Franziska Bossart ABB Technology Ventures Menlo Park, CA, United States, Franziska.Bossart@us.abb.com
Digital innovation in a 130-year-old, multi-industrial global corporation is not always easy. Nonetheless, innovation is essential for organizations that want to be leaders in the era of digitalization. One of the key enablers of innovation is the ability to test new ideas, learn from the results and iterate the ones that hold promise.
In 2017, ABB took on the challenge of catalyzing digital innovation. To this end, the company launched the digital Lighthouse Program, which selected and partially financed the development of innovative digital solutions in collaboration with customers. ABB believed the Lighthouse Program could marry good internal ideas with the necessary funding, resources and customer co-innovation to shorten significantly a product’s time to market →01.
Two and half years later, at the program’s completion, 66 minimum viable products (MVPs) had been deployed with customers and over 40 customer testimonials published. To date, 30 products developed under the Lighthouse Program have been released commercially. But the most important feature of the program is the culture of digital innovation fostered within ABB, which means that, in future, far fewer digital innovations will now sit untried and untested on the shelves.
Digital transformation
Digital innovation and transformation are vital for ABB’s growth and its ability to deliver higher-order customer value while also securing the company’s offerings from race-to-the-bottom price pressure. If ABB can digitalize and expand its portfolio of integrated digital solutions to meet the needs and expectations of the company’s massive installed base of loyal customers, the company will continue to prosper.
But digital transformation is easier said than done.
Digital transformation in large companies is hard for two principal reasons. First, traditional organizations spend most of their R&D budget on incremental product improvements that slowly but steadily increase market share in well-defined markets. By contrast, digital innovation programs are all about the future. Here, R&D resources work on novel products or in markets that are either nascent or do not yet exist →02, which makes agility, speed-to-market and risk-acceptance essential. Some projects will fail, but those that succeed can be game-changers.
Second, the success of digital innovation is not measured simply by the launch date. Digital products must be treated as fledgling businesses by the marketing or product management teams and nurtured through extensive experimentation. Models that show the most potential should be rapidly scaled up. Those that do not should be quickly abandoned.
ABB’s ignition switch
The Lighthouse Program launched in April 2017 and ran until the end of 2019. The primary goals of the program were:
• Accelerate the development and deployment of innovative digital solutions built on the ABB Ability™ Industrial Internet of Things (IIoT) platform.
• Encourage co-development of solutions with customers, engaging them at an early stage.
• Speed up ABB’s adoption of leading-edge digital technologies such as artificial intelligence (AI), augmented and virtual reality, digital twins and blockchain.
The Lighthouse Program selected, financed and launched a cohort of around 12 digital innovation projects every six months. Two main criteria for project selection were:
• Each approved project should present a high-risk and high-innovation profile that would not be funded without the Lighthouse Program.
• The relevant ABB entity should be prepared to contribute resources.
The program funded 50 percent of each project, with the remainder paid for by the ABB entity proposing the project. An unexpected benefit of this co-funding model was that it encouraged ABB entities proposing similar projects to pool their efforts to access more funding. Not only was this approach more efficient, but it also meant that customers had access to applications that work with an expanded number of ABB products.
The Lighthouse Program invited people with good ideas to champion and defend them within a business framework. Applicants identified customers willing to co-develop new digital products, explained what customer pain points the products would address, outlined the obstacles to success and how the program’s support funding would overcome them, and highlighted the immediate and long-term revenue potential.
Each digital solution strove to meet two final requirements to be considered successful:
• Deploy an MVP with a customer within nine months of project kick-off.
• Release a public customer testimonial within two months of the deployment.
The first goal drastically shortened the development time to which ABB’s R&D teams were accustomed. The goal of deploying a just-good-enough MVP instead of ABB’s usual close-to-technically-perfect standard was a powerful accelerant. As one participant noted, “the Lighthouse Program introduced customer co-creation. Historically, ABB has developed products itself, then offered them to customers. Under the program, ABB and customers collaborated from the beginning to develop solutions that directly address customer pain points.”
Project proposals received additional consideration if they could demonstrate:
• Cross-business collaboration that ensured sustainable future networking benefits and best-practice sharing.
