 Hello everybody. Welcome. I'm going to talk today about how product can transform manufacturing. My name is Alex. I'm an engineer and product manager. And yeah, I'm going to say a couple words about myself first and then introduce you into the topic. So my name is Alexander Shoshkic. I'm based in Belgrade in Berlin. I'm currently the product manager for the post-aury experience at Vinted Go. We are a company which is working on deliveries for e-commerce and small media businesses. Our parent company is Vinted, one of the largest secondhand marketplaces in Europe, at least if not in the world. At the same time, I founded a small company which is doing consulting in engineering and manufacturing because originally I'm a mechanical engineer. So yeah, I wanted to use all my insights from product management and help clients from the manufacturing industry. Before that, I worked as a product manager at Deal, Schaeffler, so quite a lot of manufacturing and engineering experience. Yeah, so welcome. Let's dive into the topic. First of all, what I'm going to talk about today is I want to explain how product management can make you win instead of just participate in a market that you have chosen to compete in. I'm strictly speaking here about manufacturing. So let's assume you're a manager, project manager, director in a manufacturing company. I want to lay out the case how product management can help you win. So how I'm going to do that? First of all, let's agree everybody on what is manufacturing in the first place. So manufacturing is basically all or covers all activities required to deliver a certain quantity of a certain product according to a certain design. Design has multiple sources. It can be your own design. It can be the design of your customer. It's a certain product, so products may cover hardware, may cover software and quantities. They can be large. They can be small. Custom products, perhaps with smaller quantities, for example, mass production. So yeah, to define a little bit more in detail, I wanted to look at the inputs for a manufacturing company. We have on the left side the suppliers, on the right side the customers. So what are all the inputs? From suppliers, we get basic material. We get energy. We get information, data, documents, whatever. Yeah, so on the other side, we get from the customers, perhaps designs, if we do not have our own, so if we need to adapt them, we get designs, we get as well information, data. In general, we can say that manufacturing companies, although producing mostly physical stuff and lately also software, we work a lot of, like a point of communication between suppliers and customers. On the other hand, we have outputs. So on the supplier side, we provide designs to suppliers. Again, we provide other information. We provide data about logistics, for example, and regarding customers, we output our products, obviously, as well as, again, information and data. What is really important to notice here is that they said we are in the manufacturing industry. We have focal points of information and data. Therefore, what is really important to manufacturing organizations is the topic of digitalization. This is also going to be an example that we're going to take in this presentation to explain how product management can help there. So what do we understand with the term digitalization? I've named a couple of buzzwords. Let's call them buzzwords and explain them. What do they mean? So we have something like Internet of Things. I think it's very well known. It's about collecting and processing data from physical assets. It could be your machine tools, your manufacturing systems. Then we have machine learning. In general, I would take a step back and say it's about data analysis, data processing, automation, stuff like that. On the other hand, we have advanced robotics. So it's not only about using robots to produce. It's also about having intelligent robots that can adapt processes that can work more seamlessly with the humans in the manufacturing shop floor. And lastly, we have management systems. Let's call them agile, scrum, OKRs. These are all tools. They're not directly connected to digital technologies per se. However, agile, scrum, and OKRs and other management systems are used always in the context of digitalization. So this is how we can describe the term digitalization. Digitalization itself is not the purpose of a company, but it's the means to an end. So we want to ask ourselves, yeah, so regarding digitalization, we want to understand, OK, the means to what end? What do we want to use digitalization for? On the one hand, the first thing that comes up from manufacturing companies is always cost savings. So with digitalization, we can collect data. We can provide transparency about our manufacturing system. Perhaps we can automate stuff or we can even predict failures of machine tools, for instance, where we can optimize the maintenance process and therefore save costs. On the other hand, we have a lot of initiatives in manufacturing companies about new business. So manufacturing companies in general come up with ideas like data services. So data services, we can describe them as services where a manufacturing company share data across the supply chain, so to suppliers as well as to customers and sell the data. So there's a value added service. Many manufacturing companies have tried themselves in the industry of condition monitoring or condition monitoring product. One industry to just name as an instance is the wind energy industry. So condition monitoring of wind turbines, you have gears, you have bearings and companies may try to sell a monitoring service in order to optimize maintenance. Lastly, we can name software. So B2B software mainly developed for customers and for suppliers of manufacturing companies. So in order to do that, obviously you need some kind of vision. You need some kind of strategy. So let's have a look about how on average manufacturing companies define themselves in the market. Most manufacturing companies have a vision statement that starts with we are going to be the leader in and then there are various aspects of being the leader. Mostly it's about price and quality. So we are going to be the leader in price and quality and therefore we are going to win. Most recently, we have also the topic of sustainability. So products are sustainable, everything that is produced is sustainable, energy is sustainable. So if you become a leader there, we may win as well. And perhaps in the next 10 years there will also be another topic, the next big thing. And most manufacturing companies will also focus on that. So it's also being a leader, it's always about being the leader in all these aspects of manufacturing. However, how do manufacturing companies address this vision? Let's say first of all, what they do, we take again the