Digital value generation – the growth potential for the European manufacturing Industry, Part 1
If you want to expand in the future, you’ll need to think radically differently. As the art, video and games markets are already demonstrating, generating value digitally can be both simple and revolutionary at the same time. There is a major opportunity for industry to recognise this potential and develop new digital business models.
In the 1990s, when the PC began marching triumphantly into offices, we found ourselves undergoing a technological transformation that gradually also started affecting all areas of modern life. Despite this, a schoolteacher would – at best – say that digitalisation in the education system ‘could do better’.
Small wonder. For decades, we’ve grown accustomed to our tried-and-tested approach to adding value: we continuously perfect things. But for some time we’ve been in the midst of a transition, moving beyond the industrial age – an era of heavy manufacturing dictated by analogue technology – to enter an age of digital creativity. What’s needed now is the courage to strike out on new paths and the daring to think digitally.
So what’s this digital value creation all about?
Let’s start with something radical, a concept that provides a perfect example of a digital asset from the world of technology – non-fungible tokens, or NFTs. With NFTs, rights relating to ownership, access and usage are captured in a digital format. In the blink of an eye, NFT technology makes it possible to create digital assets out of nothing other than … data. How? By assigning a unique proof of ownership to that data.
This opens the door to endless possibilities to generate digital property rights, for anything from art to videos, music, text, games, GIFs and even social media memes. If something changes ownership, this can be documented using blockchain technology, lastingly and securely. For example, as in the real world, a picture can be copied as often as people want to, but the original remains the original, something both unique and verifiable.
In the world of blockchain, a fundamental distinction is made between things that are interchangeable (fungible) and things that are not interchangeable (non-fungible).
A one-euro coin could be considered a prototype of a fungible asset. It doesn’t matter which of the many one-euro coins in circulation are in my pocket – their value is always the same. The digital counterparts of this – cryptocurrencies such as Bitcoin – are also interchangeable. So as with any coin, the nominal value of a bitcoin is no different from any other.
It’s a completely different story, however, with something like a football signed personally by the scorer of the winning goal in the World Cup final. The event and the goal scorer’s signature make that football unique. Thus its value is also unique. In tech terms this kind of asset is called non-fungible. NFTs make it possible to transfer this kind of value added to an object in the digital realm. The equivalent of the goal scorer’s football would be the first tweet posted by Twitter founder Jack Dorsey – “just setting up my twttr” – an asset that has now been transferred as an NFT into a unique item of value, an asset that can be traded. His NFT of the tweet, by the way, is now worth more than $2.9 million.
New opportunities to generate value in industry
With NFTs, information can not only be tagged with a date and time stamp, and assigned to its original source, it can also be sold on to third parties. For example, meta-data gathered in a production hall can be sold at a profit. Let’s run through this example. Data linked to machine users could subsequently be re-purposed to train algorithms and performance models that allow maximum loads to be matched to actual capacity levels. In other words, production plant no longer just generates value in physical terms – by making something – it simultaneously delivers digital value.
All of these possibilities constitute a massive expansion in the very foundations of modern prosperity. Our prosperity is essentially founded on innovative ideas surrounding steel, chemicals and the automotive industry, not forgetting mechanical engineering. In the foreseeable future, however, digital value creation will become just as important to us as analogue value creation.
If we turn our backs on these emerging opportunities to add value, we risk eroding the very foundations of our economic prosperity. A phrase that has been in common use for years in Silicon Valley is ‘software eats everything’. According to the thinking, digitech will seize hold of all markets – including manufacturing, of course. NFTs are a wonderful example of a door opening to reveal a whole realm of applications and new business models. We just have to walk through that door!
In the second part of this series of blog posts, you will discover what exactly the European manufacturing industry can do to take advantage of these opportunities to generate digital value.