness towards greater flexibility together with an exit clause or a state insolvency procedure for incompliant member states.
Background. The application of lean management is standard in many companies all over the world. It is used to continuously optimise existing production processes and to reduce the complexity of administrative processes. Unfortunately, in higher education, the awareness of lean management as a highly effective methodology is quite low.
Research aims. The research aim is to show how the lean strategy can be applied in university environments. Finally, this paper addresses the question why it is so difficult to implement lean in a university environment and how an institution of higher education can move forward towards becoming a lean university.
Methodology. Based on a literature review, five key lean principles are presented and examples of their implementation are discussed using short case studies from our own institution. We also compare our findings with those in the literature.
Key findings. Lean offers the chance to improve the management of higher education institutions. This requires a commitment on the part of the university top management aiming at convincing all stakeholders that a culture of lean helps the institution to be able to adapt to the rapidly changing environment of higher education.
In the lights of an increasing digitalization of companies, the sales process might experience changes in the usage and the influence of digital tools. In order to examine the status quo of German companies in this regard, a study was conducted between 235 participants. The results of this study will be outlined in the article at hand.
This paper studies whether a monetary union can be managed solely by a rule based approach. The Five Presidents’ Report of the European Union rejects this idea. It suggests a centralisation of powers. We analyse the philosophy of policy rules from the vantage point of the German economic school of thought. There is evidence that a monetary union consisting of sovereign states is well organised by rules, together with the principle of subsidiarity. The root cause of the euro crisis is rather the weak enforcement of rules, compounded by structural problems. Therefore, we suggest a genuine rule-based paradigm for a stable future of the Economic and Monetary Union.
Learning factories present a promising environment for education, training and research, especially in manufacturing related areas which are a main driver for wealth creation in any nation. While numerous learning factories have been built in industry and academia in the last decades, a comprehensive scientific overview of the topic is still missing. This paper intends to close this gap establishing the state of the art of learning factories. The motivations, historic background, and the didactic foundations of learning factories are outlined. Definitions of the term learning factory and the corresponding morphological model are provided. An overview of existing learning factory approaches in industry and academia is provided, showing the broad range of different applications and varying contents. The state of the art of learning factories curricula design and their use to enhance learning and research as well as potentials and limitations are presented. Conclusions and an outlook on further research priorities are offered.
Digitisation forms a part of Industrie 4.0 and is both threatening, but also providing an opportunity to transform business as we know it; and can make entire business models redundant. Although companies might realise the need to digitise, many are unsure of how to start this digital transformation. This paper addresses the problems and challenges faced in digitisation, and develops a model for initialising digital transformation in enterprises. The model is based on a continuous improvement cycle, and also includes triggers for innovative and digital thinking within the enterprise. The model was successfully validated in the German service sector.
How to separate the wheat from the chaff: improved variable selection for new customer acquisition
(2017)
Steady customer losses create pressure for firms to acquire new accounts, a task that is both costly and risky. Lacking knowledge about their prospects, firms often use a large array of predictors obtained from list vendors, which in turn rapidly creates massive high-dimensional data problems. Selecting the appropriate variables and their functional relationships with acquisition probabilities is therefore a substantial challenge. This study proposes a Bayesian variable selection approach to optimally select targets for new customer acquisition. Data from an insurance company reveal that this approach outperforms nonselection methods and selection methods based on expert judgment as well as benchmarks based on principal component analysis and bootstrap aggregation of classification trees. Notably, the optimal results show that the Bayesian approach selects panel-based metrics as predictors, detects several nonlinear relationships, selects very large numbers of addresses, and generates profits. In a series of post hoc analyses, the authors consider prospects’ response behaviors and cross selling potential and systematically vary the number of predictors and the estimated profit per response. The results reveal that more predictors and higher response rates do not necessarily lead to higher profits.
New digital technologies present both game-changing opportunities for—and existential threats to—companies whose success was built in the pre-digital economy. This article describes our findings from a study of 25 companies that were embarking on digital transformation journeys. We identified two digital strategies—customer engagement and digitized solutions—that provide direction for a digital transformation. Two technology-enabled assets are essential for executing those strategies: an operational backbone and a digital services platform. We describe how a big old company can combine these elements to navigate its digital transformation.
AUDI AG has historically focused on producing and selling premium vehicles but has begun to experiment with providing mobility services, built around car sharing. Its response to the so-called sharing economy addressed strategic and transformational challenges. Strategically, the company pursued additional sources of revenue from targeted, premium mobility services, rather than the less segmented services provided by competitors such as BMW and Zipcar. AUDI AG also transformed its organizational structure, processes and architecture to balance autonomy for innovation and integration for competitiveness.
In retail environments, consumers commonly evaluate products while standing on some type of flooring and concurrently being exposed to music; however, no study has examined the interaction of these two atmospheric cues. To bridge this gap, this research examines whether retailers can benefit from creating multisensory atmospheric congruent rather than incongruent retail environments of flooring and music. The results of an experiment in a real retail store reveal positive effects of multisensory congruent retail environments (e.g., soft music combined with soft flooring) on product evaluations. This study provides a new process explanation with consumers’ purchase-related self-confidence mediating these effects. Specifically, consumers in congruent rather than incongruent retail environments experience more purchase-related self confidence, which in turn leads to more favorable product evaluations. Furthermore, this study shows that consumers with a low rather than a high preference for haptic information are influenced more by multisensory atmospheric congruence when evaluating a product haptically.