example of digitalization. They take mostly the management, the directors take mostly the technologies. Let's name a few. So cloud computing, AGVs, autonomous ground vehicles and robotics in general. So what they do is they derive use cases. So what can we do? Okay, we can do condition monitoring, predictive maintenance, we can do other use cases. All these use cases are derived and basically they derive a list of these use cases. On the other hand, what manufacturing companies like to do is to draw target pictures. So they think about how could their process look like if they were ideal? They take a blank sheet and they try to draw these pictures. How is the manufacturing or processes and the production system going to look like in 10 years and 20 years? And when they map these use cases under the target pictures, what they derive as well is something called strategic roadmap. So strategic roadmaps are roadmaps that try to fill in the gap between use cases and target pictures. However, what is the consequence of such strategic roadmaps? In general manufacturing companies have multiple initiatives, for example, condition monitoring initiative, data collection initiative, process mining initiative. So again, a lot of buzzwords and these initiatives work in parallel and they're developed in parallel. What we definitely can say is that all these initiatives are always too late. The projects cost immense investment and these investments exceed the initial planning most of the time. They conflict one with each other. Imagine you have a factory and you have three different initiatives of digitalization in this factory just to bridge, to make a bridge between the use cases and the target picture. It's a lot of confusion. It's a lot of inefficiency to summarize the problems. What is the problem with these strategic roadmaps and how companies approach their vision, their strategy in context of digitalization, for example? Firstly, there's no common agenda. So you have many initiatives, as I said, and they have no common agenda. There's no clear prioritization, lots of investment, lots of things are happening, lots of activity actually, but no action. Then, manufacturing companies traditionally are used to put output above outcome. They make sure that they drive multiple projects, but what they don't make sure is that these projects really affect outcomes, like really cost saving perhaps. Lastly, a lot of investment is pumped into these projects and how it turns out that most of them are too late, are too expensive and don't bring the value. So the return on investment is rather low. With this approach, we can definitely say that there's no actual business enhancement. For example, in terms of digitalization. This is where product management can help. Let's first define what is product management actually. According to Marty Kagan, one of the main speakers and one of the main thinkers in product management, we can say that product management is making sure that what developed is valuable for a customer and viable for business. Very important. It's not only about the customer, but it's also not only about the business. It's about customer and business. To describe product management even further and go a bit deeper, I will name a few aspects of product management. The first aspect is the playing field. As a product manager, in general, when we talk about strategy and product management strategy are very closely related. It's very important to define the playing field. What market are we in? Who are our competitors? What transactions, what value creation do we want to address? Secondly, we need to define a winning position. We do not only want to define, okay, we want to go cheap. We want to provide good quality. We want to understand, okay, how are we going to win all that in the market we have defined? Thirdly, we need to think about capabilities. It's very important to understand, okay, what are we capable of? What capabilities do we lack? Where do we need to develop? On the first place, we have choices. Others may call it decisions. I like the word choices, because it's more, let's say, subjective. Product management and strategy as well are all about choices. We cannot do, for example, price and quality. We can choose one of them. Obviously, when you're a product manager, the first two points, playing field and winning position are mostly given by the company itself. Within product management, we cannot really put too much attention on to the playing field and the winning position. We take them as granted and provide perhaps feedback and input, but they're mostly given by the company. However, focus on, and this is actually the distinction between strategy and product management, is the customer. We are on a daily basis working with the customer or the customer, let's say, in manufacturing context as a proxy for problems we have in manufacturing. How can we help with product management? Let's take the initial strategy and vision that manufacturing companies have as a blueprint. We want to be a great leader, best leader in price and quality and sustainability. Let's focus on the value. When is value created, actually? Value is created when a customer orders something from us and we deliver it. The value focus can change the vision and the strategy, actually, not the vision but the strategy, which is we want to win all the tenders. We want to get all the orders in the very market we have defined. Therefore, we need to think about, okay, when is this? What is our transaction? Our transaction, again, is the order, and we can describe the order as follows. We have a pre-order process. We have an at-order, which is basically when the order is signed, and we have a post-order process. The pre-order process and this pre-order process, what we want to make sure is for specifically defined tenders and orders, we want to win them. Our main goal is we need to be in a position where we win and receive all these orders we really are looking for. I think I have a typo here, but I hope I could make that clear. We want to win everything that we are aiming for. Whereas in the post-order, we want to deliver on our order. If the customer wants, I don't know, one million years from us, we want to deliver on that and we want to deliver it in such a way that it strengthens our position. In the next tender, we win again the order from this particular customer. When we focus on winning these tenders and receiving all the orders, we cannot think only about operational efficiency. We cannot think only about being the best in price and quality because everybody is going to focus on that. We need to find, from a strategic point of view, we need to define the strategy and we need to find unique activities that will make sure that we win everything that we aim for. Let's assume we are in the playing field of automotive OEMs. OEMs