• The extent to which the project integrated with and enhanced the ABB Ability™ Industrial Internet of Things (IOT) platform.
• How the project would integrate and develop emerging digital technologies such as AI, machine learning and digital twin technologies.
Each funded project was officially kicked off via a virtual meeting organized by the Lighthouse Program team to ensure that the teams were prepared to begin work. A lesson learned early on was that forcing the kick-off too soon led to delays, lost momentum and frustration. In practice, two months of preparation time between acceptance and kick-off ensured adequate staffing and alignment of resources. On many of the projects, global teams were spread over several continents and multiple time zones.
The Lighthouse Program team reviewed the progress of each working team every two months. This schedule allowed them to cross-pollinate best practices across the entire project portfolio. Every second week, teams summarized their achievements and upcoming goals in a sprint report that was aggregated into a widely circulated Lighthouse Program portfolio dashboard.
Interestingly, the early-stage customer collaboration aspect of the Lighthouse Program became one of its most popular features. Initially, development teams came to the program primarily to tap into the internal funding. Soon, however, they began to give equal importance to working with customers early in the product life cycle, which led to better-focused products and shorter time to market.
Digital Lighthouse Program Results
In all, ABB employees proposed 170 projects to the program, of which 73 were funded. All 19 areas of business in ABB were represented, a rare, simultaneous company-wide embrace of change.
Funded projects successfully co-developed and deployed 66 MVPs with customers, 40 of which resulted in public customer testimonials. Over 60 percent of projects trialed new business models, such as subscription pricing. Two projects were the first offerings on the online ABB Ability™ Marketplace, where customers can buy cloud-based digital solutions. Multiple ABB entities were involved in 17 projects, while 19 utilized emerging digital technologies. To date, 30 MVPs have been further productized and are fully released for sale to customers.
Two successful examples
The intelligent shipping concept designed under the Lighthouse Program introduced two remote, intelligent passenger-ferry solutions that use LiDAR, radar, GPS and cloud connectivity, and that can be fitted to virtually any vessel →03. Software predicts where the ferry will be in 30 s and the optimum manner for executing maneuvers is superimposed on actual surrounding conditions, enabling controllers onshore to control the vessel remotely. The solution enables an entirely automated “sense-analyze-act” loop, a significant step toward autonomous operations, with humans remotely on standby in case intervention is required. The co-developing customer was Suomenlinnan Liikenne Oy, with the cooperation of Helsinki’s City Transport and the Finnish Transport Safety Agency (TRAFI).
Detecting harmful methane, ethane and other leaks from pipelines has been challenging and expensive because pipelines often traverse unreachable or inhospitable terrain. ABB Ability™ Mobile Gas Leak Detection, co-developed with customer ULC Robotics, detects leaks with 1,000 times more sensitivity than traditional methods by using drones that fly swiftly along pipelines →04. This protects the environment, infrastructure and workers while safeguarding the pipeline owner’s revenue. Cloud connectivity allows secure, quick and efficient distribution of data anywhere in the world. Authorized users can view the progress of drone flights in real-time and review and act on leak reports.
Guiding the way to the future
Was the Lighthouse Program a success? Michael Wade, Professor of Innovation and Strategy at IMD in Lausanne and Director of the Global Center for Digital Business Transformation, followed the Lighthouse Program carefully. His assessment: “The Lighthouse Program has been a breath of fresh air for ABB, in an industry where things happen in years, not months and certainly not weeks. Digital transformation is tough, and the sad reality today is that most efforts in this direction fail. So, ABB’s deployment of 66 MVPs within two years, and more importantly, the commercialization to date of 30 of those products is an extremely rare and promising achievement.”
The Lighthouse Program succeeded on several fronts: It ignited digital transformation, created an operational template for earlier-stage co-innovation with customers and demonstrated ABB’s commitment to helping customers execute their digital transformations.
Enabling real collaboration inside large organizations is challenging. The Lighthouse Program succeeded in encouraging teams from different parts of ABB to join forces in a powerful new way. Today, all ABB businesses currently have or are creating their own Lighthouse Program-like programs, accelerators or incubators. Crucially, ABB management is actively nurturing these efforts to sustain the change over time and at scale.
