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17 May 2018
Author:
Willem Van Winden
UIA Expert
The AS-Fabrik Project
Journal N°2
Project led by the City of Bilbao
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The AS-Fabrik project
Considering the challenge faced by manufacturing industries in the Bilbao area that are
moving towards a 4.0 dimension, the AS-FABRIK project seeks to increase the
competitiveness of the advanced services sector of Bilbao (Knowledge intense Business
Services – KIBS), that will prepare current or future workers of the KIBS sector, to acquire the
needed skills, in order to supply digital transformation demands.
Bilbao City council is therefore leading a strategic alliance between leading businesses and
universities, local service providers and entrepreneurs, in order to shape a collaborative pilot
ecosystem based on innovative pillars and hosted in a tailor made space for experimentation
and incubation of new services. New education programs for university students,
entrepreneurs and professionals addressing the new challenges of the industry 4.0 and the
digital economy will be tested, while networking actions among the main stakeholders,
supported by tailored IT tools, will ensure a good match between demand and supply. New
business models will be prototyped to support specialised start-ups that will benefit from a
Minimum Viable Product (MVP) test Fab Lab for the market validation of new
products/services.
At the end of the project, KIBS providers from Bilbao will have access to AS-FABRIK, the
“factory for the creation of advanced services for industry”, that will gather in a physical
space an integrated kit of tools in order to shape new products and services for the new
industry needs, and to reinforce their competitiveness. This new model will lead to create a
new generation of young and advanced service providers able to supply the challenging
digital transformation demands the manufacturing sector is growingly facing.
The content of this journal does not reflect the official opinion of the Urban Innovative
Actions Initiative. Responsibility for the information and views expressed in the journal lies
entirely with the author.
Partnership:
Ayuntamiento de Bilbao
Bilbao Ekintza - Public Agency
Mondragon Goi Eskola Politeknikoa J.M.A. S.COOP - Research Centre
Mondragon Unibertsitatea Enpresagintza S.COOP - Research Centre
MIK S. COOP - Research Centre
GAIA - Association of Electronic and Information Technologies in the Basque Country -
NGO
Deusto Foundation - Basque Institute of Competitiveness - Research Centre
Asoc. Cluster Audiovisual de Euskadi - EIKEN BASQUE AUDIOVISUAL - NGO
Mondragon Centro de Promocion, S.COOP - Business Support Centre
IDOM Consulting, Engineering, Architecture, S.A.U. (IDOM) - Private Company
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Table of Contents
1.
Executive Summary .............................................................................................................. 4
2.
Building competences for digitalisation and servitization..................................................... 5
3.
Road mapping as a tool for competence management ........................................................ 7
4.
A new type of training courses ............................................................................................. 9
5.
Conclusions and next steps ................................................................................................ 11
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1.
Executive Summary
This journal highlights the progress of the AS-FABRIK project in the last months. It focuses on
Bilbao’s innovative approach of developing Industry 4.0 competences, in the fields of
digitalisation and servitization.
The journal starts by putting this challenge into an international context. Everywhere,
industrial and service firms must transform themselves under the influence of fast
development of (digital) technologies and market demands. Worldwide, a wave of new
alliances can be observed, in which firms and knowledge institutes collaborate in new ways,
to develop tools, business models, service concepts, education & training modules, etc.
AS-FABRIK is part of this movement, and is developing a locally-oriented multi-actor alliance
in an innovative and unique way. In this journal, we highlight two key building blocks of this
effort: a collaborative road mapping tool, and a set of interactive training courses for
industry-related companies in the field of digitalization and servitization.
The road mapping tool is specifically designed to explore, in a precise and systematic way,
how technology and market trends will affect the local economy in Bilbao and its
surroundings. It helps participating firms to discover what skills and competences they need
to cope with these trends, and, even more interestingly, it is a tool to identify new windows
for interfirm collaboration, new common training needs, and viable business
opportunities/value propositions for start-ups.
Second, we discuss in more detail the professional training modules that were developed and
delivered so far in the AS-FABRIK project. They are not only a tool to transfer new insights to
companies, but also served as a community-building catalysts for the companies that
participated.
For both activities, we explain the progress, as well as the implementation challenges; also we
reflect on the replicability in other cities and regions. The information for this journal comes
first-hand from in-depth interviews with several key stakeholders in AS-FABRIK, the main ones
being Eduardo Castellano, Jordan Guardo and Eli García. Also, we used the rich
documentation delivered by the project.
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2.
Building competences for digitalisation
and servitization
The industrial landscape is changing very rapidly,
due to digitalisation and servitization (the
growing service component in manufacturing;
see box for more explanation). Technological
changes are fast, clients are more demanding,
new competitors enter the market, so Bilbao’s
manufacturing firms and service firms face
strong pressure to stay ahead of the game.
What is servitasiation?
Servitization allows industrial firms to enhance
their offer in the form of post-sales services with
higher margins than the original industrial
product. It can be an important source of
recurring income during the product’s lifecycle,
and a way to increase customer loyalty. Digital
technologies play a key enabling role: they can
help to reduce production costs, but also to add
functionality to products and value added for
the client, such as pay-per-use contracts, remote
monitoring,
predictive
maintenance,
and
recycling/circular economy concepts.
Servitization is not easy to implement, and it
affects many aspects of the company. It implies
a different relation with the client, but also asks
for other types of revenue models, contracts,
finance, marketing, insurance, etc. Thus, firms
need to invest in new skills and competences.
