The manufacturing industry is unable to benefit from digital networks because (1) openness is considered a risk, 2) open interfaces that enable innovation are not created, and (3) companies lack the ability to develop service business.
(1) Openness is considered a risk: Innovation still largely takes place within companies, and transitioning to networks is a major leap in terms of organisation culture, operating models, and ‘openness principles’. The principle of openness is by no means easy to implement, as the company in question would have to partially renounce control of its core functions. In the manufacturing industry, highly critical equipment and machinery which involve major investments could be at stake.
(2) No open interfaces allowing for innovation are created: Large corporations with the capacity to create key platforms use their position to protect their own interfaces and standards. Official standardisation is also lagging behind. In the United States, ad hoc standards which subsequently become official are created in companies engaging in rapid experiments. However, these standards are necessary for creating functional and open interfaces in the platform economy.
(3) Companies lack the ability to develop service business: The sale of services, such as Software As A Service solutions subject to a monthly charge, differs significantly from the traditional sale of machinery. Individual machines and devices are purchased as one-off investments, and maintenance is often the only additional outsourced service. The sale of more advanced services and software requires more specific insight into customers’ value creation, such as processes and offer.
In the early stages of digital platform development, three factors make companies’ thresholds for participating higher: a lack of trust, a lack of competence related to the platform economy, and closed ICT systems.
The current data market does not encourage data sharing. There are four reasons for this situation: determining the value of data is difficult, cooperation practices are restrictive, legislation is incomplete or restrictive, and companies have no expertise in data-based business.
The main reasons for the small number of shared digital goods in the manufacturing industry are the lack of competence in platform and data business, and rigid organisation structures.
This policy brief focuses on the innovation challenges of the platform economy in the manufacturing industry. We discuss four innovation challenges facing the manufacturing industry and the key reasons for them. We present recommendations related to innovation policy that can accelerate the development and growth of the platform economy in the manufacturing industry.