Digitization of Industry now in full force

The digital transformation of industry will cause fundamental structural changes for whole industrial branches. This process will take place in waves, which will hit the different branches in various ways and intensities and may change them from the ground up. Following the first wave, the automotive and logistics industries are already in a far-reaching shifting process. The second, marginally weaker wave will trigger upheavals in the medical technology, electrical engineering, mechanical and plant engineering and energy systems industries. The third wave of digitization will hit the chemicals and aerospace industries, albeit more gently. European companies therefore have to act fast and develop a more profound understanding of what the digital transformation means and come up with new and sustainable business models.

The study "The digital transformation of industry" produced by Roland Berger Strategy Consultants in collaboration with the Bundesverband der Deutschen Industrie (BDI), examines the changes to value chains caused by new data, interconnectedness, automation and digital customer interfaces based on the example of German market leaders. The study represents the first extensive examination of the causes of digitization and quantifies the overall effect.

 

Key findings of the study

Among the key findings, the study presents both positive and negative scenarios. In a positive scenario Europe has the potential to create an additional value of EUR 1.25 trillion until 2025. If digital transformation will not be turned to Europe's advantage, the continent stands to lose as much as EUR 605 billion in the same period. The European Commission's goals under the Europe 2020 strategy to raise the share of industry in Europe from 16% to 20% by 2020 would clearly not be achievable in the negative scenario.

These radical changes open up new opportunities for the existing market players as well as for non-industry players such as those in the information technology sector. Established firms and industry leaders could quickly fall behind as a result. Market players from outside the industry who possess a high level of digitization expertise could come in and replace them in lucrative parts of the value chain.      

 

Recommendations for Europe's future industry

Companies need a comprehensive understanding of the new value-added potential afforded by digitization and how it can be utilized. Not only efficiency and costs have to be improved; and optimized new business models will also have to be created.

Europe needs a counterweight to the industrial Internet Consortium dominated by the United States. Therefore businesses and European governments must commit themselves and define common standards that accommodate the strengths of the German and the European industries.

The success of digital transformation depends on the installation of no-gaps broadband networks. Simultaneously, regulatory steps must enable the high- quality of service for mission-critical applications. Europe needs an effective and powerful infrastructure as a backbone if the companies want to stay competitive in the long run.

If Europe wants to implement the digital transformation of industry, successful collaborative action is needed. It must rigorously focus its investment programs on digital transformation, re-establish its own information and communications technology competence and foster a virtual digital valley as a counterpart to existing digital centers in the US and in Asia. Initiatives such as Terra Numerata™ from Roland Berger Strategy Consultants can help to improve the way the digital transformation is coordinated in Europe.

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Good Management is the foundation of successful urban development

Urbanization boom – Challenges ahead for our cities

 

All over the world the competition between cities and agglomerations is rising. A huge growth in populations is expected in the following decades and young people will be keen to relocate to cities.

 Cities are facing fundamental changes. These changes can be a chance for prosperity and growth but they will be accompanied by great challenges, too.

The migration of people can bring out prosperity and job creation but can also prompt huge socio-economic problems. Cities must carefully plan and systematically regulate their growth to lay the foundations for sustainable, peaceful and prosperous development. A recent survey determined that in industrial countries seven out of 10 people live in cities. This is expected to increase to eight by 2030.

 

Urban development – new management tasks needed

 

To cope with the growing population and the challenges this can bring about, cities should guarantee a livable environment, providing secure areas for housing and work, and safe and efficient public infrastructure, as well as ensuring social integration and inclusion.

Urban development is a highly complex process that involves many stakeholders and a plurality of action fields as well as the discontinuity of political mandates for decision makers. In the context of an international comparative study, Roland Berger Strategy Consultants analyzed factors of success for effective urban development. The study consists of 30 Interviews with international experts, an analysis of 50 cities and their development, and the evaluation of over 300 reports. The study aims to create an impetus for successful urban development management.

 

Nine key success factors for urban development management

First results show that it is less important which growth targets are set but more valuable if the cities are capable of systematically realizing their growth targets over a long period.

Based on the study of 20 German cities and other projects concerning growth, nine crucial challenges in three categories appear. The three categories are strategy, governance and implementation. Here's what we have learned:

Strategy

1.        

Urban development management needs realistic initial-analysis that considers  risks, strengths, weaknesses and comparisons with other agglomerations.

2.

The objectives of urban management should address all stakeholders and should concentrate its strengths on few specific achievable targets to create a  mobilizing vision.

 

3.        

Urban development needs a plain strategy. Concepts, containing too many or     contradictory targets are doomed to fail.

 

Governance

4.        

Cities have to be prepared for all contingencies and must develop alternative cenarios to keep growth -management flexible.

 

5.       

 City- management is a matter for the leaders. Successful growth needs distinct role   -models, and this also goes for the political leadership of the city.

 

6.        

Pooling of competences and a clear schedule of responsibilities are needed for successful urban development.

7.       

Citizens should participate and influence the growth of their city. Smart    Participation enables active and engaged citizens to take part in these processes.

 

Implementation

8.        

The communication strategy must address the relevant target groups in order to be authentic. Professional authentic communication and marketing require interdisciplinary know-how and sufficient financial and human resources.

 

9.        

Finally, successful growth requires the definition of measurable targets as well    as the examination of the objectives. This is the only way to ensure the  accomplishment of growth targets.