The aim of this essay is to provide deep insights regarding the business model and recent developments like industry 4.0. The essay will try to demonstrate about the business model and how different organization create their own business model to provide value to their customers. The business model will be thoroughly discussed from the perspective of digital innovation like Industry 4.0. For critical analysis BMW Corporation has been chosen for empirical study. Through analyzing the BMW Corporation one can critically analyze how business model works and how innovation has transformed the corporation. Business model can be described as the approach which the organization adopted to create capture and deliver value to the customers. Through business model of an organization one can know the core aspects of business such as targeting of customers, business process, organizational structure etc.  The business model of any organization reflects the organizational culture and its core values.

Meanwhile industry 4.0 is the name of the technique which automates the manufacturing and other business processes. The industry 4.0 is a very vast term and include various things such as cloud computing, internet of things, cyber physical systems and cognitive computing. The digitization of the production not only improve the capacity of production and efficiency bit also allow corporation to manage its costs and improve its profitability. Through innovation corporation can provide unique and innovative product to the customers which ultimately help the corporation to enhance their sales. In this essay BMW Corporation has been taken to provide brief overview regarding the industry 4.0.

The organizations today are trying to focus on innovating their business model so that they can compete with the competitors and can smooth their routine operations. Incorporation technology advancements ion the business model allow them to gain competitive advantage and sustain in the long run. The business can only survive in the future when its keep on upgrading with the latest trends that exist in the market. The technology in recent years have improved up to lot of extent which is creating pressure on the corporation to innovate their current operations. The industry 4.0 approach is new for many organizations which have the potential to transform or revolutionize the way they are performing their routine activities.

The developed countries has realized the potential of industry 4.0 and started implemented in the industries. Various studies have shown that industry 4.0 improves various aspects related to business and improve the business performance and efficiency. The essay is divided into 4 main sections. The first section is the introductory section which provide a quick overview of the discussed phenomenon. The second section contain literature review and outline of the case. Third section of essay contain analysis & discussion of the case. Finally the last section provide a detailed conclusion of the essay.

Goal of the Essay of Digital Innovation

The Goal of the essay top provide deep insights regarding how BMW is innovating its business model through implementation of industry 4.0.

Objectives of the Essay of Digital Innovation

The key objectives of the essay are mentioned below:

·         To analyze the significance of the innovative business model

·         To analyze how innovative business model helps the corporation to achieve their desired goals.

·         To critically analyze how industry 4.0 can improve the business model of organization.

·         To analyze how BMW has transformed its operations through implementation of industry 4.0.

Literature Review of Digital Innovation

In order to know about various business model which are being used by the organization, an extensive literature review has been performed to know how businesses have created business model to provide value to their customers. Today the corporations are innovating their business models by implementing various approaches & techniques such as industry 4.0 approach. The literature review has majorly focus on the innovation of business model and industry 4.0 approach. Through literature review it can be known what other researchers have contributed regarding the industry 4.0 and where research gap exists.

According to Tjahjono (2017), IT or Information Technology has been through various chapters of modification over the past 30 years and it has actually affected almost every life’s aspect. If all the changes are being addressed, it can no doubt be said that the integration of cloud computing in infrastructures of smart devices. Actually, the recent and new advancements have allowed the interconnection of humans through virtualization along with machines through a system of direct communication. The integration of such type of network within the operation environment and production is referred as Industry 4.0.

As far as the industry is concerned, supply chain is impacted massively due to the introduction of system named as Introduction 4.0. In order to raise the transparency of various steps of supply chain, it is more than just a little important to strengthen the collaboration among customers, manufacturers, and suppliers [1].

Lobova (2019) in the research states that Industry 4.0’s concept is quite attractive in terms of economic systems that are modern due to 2 important points and reasons. The very first term is related with the Industry 4.0’s innovativeness. The progress of socio-technological has created preconditions for the revolution with respect to industry which is expected by almost the complete economy of the world. Additionally, there is also an idea in both the political and scientific environment that development’s new vector will be formed by the Industry 4.0. Meanwhile, the second point or reason is concerned with the Industry 4.0’s expected effectiveness that is quite high along with its ability of solving modern humanity’s global problems.

With the Industry 4.0, raising efficiency in terms of economic systems is allowed and thus overcoming the consumer goods’ total deficit. Additionally the system’s development is accompanied with the load’s reduction on a human entity [2].

It has been stated by Qin (2016) that ever since the 1^st Industrial Revolution, consecutive changes and revolutions have taken place in the production electrical machines to machines that are powered by the steam. The processes of manufacturing have become more than just a little sustainable, automatic, and complicated. It means that individuals can now simply operate devices in a simple, persistent, and efficient manner. At present, modern manufacturing has an important role in European countries especially. Approximately GDP’s seventeen percent is analyzed by the industry which produces job chances ranging up to 32 million.

