Innovation and the digital economy: What

role for innovation policies?

Bart Nieuwenhuis Fontys University of Applied Science

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It’s all about service

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NL is a service economy…

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GDP (78%) Employment (82%)

Own calculations based on sources CBS

Agriculture2%

Manufacturing

20%

ProfessionalServices56%

PublicServices22%

Agriculture1%

Manufacturing17%

ProfessionalServices52%

PublicServices30%

2015

Labour force distribution by sector in NL

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Own calculations, Source: CBS

Labour force distribution by sector in NL

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Own calculations, Source: CBS

Industry?

IBM revenue by segment (1980-2015)

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Spohrer, J. (2016). IBM’s service journey: A summary sketch. Industrial Marketing Management, 60, 167–172

Philips sells light as a service

Revenue model: Pay per Lux

Customers: they manage lightning against predictable costs

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Schiphol Airport National Union of Students

Rolls Royce: power by the hour…

• TotalCare

– an agreed rate per engine flying hour

– enables customers to engage in accurate financial forecasting

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Rolls Royce: power by the hour…

• TotalCare

– an agreed rate per engine flying hour

– enables customers to engage in accurate financial forecasting

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Many other examples

• Alstom

– Train-life services

• MAN

– Leasing: pay-as-you-go

• General Electric

– Zero downtime on locomotives, wind turbines and jet engines

• Michelin

– From from selling tires to selling kilometers

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Manufacturing in NL: more output, less jobs

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Own calculations, Source: CBS

And manufacturing will keep on changing

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Hybrid production systems and products

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R&D Engineers Designers Market Research Testing Material Finance Expertise

Product development Production design Quality control Purchasing Management Consultants Material Finance Technical knowledge Land / Machines

Marketing Advertising Trade Fairs Exhibitions Consultants Packaging Transportation Warehouse and Shops Finance

Servitization Software Updating products Training Provision of content Product support Provision of services rather than product

Design process

Product manufacturing

Product Distribution

Consumption Customization

production related services

product related services

Adapted from: Bryson J.R. and Daniels, P.W. (2010), The Services Duality: Production- and Product-Related Services, in Maglio, PP, Kieliszewski, C.A. and Spohrer, J.C. (Ed) The Hand book of Service Science, Springer: New York, 79-107

Digital Economy

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CloudComputing

Internet of Things

Big Data Social Media

Digital Technologies and Servitization

• Improve the firm’s efficiency

– Resource planning, automation, robotization, …

– Customer’s influence on production processes

• New ways of interaction the firm’s customers

– In-depth knowledge of the customer’s preferences and needs

• Extend the products with sensors and actuators

– New services, product enhancements,

– Monitor usage, preventive maintenance, distant repairs

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Servitization = profound business model innovation

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Servitization within SME’s

• No deep pockets

• Engineering… and … Services

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• BreadLab service

– Customers learn how to

extend their portfolio and

optimize their processes.

• Blue Value support packages

– Reduces downtime in bakeries

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SME: WP Haton: dough make up systems

Policies: at regional and national level

• Regional: Province of Limburg

– Brightlands Smart Services Campus

– Program for manufacturing SMEs

– Public-Private Program:

Servitization for MKB

• National: the Netherlands

– Service design vouchers for

manufacturing SMEs

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It’s all about service

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