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2020 MIT Platform Strategy Summit
July 8, 2020, Cambridge, USA
2020 MIT Platform Strategy Summit
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2020 MIT Platform Strategy Summit - Keynote Presentation: Dr. Roland Busch, Siemens
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About the talk

02:20 Combining the physical and digital worlds - Platform strategies at work

07:58 Systematic expansion of software and automation portfolio

10:44 Siemens - a digital champion for industry and infrastructure

13:03 Unleash new customer value by combining the physical and digital worlds in all served markets

16:14 Evolution of our market

17:00 Safe return to the office

20:04 Railigent - an open platform ecosystem

21:52 Mendix platform

About speakers

Marshall Alstyne
Questrom Professor of Management at Boston University Questrom School of Business
Roland Busch
President and CEO of Siemens AG at Siemens

Marshall Van Alstyne is coauthor of the international bestseller Platform Revolution. He is one of the world's experts on network business models and is a Questrom Chair Professor at Boston University. He is a frequent speaker, board level advisor, and consultant to startups and global firms. His research has received half a dozen academic awards and appeared in journals such as Science, Nature and Harvard Business Review. Interviews appear regularly across Bloomberg, The Economist, The New York Times, The Wall Street Journal and National Public Radio. He studied computer science at Yale and information technology at MIT. He holds multiple patents; was among the first to measure the dollar value of social networks, and his theories of network businesses are taught worldwide. He is a husband and dad, who loves dogs, exercise, travel, and questions of governance.

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As a technology company that transforms the backbone of economies, I can safely say there is no more exciting place to work on the things that make a difference in the world, than Siemens. Serving customers in industry, infrastructure, transportation and healthcare, Siemens creates technologies with purpose. That is what brought me to Siemens and why I never left. Our technologies transform the everyday, by empowering our customers to create agile factories, intelligent buildings and energy grids, sustainable transportation, and better healthcare systems. To innovate faster and serve our customers better: - We put our customers at the center of everything we do. - We empower people – our customers and partners to be successful, and our colleagues to grow and reach their full potential. - We embrace a growth mindset, being open to change, to new ways of working, always learning.

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And I wanted to now, turn it over to Marshal to give an introduction of a doctor Bush. Please Marshall. So it's quite an extraordinary honor to have dr. Roland bush with us. So I'm going to have you may know him from the Bible online or basically just from the the same of Siemens more generally but a little bit more background on a few things are currently two seats, you and Deputy CEO of Siemens Corporation, 86 billion dollar 485,000 employees and their in the midst of several platforms transformation

has been there since 94. We started as project manager for Global R&D. I also live in Cheyenne up for a while. We was headed Automotive asia-pacific region. Also at the same time. Next 47. Would you see me? Bend your arm the same things? Cybersecurity things carbon neutrality and other elements as well. Use a big believer in using Texas social good. I was in more about that particular things like, improving reducing carbon footprint in ways other than covid-19. He's been doing it. Also, one of my personal favorites

as well. He got his Ph.D. It's not figured out exactly where she also studied it quite so much to learn new skills to learn. Thanks much for the kind of deduction. I think I'm supposed to share my screen now with you. And give me a second. Should automatically give control hearing and I now have a full screen and I hope that you So you don't get the top left. No check display settings, and Wendover check that and get swap presenter, and then it should give you

mine. Okay, so thank you for the invitation into I don't talk about how we combined a physical and digital world and how classroom strategies not playing a game and I'm coming from the industrial space. Now, you know, it seemed as working on Industrial infrastructure and mobility and we are about to spend our energy business. So I'm covering that a little bit less better when I'm starting it. Now. I would like to give you an idea on what happens on the industrial space. You don't know this industry 4.0 I'll be.