With the entrance of 3 industrial revolutions, IT or Information Technology, electricity, and mechanization have been brought closer in the human manufacturing. Ever since Industry 4.0 has been introduced, it has been popularizing among not only academics but also manufacturing industries. Industry 4.0 integrates an overall network of communication among customers, resources, logistics, supplier, factories, and several factories [3].

Nagy (2018) discusses that in the period of industrial digitalization, firms are highly spending money or investing in solutions and tools for enabling their employees, machines, processes, and even products to be involved or integrated into a network that is integrated itself for performance improvement, company development’s evaluation, data analysis, and data collection. At present, the 4^th industrial revolution in terms of qualitative and innovative nature is occurring. From a single perspective, the changes’ quality can be observed in a situation when the whole process of production is supervised and managed in a way that is integrated, flexible, and combined well. For maintaining a strong competition in an environment that is globalized, the companies focusing on manufacturing have to almost always upgrade the production system and facilitate the market’s changing demands [4].

Ollif (2017) tells that the usage of data-mining as the tool of analytics has been rising in the close years that have already passed. Additionally, the uprising of manufacturing paradigms which are new like the initiative of Industry 4.0 have led numerous manufacturers for looking at the utilization of such techniques which are quire powerful. However, it also remains that practical applications are also present and are unreachable of these enterprises featuring small manufacturing processes.

By collaborating with a member of industry, a producer of household equipment, there were techniques that were developed to offer actionable feedback which could be analyzed and used for improving operations of manufacturing. Primary steps have been considered for implementing the intelligent systems and various firms with large requirements of manufacturing have actually started to explore this area’s potential [5].

According to Liebert (2016), innovation is very important in the world of economy. The development of products is rising and the agility is increasing. It is difficult to however for the processes or production to adapt to such a strong and rapid change. Innovation plays an important role over the globe for improving the vitality of economy along with competitiveness of nations, regions, and communities. This process can actually be stimulated by various elements which can be integrated according to various regions over the world. Governmental influence can actually drive many innovations such as the Industry 4.0 which was specifically introduced by the German government.

In the system of Industry 4.0, there are a lot of opportunities for development in the future regarding various aspects of the business life today. There are various benefits concerning the requirements of an individual, developing value opportunities, resource productivity, decision taking that is optimized, and flexibility [6].

According to Koen (2011), the sustaining space of innovation where firms that are established for succeeding is actually illustrated by a dependence of value networks that already exist and a financial hurdle that is comfortable. But such space is not available without hurdles and challenges for companies that are innovative. Its exploration helps in providing a perspective on issues that developed companies face when the sustaining innovation’s comfort zone is left by them. There are additional challenges when it comes to developing innovation in the products and organizations that the companies face. Industry 4.0 is quite helpful in offering opportunities for that aspect [7].

The Literature review has provided a brief overview regarding the business model innovation and industry 4.0. Incorporating innovation or technology I the business model improves the overall performance, efficiency and profitability of the corporation. The approaches such as industry 4.0 have huge potential to enhance the productivity and performance of the organizations. Through literature review it can be said that industry 4.0 have already started being implemented in the developing countries and in the upcoming years the corporation would able to provide more innovative products to its customers.

It can be said that if approaches such as industry 4.0 are combined with the business model than the organizations have huge potential to grow in the future. Through industry 4.0 the corporation can innovate its supply chain, logistic and various other operations effectively. However there are lots of challenges which needs to be mitigated or address while implementing industry 4.0. It is evident that industry 4.0 have lots of benefits however the major drawback is that it will have significant impact on the jobs of different works. When machines are going to take over various activities in the factories than unemployment level can increase up to lot of extent.

Case Outline & Topic of Digital Innovation

For critically analyzing the Innovative Business model BMW (Bavarian Motor Works) has been chosen for the analysis. BMW is a world renowned automobile corporation. It is a German corporation which has head quarter in the city of Munich Germany. The corporation has its manufacturing facilities in various countries which include China, Brazil, United Kingdom, South Africa and India. The organization is among the world largest manufacturer of automobile. The organization was formed in the year 1916. The major brands of the corporation include BMW, BMW X, Mini, BMW I and Rolls-Royce.  According to the statistics the organization has employed 129,932 employees.

The organization over the years has experience immense growth and become a major brand in the automotive industry. BMW has created brand image in the minds of the customers and has gain huge customer loyalty. There are many customers out there who prefer only BMW vehicles due to their unique design, quality and luxury interior. BMW charges premium price from its customers. The corporation has motor sports history as well and manufactures motor bikes along with automobiles as well. The factors which contributes in the success of the organization is continuous innovation and improvements in its products over the years.

