Today, digital transformation (DX) and innovation are turning possibility into reality for industrial companies. You might think DX and innovation are the same, as these terms are often used synonymously. There is a difference between the two, however, and understanding how digital transformation can help companies innovate is important to any DX journey.
Merriam-Webster defines innovation as “the introduction of something new”―an invention―while digital transformation is a term not found in the dictionary. At PTC, we define DX as the opportunity for industrial companies to utilize relevant digital technologies to increase productivity, boost operational efficiency, and elevate their workforce.
Already, industrial enterprises across the globe are leveraging an array of emerging technologies that support their quest for digital transformation. For many organizations, DX is about improving performance, quality, efficiency, time-to-market, and service to the customer without losing sight of the things that make the company’s products, processes, and people special in the first place.
In other words, innovative companies continue to push tomorrow’s boundaries. Innovation is a culture, and digital transformation is a movement that can propel an organization and its people.
Let’s take a look at the relationship between the two:
For most companies, launching new products and services is ultimately the goal of digital transformation. Consider a recent survey of 7,000 business leaders by Gartner Research that found nearly 90 percent of organizations have digital initiatives focused on improving current products and services, while 80 percent have initiatives focused on creating brand new offerings. Gartner stresses that the success of such transformation efforts depends on an organization’s “innovative effectiveness” or the degree to which an enterprise is effective at identifying new opportunities, prioritizing them, and adjusting business processes to act on those opportunities.
Stated differently, innovation is both the critical component of product and service differentiation and the primary characteristic of companies that are likely to succeed with DX.
Keep in mind that while closely linked, innovation and digital transformation are not always related, and innovation is not necessary for digital transformation to occur. Many organizations can benefit from adopting standard digital best practices, such as modernizing IT, implementing industrial IoT, and eliminating paper records. In each case, no innovation is required but DX can occur. The reality is that digital transformations can be difficult and manufacturers that master the first steps set the stage for future innovation and the use of more sophisticated technologies.
Innovation is often inspired by the impact it will have on end users―for example, a new product that leads to lower operating costs for customers. Digital transformation, on the other hand, encapsulates the desire to produce products easier, faster and more efficiently, to extend accurate and repeatable processes across an enterprise, and to unlock the power of employees in new ways.
Consider how DX can critically impact each area of a manufacturer’s business:
Dynamic digital technologies are changing the world of product development, including breakthroughs in additive manufacturing, model-based definition (MBD), and augmented reality (AR) that together allow companies to design faster and smarter by connecting digital models to physical products.
Take, for instance, advanced simulation software that enables a manufacturer to test a machine part against all manner of operating conditions in a fraction of the time compared to conventional methods. Furthermore, by leveraging generative design capabilities, engineers can evaluate hundreds of product variants in hours opposed to weeks optimize a part for different production processes without the costly and time-consuming trial and error.
This means that while competitors are still compiling data, digitally enabled manufacturers are well down the road to development. Easy-to-use tools that provide instant feedback in the modeling environment are just one example of how industrial companies are creating better designs on their DX journey.
DX also can foster cross-departmental collaboration and a seamless flow of data from the point of product conception through manufacturing to service and maintenance. Forward-thinking enterprises are creating a continuous digital thread extending upstream and downstream from engineering, leading to lower costs, higher quality, and improved customer satisfaction.
A digital bill of materials (BOM), for instance, can create a universal, consolidated view of product data. A parts-centric BOM is a closed-loop product lifecycle management solution that enables a single source of truth to all organizational data, helping to guide and accelerate design cycle iterations until a product is fully optimized. One outcome might be a substantial reduction in the average throughput period for engineering changes in production. Another might be compelling savings as the result of highly accurate data that helps avoid costly engineering, manufacturing, and purchasing errors.
Digital transformation can foster greater collaboration between teams regardless of proximity. Moving from manual to digital data management helps industrial companies harmonize global operations to reduce product complexity, eliminate expenditures, and expedite time to market.
PTC believes people are the foundation of digital transformation as DX initiatives frequently require large-scale, cross-departmental employee buy-in to benefit from implemented technologies and accompanying business processes. Importantly, DX can only be successful if it can be scaled to the job environment.
Take for example today’s data management tools that are making it much easier to give factory teams convenient access to pertinent information including product work instructions and inspection requirements that are tailored to the specific requirements of a country or region. In turn, interdependency across departments and global teams is greatly reduced, leading to fewer meetings and less time spent manually updating systems, searching for info, and answering requests. Ultimately, manufacturing accuracy and consistency benefit as the result of improved enterprise collaboration.
Capable people drive successful digital transformations and companies that rapidly capture and communicate proper work procedures can dramatically improve their workforce efficiency. In this way, the experience of expert employees can become the standard operating procedure for everyone. Such initiatives are especially important for bridging the growing manufacturing skills gap that threatens all industry sectors.
Other DX strategies can help front-line workers comprehend their evolving physical/digital world, quickly build new skills, and safely perform tasks with greater accuracy and confidence.
Industrial enterprises must capitalize on the right digital technologies to defend and advance their competitive advantage earned through innovation. To succeed in digital transformation, companies must leverage what they already have, adopt the best of what's new, and apply that to drive future innovation across their products, processes, and people. Enterprises not considering all three of these critical areas in coordination will be increasingly susceptible to unsurpassable barriers like information silos or being outpaced by ambitious competitors who are disrupting the market landscape.