The purpose of this paper is to study the impact of transparency on the political budget cycle (PBC) over time and across countries. So far, the literature on electoral cycles finds evidence that cycles depend on the stage of an economy. However, the author shows – for the first time – a reliance of the budget cycle on transparency. The author uses a new data set consisting of 99 developing and 34 Organization for Economic Cooperation and Development countries. First, the author develops a model and demonstrates that transparency mitigates the political cycles. Second, the author confirms the proposition through the econometric assessment. The author uses time series data from 1970 to 2014 and discovers smaller cycles in countries with higher transparency, especially G8 countries.
Technologies for mapping the “digital twin“ have been under development for approximately 20 years. Nowadays increasingly intelligent, individualized products encourages companies to respond innovatively to customer requirements and to handle the rising product variations quickly.
An integrated engineering network, spanning across the entire value chain, is operated to intelligently connect various company divisions, and to generate a business ecosystem for products, services and communities. The conditions for the digital twin are thereby determined in which the digital world can be fed into the real, and the real world back into the digital to deal such intelligent products with rising variations.
The term digital twin can be described as a digital copy of a real factory, machine, worker etc., that is created and can be independently expanded, automatically updated as well as being globally available in real time. Every real product and production site is permanently accompanied by a digital twin. First prototypes of such digital twins already exist in the ESB Logistics Learning Factory on a cloud- and app based software that builds on a dynamic, multidimensional data and information model. A standardized language of the robot control systems via software agents and positioning systems has to be integrated. The aspect of the continuity of the real factory in the digital factory as an economical means of ensuring continuous actuality of digital models looks as the basis of changeability.
For the indoor localization sensor combinations that in addition to the hardware already contain the software required for the sensor data fusion should be used. Processing systems, scenario-live-simulations and digital shop floor management results in a mandatory procedural combination. Essential to the digital twin is the ability to consistently provide all subsystems with the latest state of all required information, methods and algorithms.
The modern industrial corporation encompasses a myriad of different software applications, each of which must work in concert to deliver functionality to end-users. However, the increasingly complex and dynamic nature of competition in today’s product-markets dictates that this software portfolio be continually evolved and adapted, in order to meet new business challenges. This ability – to rapidly update, improve, remove, replace, and reimagine the software applications that underpin a firm’s competitive position – is at the heart of what has been called IT agility. Unfortunately, little work has examined the antecedents of IT agility, with respect to the choices a firm makes when designing its “Software Portfolio Architecture.”
We address this gap in the literature by exploring the relationship between software portfolio architecture and IT agility at the level of the individual applications in the architecture. In particular, we draw from modular systems theory to develop a series of hypotheses about how different types of coupling impact the ability to update, remove or replace the software applications in a firm’s portfolio. We test our hypotheses using longitudinal data from a large financial services firm, comprising over 1,000 applications and over 3,000 dependencies between them. Our methods allow us to disentangle the effects of different types and levels of coupling.
Our analysis reveals that applications with higher levels of coupling cost more to update, are harder to remove, and are harder to replace, than those with lower coupling. The measures of coupling that best explain differences in IT agility include all indirect dependencies between software applications (i.e., they include coupling and dependency relationships that are not easily visible to the system architect). Our results reveal the critical importance of software portfolio design decisions, in developing a portfolio of applications that can evolve and adapt over time.
Close and safe interaction of humans and robots in joint production environments is technically feasible, however should not be implemented as an end in itself but to deliver improvement in any of a production system’s target dimensions. Firstly, this paper shows that an essential challenge for system integrators during the design of HRC applications is to identify a suitable distribution of available tasks between a robotic and a human resource. Secondly, it proposes an approach to determine task allocation by considering the actual capabilities of both human and robot in order to improve work quality. It matches those capabilities with given requirements of a certain task in order to identify the maximum congruence as the basis for the allocation decision. The approach is based on a study and subsequent generic description of human and robotic capabilities as well as a heuristic procedure that facilities the decision making process.
It is assumed that more education leads to better understanding of complex systems. Some researchers, however, find indications that simple mechanisms like stocks and flows are not well understood even by people who have passed higher education. In this paper, we test people’s understanding of complex systems with the widely studied stock-and-flow (SF) tasks. SF tasks assess people’s understanding of the interplay between stocks and flows. We investigate SF failure of domain experts and novices in different knowledge domains. In particular, we compare performance on the original study’s bathtub task with the square wave pattern with two alternative cover stories from the engineering and business domains on different groups of business and engineering students from different semesters. Further, we show that, while engineering students perform better than business students, with progressing in higher education, students may lose the capability of dealing with simple SF tasks. We thus find hints on déformation professionelle in higher education.
Decreasing batch sizes in production in line with Industrie 4.0 will lead to tremendous changes of the control of logistic processes in future production systems. Intelligent bins are crucial enablers to establish decentrally controlled material flow systems in value chain networks as well as at the intralogistics level. These intelligent bins have to be integrated into an overall decentralized monitoring and control approach and have to interact with humans and other entities just like other cyber-physical systems (CPS) within the cyber-physical production system (CPPS). To realize a decentralized material supply following the overall aim of a decentralized control of all production and logistics processes, an intelligent bin system is currently developed at the ESB Logistics Learning Factory. This intelligent bin system will be integrated into the self developed, cloud-based and event-oriented SES system (so-called “Self Execution System”) which goes beyond the common functionalities and capabilities of traditional manufacturing execution systems (MES).
To ensure a holistic integration of the intelligent bin for different material types into the SES framework, the required hard- and software components for the decentrally controlled bin system will be split into a common and an adaptable component. The common component represents the localization and network layer which is common for every bin, whereas the flexible component will be customizable to different requirements, like to the specific characteristics of the parts.