The corporation such as BMW has started implementing IT-supported technologies to improve their production, operations and logistics. It means that organization has included industry 4.0 approach in its business model to improve its efficiency even further. The corporation has just began implementing industry 4.0 which have changed the way the corporation works. The corporation has implemented the technology to improve data analytics, logistics, automation & manufacturing. Overall it can be said the industry 4.0 has open new door of opportunity for the corporation and organization today can recognize the opportunities to develop new strategies for corporation’s growth. With new technologies not only corporation will able to smooth the working conditions for the employees but also corporation will able to reduce its errors which occur during productions. The difficulties which the employees face during the production process will decrease significantly after implementation of industry 4.0 approach.

Analysis of Case of Digital Innovation

Digitalization has been introduced into production which have referred as industry 4.0, this is creating the new business opportunities to benefiting the group of BMW system. This system better facilitate the customer requirements and bringing more flexibility into the production process and quality process. BMW Group have been adopting the digitalization technology rapidly and its technology clusters have been discussed in the following.

These are Smart data analytics; smart logistics; innovative automation & assistance systems and high quality manufacturing.

There have been significant impact coming from the digitalization and latest technologies on the huge giant BMW Group, digitalization has impacted on its production value chain significantly. The production system has been changed from press shop to body shop, and body shop to paint shop. Each and every stage involved in the manufacturing production process is enjoying the benefit of digitalization.

The technology invented its name is “Smart data analytics”, it is installed an application which captures and analyze the data accordingly suggest the improvements in the process after conducting data analytics. Factory digitalization is for instance, it is enabling the three-dimensional image of a production plant to contribute into the production process while maintaining the millimeter accuracy. At the later stage, 3D data is also available to be using to bring medications and make calculations at the factory. Algorithms are helping in analyzing thousand bolt connections in the vehicle and providing the useful information what errors are going to occur so that change can be made before the time.

Virtual reality has also been introduced into the manufacturing process as contributing into stimulating and interacting with 3D environment which is being used in real time. This is such a technology offering great amount of value to both gamers and companies. High qualified and experienced team of BMW present at Group Virtual Reality Lab using the technology which contributes into optimizing enhancing work process and then its safety, a safety example is such as safety in logistics sector. The data is used to be analyzed so that intelligent decisions can be made to bring improvements in every area of production. This analysis is also of the subjective nature as subjective analysis which can easily understandable by the one who then implements the suggestions

Group-breaking system have been implemented by the BMW Group, the area was selected of smart logistics. Real time critical information has been providing by the Smart data technologies for the supply chain. It made one thing to sure that plants can have their part of supply under the flexible conditions. Logistics are being assembled through autonomous tagger trains. The laser technology is installed for navigation which sends the long distance signals.

The new technology in the name of “Smart Transport Robots” have been programmed for lifting the components weight up to 0.5 tons from one position to another. They are programmed for finding the shortest route available in between the distance, they can do that after transmitters determined the location. These can drive for longer hours as much as eight due to the strong BMB i3 batteries installation. They have been connected each other sending critical information in between receiver and dealership. When it has to find its location at the time car is stop, it relies on the information coming from geo-location connected through the mobile phone.

Innovation has been contributing significantly for providing the relief to the employees. The robots have been offering flexibility and better quality into the production process. Lightweight robots have been working with human employees at same workplace and coordinating each other efforts. Robots have been working in collaboration with employees and provide them big support. They are normal speed and do not create any threat for the employees. These lightweight robots are flexible and versatile can be working in any environment.

BMW has invested in lots of R&D program because they want to bring more innovation and rapid technology introduction, collaborating with educational institutions. BMW has been actively engaged in automotive ecosystem and have been investing in producing lightweight robots which can better engaged in manufacturing process comparing to the human employees. BMW has also made other collaboration with the firms to take the advantage of each other strength and develop the strategic position through developing the new technology.

According to the Hilgenberg, no one can imagine BMW to get dire need of 3D Printing but this made possible after three years when no one could imagine it to happen. They have been producing more than 25,000 prototype parts on every year which resulted as design phase of hardware has been completed successfully. 3D Printing is not limited to the car but also being used for spare parts. BMW is not creating them on demand instead of keeping the spare parts on inventory which is a freeze investment and unproductive source of production.

