Innovation 4.0

Germans declare it Industrie 4.0. The Yanks tag it as The Connected Enterprise. And the Brits give it the 4th Industrial Revolution moniker. Any way you slice it, it’s the future.

The product development community, especially those in large organizations, don’t seem as caught up in a name. I’ve seen Innovation 2.0, 3.0, and 4.0 label the change. My preference is Innovation 4.0 because it matches the title series dating back centuries.

But the name doesn’t matter. What matters is the enormous wave of practices and technologies it’s ushering in. Consider two drivers: factory automation and AI. With software tools and methods, these drivers create a powerful force. They change how we work, the innovations we create, and the customer needs we satisfy.

Innovation 4.0

The Innovation 4.0 wave is real, and it’s potent. Big companies can either figure out how to ride this wave or prepare their out-of-business signs. But their challenge is to avoid diving in with little understanding. The job isn’t about digitizing old practices and directing managers to think up new offerings from new technologies.

Innovation 4.0 calls for setting up new work methods and creating new customer relationships. Plus, it demands new products and services with new foundations. In strategy terms, the job demands superb execution of a smart Product Line Pivot.  Let me explain why. As you move forward, you’ll see Product Line Pivots are crucial to Innovation 4.0 success.

Product Line Pivot

Clearly, the Innovation 4.0 challenge is big. Consider what it means to B2B companies that make tangible products. Most have product lines based on designs, software, and materials. And they have organizational structures, supply chains, and skills that match this. But in the Innovation 4.0 wave, these same firms must embrace new platforms, new customer interactions, and new organizational supports. Suddenly, things may not match up so well.

To succeed, waterfall project management must merge with agile practices. Design engineering must combine with systems engineering. And a traditional voice of the customer approach must advance with Jobs-to-be-Done analytics. It demands major changes. And these changes must cut across the whole organization.

The same is true for consumer goods and services. Social media changes branding. Big data changes service delivery. And new materials change product designs. Plus, you’ll see factory automation advance to meet customer needs within smaller market segments. And it’s not a surprise that keeping one’s head about all of this can be a daunting task, itself in need of systems support.

The major change is the match between your offering and each customer’s needs. This is fundamental. The only reason for embracing Innovation 4.0 is to assure better customer satisfaction. Screw this up, and customers will walk away. Screw this up, and you’ll lose your business. Regardless, your full offering must change as your customers and their needs change. And that’s why it’s so important to understand whole Product Line Pivots. It’s not enough to be clever with a single product innovation.

The Strategy-Essence

A Product Line Pivot demands a renewed product line strategy. And as you dive into the topic, you’ll see each product line strategy is based on three complementary parts. I call this the Strategy-Essence. The three parts are:

  1. Attribute-Positioning,
  2. Platform-Leverage, and
  3. Chain-Link (organizational) Alignment and Synergy.
Strategy-Essence is the core of a product line strategy.a

The Strategy-Essence is the core of a product line strategy. It is made up of three parts: Chain-Link Alignment and Synergy, Attribute-Positioning, and Platform-Leverage.

These parts and how they work with each other form the core of a good product line strategy. You can read much more about the Strategy-Essence and its parts HERE.

The big deal about Innovation 4.0 is that it impacts each of the three parts. Plus, Innovation 4.0 can ramp up how each part boosts the others. By definition, when you purposely change the Strategy-Essence parts, you’re also carrying out a Product Line Pivot. Because the impact is significant, it’s imperative you make sure the Pivot is deliberate and well thought out.

The insight I wish to share is that Innovation 4.0 demands Product Line Pivots. This, in turn, demands a clear understanding of your product line’s Strategy Essence and its three parts. It’s important for managers to learn exactly how to empower Innovation 4.0 with a smart product line strategy pivot. But that’s only if you wish to make powerful gains, not incremental improvements.

Making Strategy

As an add-on to this post, I lay out how the Innovation 4.0 wave affects each Strategy-Essence part. Check it out HERE.  Changing one part is a strategic move for most product lines. But changing all three Strategy-Essence parts elevates the change to be a notable Strategy Pivot.

Good product line strategies always carry out the three Strategy-Essence parts in unison. And the unison boosts the impact of the whole — one part amplifies the others. Should the parts fall out of unison, the line’s impact and success will decline.

You’ll see errant roll outs of Innovation 4.0 unknowingly hurt the Strategy-Essence. A new product or innovation may ruin the desired unison. This doesn’t mean the innovation is bad. Rather it means the Strategy-Essence, the way its parts come together, doesn’t work with the innovation. As much as you wish to embrace Innovation 4.0 changes, you’ll also need a newly formed and well-though-out Strategy-Essence ― one that empowers the unison. Rolling out Innovation 4.0 without renewing a product line’s Strategy-Essence and the unison of its parts can be costly.

A smart Innovation 4.0 execution plan will tie to product line changes. Don’t fall into the trap of thinking Innovation 4.0 won’t affect your product line. There’s no doubt it will. And it’s best to drive the change proactively. A reactive response means your late. And being late is a burden to any strategy.

When a colleague suggests your company should embrace Innovation 4.0 or any of its contributors, consider a key question. Does the work involve changes to a line’s Strategy- Essence? Does it need a Product Line Pivot? Get prepared, though. Your colleague may not understand your question.

Call to Action

First, product line teams must learn about Product Lines, the Strategy-Essence, and what it takes to carry out smart Pivots. This strategy view opens enormous possibilities and challenges a business’s norms. And it’s the Innovation 4.0 wave, not just one tool or approach, that makes these possible.

To learn more about smart product line pivots, check out my book. It’s entitled The Profound Impact of Product Line Strategies.


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