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Network economy is making a comeback – at elevated strength

In the 1990s, the time and technology were not ready for the network economy. Today, things are different. In his dissertation, MSc (Tech), MSc (Econ) Matti Sommarberg examines digitalized machine-building while applying his strong vision and extensive experience from managerial duties at Cargotec.

The network economy was a popular concept in the late 1990s, during the initial steps of the Internet. Today, nearly two decades later, the development level and affordability of various platforms, the Internet of Things and data processing are laying the technological foundation for the true arrival of the network economy. At the same time, crowdsourcing and the sharing economy have moulded people’s attitudes and behaviour in a direction that is favourable for the network economy.  In his dissertation, Matti Sommarberg studied the ways that digital technologies and the strategic management models they enable change value creation in one specific, traditional line of business: machine-building. Through his research, Sommarberg wishes to add to the understanding we have of these ongoing trends.

“Does this development mean continuous improvement, does it take place in leaps, or can be assume that this shift involves a change in our current mindset? It is important to identify the factors that speed up and slow down the development,” Sommarberg says.

“The transition in other industries, such as commerce or the media, or phenomena like Uber, have also increased deeper digitalization-related strategy reflection in traditional fields.”

Matti Sommarberg approached the topic from the perspective of the value chain: machine builders are actors who apply digital technologies provided by enablers. In the end, the value is created for the users, i.e. ports and terminals.

“This transition applies to products, services, corporate operational processes and business models alike. Depending on the value chain section from which the matter is examined, the impacts vary. However, a common feature is that the most radical shift is in the way that all four merge into a service in which the product becomes a higher-level outcome. In recent literature, this phenomenon is referred to as ‘Outcome Economy’."

Entrepreneurial mindset and multiple small experiments

In companies, investments are driven by highly traditional variables, such as precalculated productivity improvements, shortening of turn-around times and quality improvements – all of which are positive aspects.  As for the factors that slow down digitalisation, some are practical and easily identified, including information security, data ownership and questions related to the maturity of an individual technology.

“The most significant speed humps, however, are constituted by the difficulty to identify systemic phenomena, managerial beliefs and a lack of capabilities required by the transition,” Sommarberg lists.

In his dissertation, he also applied behavioural economics and management cognition to examine the reasons why the right strategic choices that change the prevailing beliefs are difficult on an individual level.

“We could try and apply an entrepreneurial mindset and multiple small-scale experiments that make use of the knowledge of external networks. This way, it is possible to create a strategy by learning, which will simultaneously enable the development of the abilities required by the information- and user-oriented business environments.”

Sommarberg’s research findings were attained through Delphi interviews, surveys and by analysing three corporate examples of novel value creation.

Public defence of a doctoral dissertation on 9 December 2016

MSc (Tech), MSc (Econ) Matti Sommarberg’s dissertation ‘Digitalization as a Paradigm Changer in Machine-Building Industry’ will be publicly examined in hall K1702 of the Konetalo building at Tampere University of Technology (Korkeakoulunkatu 6, Tampere) at 12 noon on 9 December 2016. The opponents will be Professor Yrjö Neuvo from Aalto University and Adjunct Professor Osmo Kuusi from the University of Turku. Professor Saku Mäkinen from TUT's Department of Industrial Management will act as Chairman.

Matti Sommarberg (55) has worked in managerial positions at Cargotec and associated businesses for nearly 30 years. During dissertation writing, he worked in the Kalmar business area (VP, Senior Technology Advisor).

The dissertation is available online at: http://urn.fi/URN:ISBN:978-952-15-3875-9

Further information: Matti Sommarberg, tel. +358 (0) 40 5028836, matti.sommarberg (at) kalmarglobal.com

 

News submitted by: Tiina Leivo
News updated by: Mika Puonti
Keywords: science and research, network economy, outcome economy, value chain