So there has to be a one, two and three before. And if you think that this is a Continuum of just a little thing, any further little bit of misunderstanding and I give you an idea first for example, from 1.02 2.0 from the steam engine to electricity with a substantial change. Because before that, you had a steam machine with one access controlling in one line, all the mechanics. Electricity was bringing the opportunity to decouple lines because you can put that motor everywhere in. This is a substantial more freedom to change the

productivity substantially estate industry 3.0. When you have the first industry computers, entering the shop floor as a combination of hardware and software and doing all the things that you see current you come maybe even more destructive. Change recall about we talk about industry for the to one saying that it's an ugly that Hobby and stuff is going to be this small Freedom. It is about changing from a linear to a networked value chain of a continent, but it also transformed themselves ecosystems infections

in the game. So therefore, I do believe that this is maybe even more destructive wave compared to already at tremendous changes, Wisconsin. So, what y'all do that? You're living the very, very exciting time. The basic idea behind it is we call it the industrial internet of things, which is unleashing a new growth area by combining the digital in the physical world. And in order to drive value of complexity as you can imagine, but it also increased tremendously, the value proposition in Impact which received

in all markets or we can go, we can go beyond whatever we have seen so far. I give you a couple of examples of little bit later. So coming to that we can now called any kind of study you want them quoting know Mackenzie. They say the potential impact 11 trillion to year in 2025. B2B. Would apply for 70%. So if we believe that the b2c business, the place on business is already a big thing. The potential of each Abby is even bigger and maybe that's also reason why I also didn't picture it companies looking for and going of industrial space and look how they can

provide value their value. Tell me about the triggering this extra area roads, give you three points. For example, an industry. We believe that 60% of the business study for Mackenzie for that. 60% of women infections house could be all demented, improving productivity quality and safety with using the development time because we're talking about getting a digital twin of your product, digital twin, limiting factor, annoying. And then once you build it, and bring to the real world, because you are optimized it in the picture of the road where you

continuously, look how the real world looks like and all the information. You can. You can bring back into your group into the digital twin of your product up tomorrow. Is it? And you do it all over again? Infrastructure, for example, we can see that. Let me know that 80% of the life-cycle cost of a building. For example, I'm the operational face. So the possibility to influence these costs highest in the planning phase on cost. But then you can again building and optimizing your system in the middle. Pretty well, you can reduce these Concepts substantially balance. Point comes from

a favorite of mine, his face. We believe that we can increase the capacity of public transport by 20% without building a new line. This is just making a better Train control system. We are reasonably one on order in in no way. We're bringing the complete interlocking system, 300 locking systems of no way into one in the cloud. And this is like switching from the dial phone to the voice over IP in one step and that's out of Full of the world can influence the real world,

10 years ago, coming from being a bother strong, clay and automation Ruby increase the size of the automation Revenue in portfolio continuously, but it started off in acquiring software companies. The first one was UPS in the many, many of them, followed the recently, maybe one of those which are more in your eyes as Mentor graphics on Monday, to look at phone and meanwhile to be invested, 10 billion dollars or Euros. In this software suite providing us with a 5 billion software

Revenue, which brings us in the top 10 League of the largest of the companies in the world. And witness for you. We have now automation software portfolio and this enables us now to bridge that and to bring this into the new world. The internet of things. And again, I become a tremendous change, widgets unmatched, and let me start with the traditional players, do players, you know them, then they may be be an electric somebody he could, you see, they are basically doing similar things. Either they come from the software, like the soy in their partnering with a

