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5 big questions on innovation

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Otto Schell, Member of the Board of Directors, DSAG

Otto Schell, Member of the Board of Directors

Otto Schell is helping to redefine the true meaning of agility and speed for executives, based on his observation that “the world is no longer a globe; it is flat – with IoT you can see everyone, everywhere. Information is everywhere – agility is our new challenge.” Arguing that there will often be too little time even for data analysis and innovation measurement, the German thought leader advocates for...
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1

How is your team changing the game within your industry sector?

Others try to be on the political side; some try to be advisors, but what we really offer is the practice. What we can deliver on is the knowledge and experience of 3000 company members – both large and also midsized.

We ask – are you prepared for 24/7? Are you prepared for changing from products to services? Are you really cyber-ready? I am talking a lot about IoT – we need to change in terms of its promise. How do we motivate this group of people who are doing IT business processes to adopt new business models to reflect these capabilities?

Many leading companies are evaluating the importance of digitization, and new business models, and I see a responsibility with vendors such as SAP to inform and accompany them in their transition to a digital future. I want to ensure people are aware of what they need to think about – to get from digital to practice. We don’t know everything, but we do know there will be huge change. Companies will really be out of the game if they don’t change their business models. There are companies which do sensoric very well, but they don’t understand the business models, and there are those with good business models, but no clue about sensoric. We must bring those together.

Business model development and innovation needs to have an iterative approach, not a sequential process. I think IoT will change asset-rich industries in a positive way – you’ll know the usage and change in your assets. You can add sensoric to 10 year-old assets and derive a longer lifecycle. The question is how you change your business model around it.

In terms of the mix of skills sets companies will need, what we see going on in the European ecosystem, for example – universities; schools – is that there is a lot of momentum to embrace a positive attitude about change. The question is only how far to take this attack mode. It is difficult to understand what’s going on regarding China and India – they are so huge. Everyone in the west knew Amazon; not many knew Alibaba, and yet Alibaba is much bigger than Amazon ever will get.

In Germany and Switzerland, and really Europe in general, there is nothing we can do anymore in terms of extracting materials from the ground. All we can provide is knowledge. In recent decades, our exports have been dominated by engineering; by producing the best machines. But knowledge is the future. Nevertheless, too many executives tend not to take the opportunity, and wait for others, which is a pitfall. More acting than (worrying) is the right thing to do.

Some organizations still believe they can run with isolated strategies – with marketing/sales and production/purchasing in isolation. I firmly believe you can no longer do this alone. Companies need to have a clear glide path of where they want to go; they need clear buy-in that transformation is both top-down and bottom-up. What I think companies normally don’t do, and what they should do, is to really attack markets. Uber attacked.  Do you really believe that if Uber had entered the market in the normal, slow way, analyzing and checking everything – they would have succeeded?  They did not wait. Many other companies should also move away from a risk-awareness position to attack mode.

They need to ask: How can I attack other areas where I am strong? Many companies believe they are world-leading, and then some company in China, or Korea, or India has already overhauled them from an income perspective.

Executives must ask: are we ready for the shared economy? Are we truly cyber-ready? A lot of people talk about data analysis and big data, but at the end of the day its not about the big data – its about finding a pattern from the data which creates a new business model.

Too often, this is not what companies do. We analyze to death; we prepare for a presentation, and we wait for someone to make a decision. And when the CEO makes the decision, they are not ready for that decision because they are too large. The way of working together needs to change.

2

What are some of the biggest impediments to innovation in your organization or industry sector?

Companies need to move away from risk aversion and towards attacking markets. Also, companies need to involve the youth and their perspectives into the discussion. There are cultural barriers. We cannot truly go into the digital world in healthcare – which I would like, certainly – if we don’t change the rules of engagement. We will never get 100% security, but we never had 100% security anyway.

I see that some people are overloaded with what’s going on – take the most talented marketing people: they need to understand that CRM will completely change everything in that field. So it is most important that people stay open.

Will people lose their jobs? Maybe – but there will also be new jobs, and there will be a bridge between old skills sets and the new skill sets.

3

How has innovation become engrained in your organization's culture, and how is it being optimized?

Within our organization, the culture of innovation runs very deep – because we have been doing this for the past 30 years; we do business processes; we do transition management. This is our advantage – we are practiced at this.

There is real excitement about how we can use assets in a different way. There is a passion about the business value being brought by digitalized business models. About smart cities and automated driving, and many others.

Open minds are the key. Imagine you are at door of a supermarket: it will already recover your data from your smartphone, knowing your behavior and your previous buying patterns – and you will be guided. This will happen much faster than we expect – and the next generation already expects it, and does not fear these kinds of changes.

When we order from Amazon – do we wonder about security and reliability?  No, we already know they are reliable. So trust in new technologies does not take decades, or even years.

4

What technologies, business models, and trends will drive the biggest changes in your industry over the next two years?

Real Time. It will be a real-time world. You will get information in real time and make decisions in real time, because you have the capabilities and skills, and because consumers will expect it. You will be in front of a shop and they will know what you want.

Business models will change – often, toward technology-enabled services. We had analytics before – just not this quickly. Now you have all this discussion about data, but what about business models? That is the next discussion.

5

Can you share a specific innovation strategy you’ve recently encountered which you find compelling?

What I find really cool is the potential in healthcare devices to actually do what we saw in Star Trek in the ‘70s. Remember that noise – doo-da-doo – when they would go over someone’s body with a handheld device to detect a defect? I think its great that that will happen. When I go to a doctor, I don’t want to answer questions about my age; what I’ve been eating and how much I have been exercising – I want them to know that already.

As a consumer, I love to be recognized. I don’t worry about old notions of privacy, when there are such amazing benefits.

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