are overall equipment manufacturers and OEMs, for example Mercedes-Benz or BMW. We are efficient, we want to give a good price, we want to be as best of quality as possible. However, we have identified in the past tenders and past tender processes that customer onboarding is very lacking. It's a big issue and that's why we just state now, okay, let's assume our strategy is to be first in the leader in customer onboarding. What is covered by customer onboarding? For example, sharing data that is important to the customer, sharing data via one interface. This could be a super easy way of how we can onboard customers who buy products from us. Again, I want to emphasize operational efficiency is no strategy here. You need to do it anyway, you need to be efficient anyway, you need to work continuously on that, so that cannot be our strategy. Our strategy, for example, could be that we are the leader in customer onboarding, which could be an argument to win tender. As I explained, we have multiple assets, we have design, we have the production, we have logistics and we want to have our vision basically here is we want to make customers gain access to all relevant data they want to have about our products and processes within one week and via one interface. So this is our beating argument. In order to do that, obviously, we need to make our data available. So what we do, and here we are now diving from strategy into product management, we need to push for data availability. Let's look at the problem. So we have assets, we have manufacturing systems, machine tools and traditionally, the data collection from these machines is very expensive. We have a great variety of machines, great variety of manufacturers, suppliers, software is different. So it's traditionally very expensive. If you look at connecting and collecting data from machines, if you look just from a business case point of view, for example, if you want to improve a process and just look at the business case, okay, is it profitable now to connect this machine to the cloud? Only a few profitable business cases can be found. And that's an issue that's a big obstacle. If we only work based on business cases, we will never connect all these machines and it will never be the first in customer onboarding. What we can say is we have a very heterogeneous and limited data availability. So how can we solve it? Let's start again. We have the capability or we want to aim for the capability of onboarding experience. We want to have a great onboarding experience. How can we do that? We choose to have a high data availability. We can measure data availability, for example, how many connected machines do we have per 1000 machines in our manufacturing environment? And one, let's say factor one input metric that we can identify is the time and cost to connect the machine. We can definitely state the hypothesis, the less time I need and the less money I need to spend to connect an S to the cloud, the more likely I will connect it. The more likely data availability is going to increase and the more ultimately, the better our onboarding experience will be because we can serve the data without any issue. Therefore, we can derive an objective, something like we want to reduce time and cost to connect a machine by 90% within the next 12 months. I think this is a really well phrased objective and it's also a good blueprint, let's say, for product management. So now what we can do is we can staff or we can assign a fully enabled team, a product team to work on this specific goal. And this is what makes product management. So we are working on specific outcomes that will drive other outcomes and ultimately deliver on our strategy. However, we face multiple problems in manufacturing companies in order to use product management in manufacturing companies. I will name a few. Mostly they are around the management system that is implemented in manufacturing companies. So first of all, we need a strategy. So in order to work like this, so time to connect improvement by a product team, which is driving outcomes and then ultimately delivering on our strategy, it requires a strategy in the first place. Now that we derive the case with the onboarding experience, it is obvious that we didn't start from time to connect in the first place. What we started with is the strategy. We wanted to have a unique activity that will allow us to win tenders, to win and receive orders. Therefore, we need a strategy. A plan is not a strategy. A strategic roadmap with multiple projects that all go in parallel and can be considered as a task list. This is not a strategy. Furthermore, reducing costs and being more efficient is also not a strategy. It is a continuous improvement and we cannot frame it as a strategy. Second thing is we need to arrange teams, not around outputs and functions, for example, departments. Let's not talk about IT departments or platform department or data analysis department. We need to arrange teams around outcomes. It is very important. As we have seen in the example before, when we talk about time to connect and cost to connect, this is a problem that is affecting hardware, software, data analysis, lots of other factors, perhaps design, perhaps we need an app. We don't know yet. However, it's about outcomes. We want to drive these metrics. We are not arranging teams around outputs and functions. In this context, there is a big trap, which is most recently manufacturing companies try to introduce OKRs. We need to say OKRs are just a tool. This is just a tool of framing and organizing and aligning. OKRs still can be phrased as output functions, as output task lists. They are used wrongly. So that's why we say, okay, we arrange teams around outcomes and we can use OKRs to do that, but it's not like when we use OKRs, it automatically we are arranging teams around outcomes. This doesn't work. And lastly, very important as well, we need to equip teams with the capabilities to solve problems. We want to go away from departments. We want to think more about the outcomes and therefore equip teams to solve these issues. Again, if we talk about time and cost to connect, we need hardware engineers. We need software engineers. We need a product manager. We need perhaps a designer. We need a front-end engineer. So we need a fully capable team that can deliver on these particular outcomes. And this will lead to less coordination as we now in the manufacturing industry work mostly in projects. We coordinate across multiple departments. It's very slow. We go away from that. We go to more ownership. We have a product team and work on outcomes. Yeah, so that's it. Thanks for joining. And yeah, if you've got any further questions with regard to this specific scenario or how product management can help you in the manufacturing industry, please feel free to write me an email. Thanks.