BB or they come from the stuff that I see in the truck, for example, of motivation company. So, therefore, it will see. This is, this is not only seen a lot of combinations, which received two companies. Of course, there's a lot of data, which has to be processed and the clouds. The perfect place to get all these states and collect them, stole them create value out of I'm having a little slow processing power, but you need to see where the AWS or Microsoft

it coming into the game. And they are also providing tremendous good platform Technologies, which will definitely play a role in the game. The last but not least. Of course also, the consulting firms are in the game. Now, i r t connecting, the realtor roads means integrating the schools integrated with the IQ in the ouji board tremendous potential in. You see that both of the consultant for the extensions, but also their strategic consulting firms, like they are entering the space. And they do it in

acquiring Camano home, which is one of the elements you need, if you want to play in the area. Strategy is, it looks simple and but it's to bring it to life is a complex thing. First, and foremost be addressing all markets with our strategy, and the technology stack is build. Basically, a couple of players. We have the hardware. They are the devices, the things which have to be connected to give the automation layer, which is also changing. You're talking all about it. She devices to we

are bringing much more processing power to the edge. We talked about the edge in the clouds, to India is soft when they are, which is allowing, you including a connectivity layer, which allowing you to bring the daytime to the cloudiest. To print them, take them all the data switch, apparently produce their basic sitting there. Are you wasting you don't even use them, have to bring them to the couch, you have to develop applications recorded, vertical, software Audible application. And then you have the highest rate of Solution Services, which is about, of course, Consulting

implementation prototyping integrating. We need a different label Solutions. All of them are vertical specific. This is so hot to scaling the brightness, on the time of this fire layer. It's really virtual specific. And last but not least, you want to have marketplaces, which customers can easily choose their applications? Usually park in Clementon deploy them, out of the cloud. And instead of the bank and make them sucking their purposes on the right side to see an element, which is equally important than the technology Stuck in the Middle. It's all

about our system of the business ecosystem and Industrial won the cloud partners and alliances the in the whole deployment of software and Detroit station in the IRT space is so broad that, there's no one company. You can lift this one alone, and we need a lot of Technology elements in this ecology stack, but also at the may know how, you know that you're really make things happen before I come to samples. I would like to share one more with you. This is again same picture. We will do the dishes while they're connected all over the house and I was just

talking about manufacturing or industry Mobility or infrastructure. They give you a glimpse of what's behind it. It's runs from Automotive Machine building to Logistics manager in manufacturing energy distribution Royal airport, the critical infrastructure oil and gas company buildings. And here's one element which is of essence the line in between the middle of the infinity sign. It means that you are starting as I said before with a digital twin of your product. Then you build a difference between a few minutes extra side and it did at the

Foreman's twin and you run that into it all over. You get all the feedback in the inputs and phone, you would learn to bring it back to your digital twins, optimize it build it, and do it again. And again, you can enter into that 898 East Point. You can solve the performance and then build up your digital twin of your product or you start reverse regardless, where you stand, you will get an itch time to running for the cycle Improvement. And the faster you do it. The more in cooked impactful it will be. So we were thinking about how can we

take me to repack? Phones? No, can you learn from me to seapot phones? And there's one particular element is set as I said before. It doesn't go that high compared to be to see and Marshall said it before. This is more on this high-value comparable, low-volume side lower volume compared to something. Millions and millions of fuses. The standards are still knocked out there. It's still something a lot of customized and to bring that to life, and this is something he believes is very new so far. We have firing only on 2 cylinders in our traditional world. What is across the supply chain. The

business Partners billing me a supply chain. We talked about before and the automotive industry. OMG. I want you two to three and you line them up, and of course you're working in Norwich University and the missing part, which is so new. It's new to our world and you have to train our people on TracFone ecosystems to you. Just nonlinear anymore its Network and and also in Clarksville. Systems this way you say you are, you're contributing something and you getting out of it and the highest value lies, basically outside.

