Reapplying Core Competence for Digital Value

Client challenges

• The Client had made early moves to take a leading position in the industry’s digital transformation, and as a result had built up valuable insights regarding both new opportunities and impending shifts in the competitive landscape.
• The Client had identified that customers’ key decisions were moving upstream, away from the Client’s home turf in the value chain, and into software used by a different set of stakeholders. To continue to be relevant to customers, the Client realized they needed to secure a position upstream where these decisions were moving.
• In an effort to accelerate the digital transformation and the company’s role in it, the Client launched a new unit as a digital innovation hub. The unit was tasked with making the Client’s know-how reproducible and more accessible to customers and set out to develop a virtual tool chain throughout its customer’s industrial process.
• The Client realized that this new business move involved new dynamics and rules for IP. While the Client’s IP department was managing IP effectively in the core product business areas, they lacked the right competence profiles and skills to be a co-creator of digital business value.

Konsert contribution

• Together with Konsert, the Client developed and applied a playbook for navigating digital change, which brought in and involved intellectual property in every step of its strategic planning.
  • First, the business opportunity was defined by answering the question “where is our core competence the key to making things better?” and pinpointing productivity challenges in the customer’s process that could be addressed with digital tools.
  • Secondly, the value chain was mapped to identify bottlenecks and evaluate in which positions the Client could grow their share of the profit pool.
  • Thirdly, a team was put together to rapidly develop the digital value propositions that could outperform competition and be faster to market.
• Realizing the data and IP-related challenges ahead, people with business-IP expertise were closely integrated into all phases of the business development process. IP formed a key component in competitive analysis and business strategy formulation, which ensured that sufficient control was established (using e.g., patents, contracts, and secrecy) around key positions to keep the Client’s desired role in the value chain and capture its share of the profit pool.

Impact

• The new offerings developed by the digital business unit were very successful. The Client brought about a step-change in what customers were able to do with software and data, and transformed the industry ecosystem and its business model.
• As an example, the first digital product launched based on the playbook reduced customer lead times for a key process step by up to 90% and overall productivity by up to 20%.
• These productivity improvements created a massive profit pool to share in the value chain. Based on its forward-looking approach to IP, the Client could help regulate exclusivity and openness in the ecosystem and claim a large share of the joint profit pool.
• The Client’s pioneering approach was not only rewarded in terms of increased revenue, but also by the stock market. As their new sources of income were digital, the market applied software company valuation multiples for a significant increase in their market capitalization.