In the phase of planning, BMW was fully equipped with all modern facilities such as 3D scanned and then digitalize the whole operations from assembly to the complete model. The process has become more reliable and fastest just because of the latest technology. The all credit goes to the 3D printing and latest technology which have been adopted by the BMW and else they would have left far behind from the competition in the modern time. This technology have been benefiting in terms of saving of cost in several steps which reduces the total cost of production and this also helps in gaining the competitive advantage over the market. It has further simplified the automation process in the fields and then accordingly things happen to achieve. It is agreed fact that modern automation process and latest technology has reduced the cost by 30% and the return on investment has been increased by 50% which is good. The latest technology would fulfill its cost and initial investment within few years and then BMW would be enjoying the additional return on the capital investment. As far as complete feasibility is concerned, it has lots of requirements such as Information Technology, buildings and infrastructure which was essential.   

Discussion & Critical Reflection of Digital Innovation

Through literature review and analyzing the BMW Corporation it can be said that the organization performance increases through implementation of industry 4.0 approach. When the organization include technology or innovation within its business model than lot of opportunities for the corporation arises such future growth and reduction in expenses. If the organization wants to sustain in the long run and want to gain competitive edge over its competitors it is important that the organization should revolutionized its production process and provide such products to its customers which are not only high in quality but also differentiate the corporation in the market.

I find it quite interesting that BMW is among those corporations who already started to implement the industry 4.0 approach. Industry 4.0 is a new approach and many organizations are evaluating its benefits and drawbacks before implementing it in the organization. Currently the industry 4.0 approach is only considered by the developed countries which include USA, Germany and UK. The developing countries however are currently not in the position to implement industry 4.0 because the developing countries does not have much resources which are required to implement the industry 4.0. Making the process completely automated is a costly tasks however the benefit of automation are much more than the cost involved. The below table discussed the key advantages & disadvantages of industry 4.0 approach

It is recommended to the corporation to implement industry 4.0 because it improves the performance, productivity and efficiency of the organization. In future it would be impossible to sustain in the long run without technology and approaches like industry 4.0 are essential for the corporations. Although there are certain disadvantages like increase in cost and problem with the decrease in number of employees but the benefit which the organization will get are higher than the costs.

Science Fiction Story of Digital Innovation

I have read the news in the Newspaper that BMW has thinking about creating a flying motor bike. I discussed the news with my friend and said “hey Mark! Have you read the latest news in the paper? Mark said “which new?” then I told mark that the organization is considering about creating a flying bike. Few months later I see a bike in the city at a time when there is less traffic on the road. I completely shocked when I see that the bike take off from the road and start flying. It was the time when I remembered the news about the flying bike. Through innovation and continuous improvement BMW finally created a bike which can fly in the sky. Later that day I told this thing to my friend who concluded that he was not surprised because over the years the corporation was continuously improving and developing its technology which would result in creation of such a product.

Conclusion on Digital Innovation

If all the above discussion is summarized than it is evident that through industry 4.0 the corporation can innovate its supply chain, logistic and various other operations effectively. However there are lots of challenges which needs to be mitigated or address while implementing industry 4.0. It is evident that industry 4.0 have lots of benefits however the major drawback is that it will have significant impact on the jobs of different works. When machines are going to take over various activities in the factories than unemployment level can increase up to lot of extent.

The corporation such as BMW has started implementing IT-supported technologies to improve their production, operations and logistics. It means that organization has included industry 4.0 approach in its business model to improve its efficiency even further. The corporation has just began implementing industry 4.0 which have changed the way the corporation works. The corporation has implemented the technology to improve data analytics, logistics, automation & manufacturing. Overall it can be said the industry 4.0 has open new door of opportunity for the corporation and organization today can recognize the opportunities to develop new strategies for corporation’s growth. With new technologies not only corporation will able to smooth the working conditions for the employees but also corporation will able to reduce its errors which occur during productions. The difficulties which the employees face during the production process will decrease significantly after implementation of industry 4.0 approach.

The organizations today are trying to focus on innovating their business model so that they can compete with the competitors and can smooth their routine operations. Incorporation technology advancements in the business model allow them to gain competitive advantage and sustain in the long run. The business can only survive in the future when its keep on upgrading with the latest trends that exist in the market. The technology in recent years have improved up to lot of extent which is creating pressure on the corporation to innovate their current operations

I find it quite interesting that BMW is among those corporations who already started to implement the industry 4.0 approach. Industry 4.0 is a new approach and many organizations are evaluating its benefits and drawbacks before implementing it in the organization. Currently the industry 4.0 approach is only considered by the developed countries which include USA, Germany and UK. The developing countries however are currently not in the position to implement industry 4.0 because the developing countries does not have much resources which are required to implement the industry 4.0. Making the process completely automated is a costly tasks however the benefit of automation are much more than the cost involved.

 References of Digital Innovation