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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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