This is the company. We have to learn that it's not in the DNA of our managers and saying that, I'm raising my hand here because this is something where we have to be really aware of if you really want to play the game, yester played right and you have to understand the mechanisms behind, it is a reason why we are working better breakfast with Marshall and now it will see why we are so excited. I will call markets are going to send this is very, very, very strong football game. Number. One in automation without making everything manufacturing building

Spain's, 45 million installed how to make sure systems. More than 9 million license seats for PLM software worldwide. This is a platform in its own dear. This is just selling somatic industry controller and along with that engineering or engineering tool helping customers to program, a local kind of language. And then, why did they do that? They created automatically the software code for the semantic, so they can download it. And it works. It's a platform on the right side. You'll see a market which

is still on a 30 billion size, but it goes to 16% and there are a lot of interesting applications which of the following. I'll give you selected examples. I will not go into the bottom-right. This industrialectric sample. This is where we are really helping Machine 2. Builders, for example, of new business models that they don't sell Machine Tools, but they know they're going to sell Machine Tools hours, which is a completely new motor. I'm off balance sheet away, customers and it's resume. It's obviously very long week samples.

One example is over the building space. We recently acquired two companies, small companies. One is enlightened. They are providing census licenses for your lightning damage, stranger things like the movement in buildings, humidity temperature in the light and comfy is a platform which is the user interface, which is helping you to think about what's the situation in your building. You can control your lights, you can put information on it and guess when you bought it. Sleep meant to increase their space productivity of buildings. So packing as many people

in the building so you can know in Corona X reverse, we do that together with a partner where we found out that sales force is an ideal partner with their work to come back from where we are now doing executive. So we are not using comfy to pack the building as possible. It's that much responsibility trying to have this social distancing in a building and providing information transparent to hit me. What does conference in training boarding? Passes dashboards shifting scheduling for exemption scheduling, for example, so it's an ideal

combination again based on an ecosystem, maybe system, ecosystem of hours and I believe he can bring a lot of value to a lot of companies. In number one, bring the people back to work. Back to the office, but eventually also having a kind of a more balanced home office and office working space where people can enjoy both elements to expect. One of my favorites radio giant religions are open platform ecosystem for rail applications. What we are doing is we are constantly monitoring in

connecting all the sensors and actuators of trains in order to really a measure their current situation that whole situation and we can predict now with early timer 7 to 10 days which store in a train is going to fail and Royal that this gives us the opportunity to really run away with. I think, in some cases, even one hundred percent of a liability and this train is one of our high-speed trains Advance also between Moscow and Saint Petersburg. We have no more than 30 million kilometers without technical loss of any

minutes because Olivia had fellas, but we could attack them before they appeared and B. Are we were putting these strains of pot repair. Is the power of it? All comes back from economy. We have a lot of players in the face from the Rolling Stock from signaling from infrastructure. And then now we are opening our platform which is better using as a specialist service soft, as a service inside out, come service. And now we're bringing our sometimes also telling, for example, computer power supply is my friends. Can you bring them on the truck? Because

they have accepted the same problems in the same environment? Public transport environment. They using their applications in the mall that use it. The more we getting out of this platform and this is exactly what we want to see and they are not using that but they also can bring the value into our platform and leverage it for the respective businesses. So my, my last example is men dicks, a local platform which can build applications 10 times faster is 70% less resources and have to say also less skilled resources.

It is a platform which combines a lot of existing systems. So the data ingestion comes from whatever kind of system that ASAP or a tumor in the light of our systems existing systems and applications against a local platform with work clothes, engineering application, at Sprouts and Reporting any brains are tremendous productivity to everybody who wants to run an application based on iot platform. You get them access to data operational data, and you can program it in as

productivity there. You see, we have more than 750 customers across 25 Industries universities. And the like they using that platform and this is the way of Siemens is finally starting to make and shape, our economies to make them more sustainable and resilient to. Thank you very much for your attention. And I think we have maybe sometime, we'll be time for some questions asked. Thank you for. That is really interesting issues on the press that you're bringing the competitors in the ecosystem that you got quite a road

map. Going forward. We have a slew of questions, but let me just give you before and I had to repeat any of them. If we happen to have more time, which I doubt, I can actually go deeper and got several more accidents. Only give you for quick one. The first one is, the twins are really interesting idea who gets access to access Metro property rights, is it? Just humans, be late but system Partners in as well. What do you do for the ones that you want? The second is, what are the success criteria to be to become text? How are you designing for networks? And

