Giving Birth to Digital Twins
The Digital Twin concept is the cornerstone of digital transformation efforts in companies around the world. While definitions abound, the basic idea is to create a digital replica of an asset, a function, or a system that exists in the real world. This could be a simulation model of a supply chain as a practical example. The purpose of the Digital Twin is a) hold the real asset’s data, and b) to provide a safe, low cost place to experiment with and understand the behavior of the system under a wide variety of conditions. The subsequent insight from this experimentation can then be layered back onto the real asset as a means to increase its value or to make it safer to operate.
What if this Digital Twin idea was extended to entire companies? Larger, established firms struggle with digital transformation in spite of their best efforts and considerable investment. Many of the failures of these firms to transform can be traced to their size and entrenched thinking. How can we marry the aspirations of leaders with the reality of corporate atrophy? Perhaps one solution is the enterprise form of the Digital Twin. What if a company created a smaller, sister company as a means to learn and experiment with advanced analytics and automation?
The idea is not without precedent. Faced with ever eroding market share from foreign competition and an inability to react with due haste, GM founded the Saturn division in 1985. Saturn broke many norms of GM in product design, factory location (GM’s first plant in the mid-South), and dealer networks. It was an experiment, that, for its time, showed GM a very different way to manage a car brand. Many of Saturn’s innovations came back to GM in later years. Shouldn’t Tesla have been the brainchild of the established automakers, rather than Elon Musk? Shouldn’t Airbnb have been borne out of Hilton Hotels? Uber from Yellow Cab?
How Does it Work?
A large, industrial firm makes widgets, and has been doing so successfully for many years. Yet this firm has not changed its fundamental systems in many years (nor its talent inventory for that matter). We will call it The Mothership. Leadership is desperately eager to build a more forward-thinking, innovative firm, but all the efforts to date have been mostly ineffective. Alpha growth remains elusive.
Valedor assists the company in standing up (or buying) a smaller version of the firm as a means to experiment with entirely new methods of producing widgets. The Newco uses a balanced combination of widget expertise from The Mothership and new thinking from a more vibrant talent pool at Newco. The ethos of Newco is a respect for the legacy while constantly questioning assumptions and beliefs using data-driven arguments. As time goes by and Newco is successful, proven practices from Newco are slowly adopted back at The Mothership, with assistance from Newco personnel. The Mothership holds an option to buy out the Newco from capital investors.
All of this requires expertise in Launchpad investing, corporate finance, capital sources, deal structure, and automation. These skills are prominent at Valedor.
Valedor “clients” then become The Motherships of the industrial economy. There are many of them out there that fit the above description.
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