Less is more. Stop trying to be a disruptor.

Successful innovators change one step at a time and use one of these ten strategies.

We are constantly being told that significant business transformation requires radical changes to business models. We are expected to look for moonshots, opportunities to disrupt or “upend” the market, or to disrupt ourselves.

We don’t have to.

Often a small change to a business model can open up massive opportunities for growth: less is more.

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Case in point for Amazon. In 2004, they made some of their existing IT infrastructure available for paid public use. It was a small experiment, one small change. The experiment was a success and led to establishing Amazon Web Services Inc. in 2006.

Thirteen years later, in 2019 alone, AWS generated $35B in revenue. It is now the largest cloud services provider in the world.

It all started with just one small change.

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Together with my colleagues, we analysed 32 manufacturing companies from around the world. These businesses are recognised as successful innovators in Industry 4.0. What we learned was telling. They are not the disruptors that Silicon Valley tales are all about.

They don’t “upend” markets by completely changing who they are and what they do. They innovate individual aspects of their business models, while leaving the rest untouched. They introduce small changes that ultimately open up large opportunities.

We identified ten strategies that help Industry 4.0 innovators stand out.

Three of the strategies are about enriching their products or services: (1) enable lifelong partnerships, (2) sell your products as a service, and (3) charge for results, not the product.

The next three are about reimagining their processes: (4) let your ecosystem imagine your new products, (5) make your infrastructure available to others, and (6) expand from mass production to mass customisation.

The final four are about capitalising on the knowledge and other assets that organisations have: (7) sell your product expertise, (8) sell your transformation expertise, (9) monetise the data you’re collecting, and (10) turn in-house solutions into products you can sell.

Which of these small changes might help you take your business to the next level?

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Small changes in your products

Enable lifelong partnerships.

One of the powerful shifts we witnessed is one toward building lifelong partnerships with customers.

Remember when the act of buying a car used to be the last interaction with the manufacturer or a dealer? These days, the purchase is often the beginning of a relationship. For instance, a modern car can communicate with the manufacturer and request service checkups.

Austrian manufacturer of power trains, AVL List, introduced remote usage and condition monitoring of the components they sell. The monitoring service established an ongoing channel of communication between them and the customer — an opportunity to offer more products and services.

Can you modify the products you sell to stay connected with the customer after they buy them?

Sell your products as a service.

The software industry introduced the concept of software-as-a-service a few decades ago. They recognise the need to reduce the upfront investment and increase customer confidence by taking full care of software maintenance and updates.

Industry 4.0 innovators now offer product-as-a-service. No need to pay upfront. Just pay for the use.

Yellow goods market — a market for construction and earthmoving equipment — is ripe for innovation in this space. Finnish Konecranes Oyj is now offering their cranes for rent, tapping into a new customer base.

Which of your products could you offer in the product-as-a-service model?

Charge for results, not for the product.

Some Industry 4.0 innovators go beyond product-as-a-service offering. They focus on selling the output, or result, of the product.

German Kaeser Compressors Inc. now sells compressed air per cubic meter. They install and maintain compressors on customers’ sites, but only charge for what the customers ultimately gain from Kaeser’s products.

What results do your customers need? Can you offer a result-as-a-service partnership?

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Small changes in your processes

Let your ecosystem imagine your new products.

Recognising that product development does not have to happen entirely in-house, Industry 4.0 manufacturers are opening up this aspect of their operations to the community. Quirky.com is a well-known example. They rely solely on crowd-sourced ideas.

American car manufacturer Local Motors built a community of designers and technologists, Launch Forth. Members of the community are then engaged in developing new products.

Do you have access to a creative community that could design your future products? Can you create and facilitate such a community?

Make your infrastructure available to others.

Demand is never constant. When it drops, production slows down, leading to idle infrastructure. Innovators open up production lines to others to avoid such underutilisation.

A focus on increasing utilisation was the original driver behind Amazon’s Web Services. In a similar move, Philips Electronics spun off shapeways.com to offer additive manufacturing facilities as a service.

Is your infrastructure underutilised at times? Can you let others access it then?

Expand from mass production to mass customisation.

Automation and robotisation of production lines dramatically reduce costs of manufacturing unique items. This flexibility of production creates a new opportunity for mass customisation. Customers of Adidas can personalise their shoes in Adidas’ online shop, and get a pair produced just for them at a price similar to mass-produced sneakers.

An Australian steel fabricator, Watkins Steel, started using laser scanning to capture digital models of construction sites. They can now manufacture steel components, regardless of their shape, fitting the customer sites with unprecedented precision.

Does your production infrastructure allow you to switch from mass production to mass customisation? How can you enable it?

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Looking beyond products and processes

Sell your product expertise.

We witnessed Industry 4.0 innovators who recognised that the intimate knowledge about their products is something that they can offer to customers as a service.

The manufacturer of compressors, Kaeser, made use of their product know-how to offer system planning and energy management services. Such product-related consulting helps customers make the best use of the products they buy. Both customers and Kaeser benefit.

Do you have in-house product expertise that your customers would pay for?

Sell your transformation expertise.

Successful innovators offer their expertise and know-how to those organisations who are only starting their journey.

The TRUMPF group, a German industry machine manufacturing company, and one of the early innovators in Industry 4.0, now advises other manufacturers on digital transformation, through their spin-off AXOOM.

Do you have digital transformation experience that you could share with other organisations?

Monetise the data you’re collecting.

If data is the new oil, then there are still many organisations that have lots of it, but no engines using it.

German CLAAS, an agricultural machinery manufacturer, uses data from their tractors to offer additional services. Its spin-off, 365Farmnet, offers farm management, crop planning, and paperwork support for farmers. The data coming from the machines helps offer customised services.

Are you collecting data from the products you sell? How can you generate value from the data?

Turn in-house solutions into products you can sell.

Often, custom-built internal solutions can be turned into a product.

Orange Sky Australia built a sophisticated digital solution to support its network of volunteers. When they realised other charities could benefit from such a solution, they made it available as a product. A few months after launching, the new software platform, Campfire, is used by other charities to manage volunteers.

Have you built digital solutions for your business? Can they be sold to others?

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To read more about our research, see:

Weking, J., Stöcker, M., Kowalkiewicz, M., Böhm, M., & Krcmar, H. (2020). Leveraging industry 4.0–A business model pattern framework. International Journal of Production Economics, 225, 107588.