The Next Great Wave of Value Creation in Manufacturing and What CEOs Need to Know to Compete in this New World
We live in a smart, connected world. In 2012, the number of devices connected to the Internet surpassed the total number of humans on the planet, and we’re accelerating on our way to an “Internet of Things” that will include as many as 50 billion smart, connected devices by the end of the decade.
For manufacturers, the implications are huge. McKinsey estimates the Internet of Things could unleash as much as $2.3 trillion in new economic value worldwide by the year 2025. That new value will come from reduced costs of production, improved efficiencies in areas like service, and the creation of entirely new business opportunities previously unthinkable.
As GE CEO Jeff Immelt sees it, this new world represents manufacturers’ greatest opportunity, but also its biggest challenge. For value creation to happen on the scale predicted by McKinsey, manufacturers must be ready to collect, analyze and capitalize on vast streams of data from customers, suppliers and now the products themselves, all arriving at increasing volumes and speed.
The Internet of Things will be defined by the exponential growth of web-enabled things that push the boundaries of imagination when it comes to how they connect, communicate, and control the physical world. In this new world all manner of sensors, tags and controls will become a part of both the manufacturing process as well as the products that such manufacturing produces. Among the many examples: thermostats and tennis rackets, parking meters and spaces, refrigerators and televisions, subways and airports, cities and farms.
Cisco CEO John Chambers says this connected world is the fourth wave of the Internet where the world of production meets the world of information. And the dawn is only just breaking. Today, sensors are embedded in less than one percent of the non-human devices that have the potential to transmit useful information. But a wave of innovation is speeding us to a smart, connected world.
To capture the value creation opportunity the Internet of Things represents, CEOs must assess their company’s strategy as it relates to everything from product design and factory production to sourcing, sales and service. It also means evaluating the company’s readiness to pursue new business models, or entirely new business opportunities, which could be uncovered by the data generated by the products it creates.
We invite you to join Chief Executive for a roundtable discussion of these issues, moderated by our Editor, JP Donlon and Harvard Business School Professor Michael E. Porter with PTC CEO Jim Heppelmann. The two have been collaborating for the past year on a project exploring the impact of the Internet of Things on manufacturing. We seek your views in order to have a spirited conversation around what CEOs should consider as they seek competitive advantage in a smart, connected world.
Please contact Lisa Cooper at 203-889-4983 or LCooper@chiefexecutive.net to attend.
Michael Porter, Harvard Business School
Michael E. Porter is a leading authority on competitive strategy; the competitiveness and economic development of nations, states, and regions; and the application of competitive principles and strategic approaches to social needs, such as health care, innovation, and corporate responsibility.
Professor Porter is generally recognized as the father of the modern strategy field, and has been identified in rankings and surveys as the world’s most influential thinker on management and competitiveness. He serves as an advisor to countries, corporations, non-profits, and academic circles across the globe.
As the Bishop William Lawrence University Professor based at Harvard Business School, Professor Porter has received the highest professional recognition that can be awarded to a Harvard faculty member. In 2001, Harvard Business School and Harvard University jointly created the Institute for Strategy and Competitiveness, which is dedicated to furthering his work and research.
The author of 18 books and over 125 articles, Professor Porter received a B.S.E. with high honors in aerospace and mechanical engineering from Princeton University in 1969, where he was elected to Phi Beta Kappa and Tau Beta Pi. He then received an M.B.A. with high distinction in 1971 from the Harvard Business School, where he was a George F. Baker Scholar, and a Ph.D. in business economics from Harvard University in 1973.
Professor Porter has also founded three major non-profit organizations: the Initiative for a Competitive Inner City – ICIC, the Center for Effective Philanthropy and FSG-Social Impact Advisors. He also currently serves on the Board of Trustees of Princeton University.
James E. Heppelmann, Parametric Technology Corporation
James (Jim) Heppelmann is the president and chief executive officer (CEO) of PTC and is responsible for driving PTC’s global business strategy and operations. Previous to his appointment as CEO, Mr. Heppelmann served as PTC’s president and chief operating officer, responsible for managing the operating business units of the company including R&D, Marketing, Sales, Services, and Maintenance. He also serves on PTC’s Board of Directors.
Mr. Heppelmann previously served as executive vice president, software products, and chief product officer at PTC with responsibility for overall product direction, including coordination of PTC product vision and strategy, product design and development, and product marketing and management.
Mr. Heppelmann has worked in the information technology industry since 1985 and has extensive experience developing and deploying large-scale product development systems within the manufacturing marketplace. Prior to joining PTC, Mr. Heppelmann was co-founder and chief technical officer of Windchill Technology, a Minnesota-based company acquired by PTC in 1998. Before co-founding Windchill Technology, Mr. Heppelmann served as chief technical officer at Metaphase Technology. Mr. Heppelmann had worked at Control Data Corporation (now known as Syntegra) for seven years until the company formed Metaphase in 1992.
Mr. Heppelmann travels extensively to customer sites around the globe and speaks regularly at product development and manufacturing industry forums on topics such as PLM, global product development, and gaining competitive advantage through product development process improvement. He has also been published and quoted in numerous business and trade media, including The Boston Globe, The Wall Street Journal, and Bloomberg Television.
Mr. Heppelmann also serves as a member of the national FIRST (For Inspiration and Recognition of Science and Technology) executive advisory board, and is a member of the Dean’s advisory board at the University of Minnesota College of Science & Engineering.
Mr. Heppelmann attended University of Minnesota, where he earned a bachelor’s degree in mechanical engineering with an emphasis on computer-aided design.