what are your network effects Road in? Question is, how do you monetize it going to be to be contacts cuz you don't have the ad model so we can get your Facebook relationship. This one's kind of fun. What's your time? Like I think this was coming from investors. So I think I want to know when that one is. What's your timeline for cheating? All of these things have a couple more if that if you happen to be able to have to be fast. So that this is a very touchy topic because a machine tool company. For example, of

achievement in creating the digital twins, of course, they are there in about it because you can learn a lot about the Machine Tools themselves. If you began The point is that we have to be at the Armada Library. Say we are, we are using our applications, running them on their date. Without looking on the other side, many customers are sharing data with us because they have fun and this is exactly what I talked about it. They get more out of it, if they share and they're very good example

where it's less critical Mobility, space again, Singapore, Singapore, Singapore. Mitchell said all your, all your knowledge, but you get from Munich from New York, from London and then our competitors, the dog, so, I'm in Singapore Metro, and don't know, make sure they don't,, they are very easy and sharing because they get the benefit of it. So you ready to have to distinguish success in a B2B. It's basically mashups in the value of each week racing at our customers. And one example, for example, if you go to a customer who is testing testing still consuming twenty to

thirty percent of the time zone time facing money, even if you cancel a request testing by telling the truth, according to the data, which we are having from the machine, you know that these pots are faulty to take them out. It's any other one. Don't work in true. Sejusa, testing time. This is a tremendous value. You can increase your outfit off of stamping up to my stomach acid. Sitting there. You can optimize it, the value of which is, which is facing created with that. This is the measure of success. In the between Ramona Tires. In different ways. In some cases. We are running

an abscess a software-as-a-service. So the customers are using it. Some cases for monetizing wire, the dates on the amount of data. Or we are coming in models, when we are texting, somebody off balance sheet. For example, we are providing availability. If our residents including all day long term service agreement, which is a very nice person. It's more resilient. And since we know what we are doing, because, you know how to ecology, we can optimize it. By the way, we would have to

take about the cake on rate for customers. It says it's lagging because of in most cases customers on educating. There's no real standard yet. We're looking for standard solution pack and play. And very very, very important realities of customers to really be this kind of solutions and run them on their own operations is not there yet. So this reason why we are providing integration resources and training resources to I think it takes a couple of years until you

receive the first and release, hailing up. Applications, in some cases. We are close to do that but have in mind that also so I'm not someone OK, Google, what's not building a year? They also took some time before they took off and they took this economy of scale. I remember. So I just want to pull your highlight, your cousin Marshall and client is the name of the game. It starts slow and then it's efficient. See you actually answered the question and did it with a little time with

silver. So we have what time for one more question among the competitors in some way. So I have to play favorites. How would you balance the neutrality of that playing field? So, how do you manage your competition among the competition? I think it's a new way of looking at. In some cases, if you managed competition away that you take competitor's into your ecosystem, it helps as I said before, customers would not take on Solutions not before, this is standard assume. Now that the three automation players, big automation players will come to

a kind of a certain standard technology to take on rate of customers would be much much faster. So if you, if you share some you get some out. So it's it's a, it's a touchy topic. You have to be very careful with how much you want to share. But the tendency I would say it's going more from into a cold petition kind of way, but you're really putting up some a strong platform where people are benefiting from wedding and much, much more value than you can do in the trying to defend your Turf on your own and being. But they ever ever. So we are working on open system Vivo. We are going to

open apis to also, do all competitors with that. We hope that you can move the needle, very, very fast and Kayla. Dr. Bush, this is not about what you doing. It's amazing to see what's Siemens is actually moving forward and how they're progressing. So with that we are exactly on top. Turn it over to Alexa Bose speakers with your course. You're welcome to join us for the rest of the day. Look forward to the next.

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