The Digital Mittelstands-Award (DIMA) showcases exemplary digital projects from mid-sized enterprises in the DACH region. The jury consists of six members who have already proven their excellent digital competence – and Dr Holger Schmidt is one of them. The former economic journalist focuses intensively on the topics of platform economics and artificial intelligence (AI) and researches new digital business models.
In this interview, the digital expert reveals how mid-sized enterprises can concretely profit from AI, what is behind the Plattform-Index and why he’s excited about DIMA.
Dr Schmidt, as a lecturer, you teach digital transformation at the Technical University of Darmstadt. Shouldn’t such content be much more widespread, when you take a look at how slow digitalisation in Germany is, at least before the coronavirus? Digital experts have never been more sough after on the job market …
Today, there are many courses of study focuses on the digital economy; informatics above all, or mechanical engineering. My teaching, however, concentrates mainly on the area of digital business models, in other words how founders can leverage technology for building up a company or how such business models can be applied in traditional companies. And indeed, the educational offers in this area are still very limited in Germany.
For many mid-sized enterprises, digitalisation means first and foremost automation. Is this what it’s all about in your view?
If you automate, you are essentially optimising what already exists. This doesn’t give a company a decisive competitive edge, though. Changes at the top of a market have not been based on the sole use of new technologies in the last 20 years, generally speaking, but on a well-considered business model which cleverly integrates the opportunity for digital further development. Amazon, for instance, has not based its world leadership on a certain product of technical savviness, but on a platform-based business model.
For mid-sized enterprises in the B2B segment, the question often arises if an investment should be made in the creation of an own online shop or if it’s best to use a platform as an online marketplace. What would you suggest?
The two can go hand in hand. But if you ignore platforms as a provider of a product, you are closing off access to new markets which cannot be covered by an online shop. For instance: around 40 per cent of providers listed on the German Amazon marketplace are from China. They use the platform economy to be able to sale products from abroad.
Dr. Holger Schmidt, lecturer at the Technical University of Darmstadt
You developed the Plattform-Index. Explain briefly what this is?
Platforms are currently the dominate digital business model. Six or ten of the most successful companies in the world work in this way. The Plattform-Index is the economic attempt to show the superiority of this business model on the stock exchange. It covers the stocks of 15 such companies. In the past five years, this index has grown by more than 300 per cent.
Today, we have also set up the stock fund “The Original Platform Fund” based on this, which only has listed companies in its portfolio who operate their own platform.
One of your focal points is the topic of artificial intelligence. You even claim that this technology can make the German railway more punctual – which no one has been able to do to date. How can a mid-sized enterprise profit concretely from AI?
There are many approaches, although artificial intelligence has hardly made it past the pilot project phase. For instance, AI has huge potential in the area of process automation, specifically process mining (German), or in quality control for determining defect products. What’s more, machines can be made to be more intelligent using AI, which then determine in advance when it will have a defect, in other words in the area of predictive maintenance (German). This, in turn, opens up new business models such as Equipment-as-a-Service (EaaS), whereby production systems or machines are not purchased, but given access to by a provider for a fee.
You have been researching for years now new digital business models. Apart from EaaS, what are currently the most exciting developments? Are new, disruptive models waiting at the starting line which not only promise small-scale improvements, but also offer true added value?
Generally speaking, the platform economy is also gaining significance in other industries too, such as mobility, real estate, health or education. The above-mentioned “as-a-service” way of thinking is currently the most exciting business model. A lot is happening here in the car industry, for instance in the direction of car subscriptions. In future, it’s also imaginable that we have serves with the help of autonomous cars.
Are there digital trends which are overrated?
I’m not certain if blockchain technology can keep all the promises that have been ascribed to it over the past few years. The really necessary application areas are something I just don’t see in real life to date.
You are a member of the jury for the Digital Mittelstands-Awards 2021 thanks to your expertise on digitalisation topics in economy and working life. What do you expect from this competition?
Mid-sized enterprises are often said to not be very advanced when it comes to digitalisation. But enormous innovation potential is hidden in these companies, which is hopefully highlighted at this event. I expect lots of creative digital ideas in any case.