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Digitalization and industry 4.0, strategies... not only technologies!

Industry 4.0's investments and approaches will actually increase the levels of competitiveness of companies only if they are used to enable new levers of competitive advantage. It is, therefore, necessary to have a strategic vision that can identify the new Products/Services that can be offered to the market and the related business models.

Companies have also to avoid investments that will generate little real value in the marketplace. Quite often they even generate new complexity that can affect the current competitiveness of the Company. Strategic methodological approaches should be used to design and develop new Digitalized Value Propositions and Business models. This article describes how to realize the new Organizational Digital Configurations.


There have been already a lot of talks and writings on “Industry 4.0 ". Perhaps they have given too much emphasis on its technological dimensions without a full understanding of its strategic value. It means that there is the risk of investing in digitalization (quite often exploiting the advantages of the financial/tax promotional campaigns available in many Countries), assuming that the possible increased efficiency and flexibility can be automatically translated into a higher turnover of the company.

Adequate technological investments may indeed increase the productivity rate of the companies, allowing a reduction in the number of employees and therefore an increase in their EBITDA. But these investments may generate some negative by-effects.


In order to make a strategically valuable use of the 4.0 technologies, it is necessary to have the awareness of the strategic, organizational and cultural levers they can enable. It is with such awareness that best and suitable technologies can be chosen to create more business leverage and avoid low investments return. In this context, however, it is also necessary to know how to make the right changes in the Reference Paradigms. A vertically integrated implementation approach is also needed (Strategy-Organisation-Culture- Technology) and horizontally as well (Machine- Human, Virtual). 

As far as the Company's Operating Model is concerned, it must be analysed, and probably reviewed in an integrated way, in all its dimensions: Structure, Business Processes, Organisation, Management, Culture, Systems and Technologies.


More generally, the possible evolutions of Business Models in the logic of "Digitalization 4.0" can be identified through the combination of different perspectives/dimensions: Value Proposition (products/services offered), Operating Model, Technology. Each of these perspectives can be seen in the evolutionary sequence through the following incremental steps: Enhancement, Extension, and Re-definition.

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About the author:

Giorgio Merli, author of numerous books and articles on Management published in Europe and USA, consultant to Multinationals and Governments, a teacher in several Universities in Italy and abroad. Formerly Country Leader of IBM Business Consulting Services and CEO of PWCC Italy, he is currently Senior VP of EFESO Management Consultants .