The question of industrial modernization,
digitalization and servitization is not unique to
Bilbao or the Basque Country; it is a key issue for
any industrial company or region. Everywhere,
we see the emergence of new types of alliances
to tackle this complex challenge. One of the
most prominent is the Cambridge Service
Alliance (see box), in which big companies work
closely together with academics, and created a
community to learn from each other, set up
R&D and competence building programmes, and
develop new approaches together. In Germany,
the Fraunhofer Institute has set up similar types
of alliances, more oriented towards particular
types of industries. The emergence of these
alliances underlines that digitalisation and
servitization are challenges that can no longer
be addressed on the level of the individual
company or university; even large multinational
companies with vast resources realise that
innovation requires collaboration, knowledge
exchange, and a community of co-creation and
shared learning.
For Bilbao, the approaches of Cambridge and
Fraunhofer are inspirational, and the leaders of
AS-FABRIK have used insights from these cases
to build up the programme. But it is not a copy:
what makes the AS-FABRIK project unique is the
localised approach, aiming is to develop a
local/regional alliance (rather than a national
global one) around digitalisation and industrial
servitization. This urban/regional focus allows
the participating firms (industrial firms and
service providers) and knowledge partners to
collaborate more deeply, closely and long-term;
Moreover, a concrete location is being
developed –the Beta Building, more on this in
the previous journal- where the collaborations
will physically take shape and place, where new
prototypes can be developed, and where new
start-ups will be incubated.
The Cambridge Service Alliance
The
Cambridge
Service
Alliance
is
an
international network of academics and
industrialists that share experience, knowledge
and insight in how to better design and deploy
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high-performance complex service systems.
They join forces to conduct practical research to
improve the design and deployment of high-
performance complex service systems; to create
and develop industrially applicable tools and
techniques that deliver competitive advantage;
and to deliver education programmes to raise
the skill levels of organisations. It was founded
in 2010 by BAE Systems, IBM and the University
of Cambridge’s Institute for Manufacturing and
Judge Business School.
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This local approach has several other
advantages. More than the top-notch alliances
of global leaders, it is a more inclusive approach,
also engaging the not-so-early adopters. And
because the project is led by the city (rather
than a company or a university) it allows for a
more integrated approach, linking with relevant
1
https://cambridgeservicealliance.eng.cam.ac.uk/
local and regional policies in the fields of
innovation, education, labour markets, start-
ups, and the urban regeneration of Zorrotzaure,
the place where the co-working building is being
developed.
Hence,
servitization
and
digitalisation are not considered as individual
competiveness challenges for firms, but
embedded in a bigger vision of economic
transformation of the city. In particular, the aim
in Bilbao is to further strengthen the
local/regional knowledge-intensive business
services (KIBS) sector.
The remainder of this journal focuses on two
key activities in the AS-FABRIK project related to
competence building: the road mapping
exercise, and the training for company
professionals.
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3.
Road mapping as a tool for competence
management
It is easy to say that the manufacturing and
service industry in the region will need new
competences, skills and approaches to remain
cutting edge in Industry 4.0. But it is an art –
and hard work – to find out what exactly needs
to be done, how, and by who. What
competences are lacking, which players in the
ecosystem can be complementary, what kind of
new start-ups have a high chance of success;
what kind of new courses are needed, how
exactly are technology and market trends
affecting the industrial and innovative business
service firms?
To address these issues, the knowledge partners
of AS-FABRIK (MIK and Mondragon University
Enpresagintza),
led
by
Luis
Berasategi,
elaborated a sophisticated approach, with a
road mapping method at the heart of it. In a
very systematic way, groups of company
representatives (from industry and services) and
experts analysed, in ½ day sessions, which new
technologies are emerging, how they will affect
industrial companies, and what that implies for
their operations, for their business models, the
skills of their staff, the education programmes of
the
universities,
and
new
types
of
collaborations. In a second round, the groups
did not start from new technology challenges
but from market trends: what are clients asking
for in terms of new services, contacts,
technologies, specifications; what new markets
are evolving; how does all that affect a business’
operations, technology, skills etc? The exercise
was done by both industrial companies and
services
companies
(offering
technology
solutions & advanced services).
For the individual participating companies, this
road mapping exercise helped immediately to
gain a clearer view on the challenges ahead,
with implications for their business. But on the
collective level, it also created valuable insights
into common challenges that might ask for
collective action, and, even more interesting,
new matches for collaboration between
companies in the ecosystem, and “white spots”
where start-ups might have a good chance to
address unfulfilled needs in the local market.
As such, road mapping is not new; it is
commonly used in business as a forecasting and
strategy tool. But the type of “collaborative”
road mapping, as applied in AS-FABRIK, is very
innovative: it helps to identify new matches
between companies in the ecosystem that might
lead to new types of partnerships; it also
contributes to find challenges that might need a
common rather than individual approach, and to
discover new, underserved market niches where
start-ups might have a chance to develop a new
business. Finally, the sessions helped to assess
the offer of education in the region, both for
professionals and in in the regular education
system.
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Figure 1: Images from the road mapping sessions
The first run of the road mapping exercises can
be considered a success already, with 32
participants in the technology push session and
31 in the demand pull session, yielding a wealth
of new information, and an inventory of new
collaboration opportunities. It remains to be
seen whether the companies will remain on
board during the subsequent phases of the
project, where the actual collaborations will
take shape, start-ups will be founded and
supported, and firm-specific training will be
developed, but the indications so far are
positive. The two key ingredients for success,
according to Eduardo Castellano and Jordan
Guardo, are very solid preparation (that eats up
90% of the project’s time), and having a trusted
position amongst companies in the region, so
that they are willing to invest time and actively
participate, having confidence that a useful
result will come out of it. A challenge in this
respect was to engage a sufficient number of
industrial companies. They tend to be very busy,
especially now that the economy is booming
again, and it took quite some effort to convince
them to participate. In the remainder of the
project, this issue will undoubtedly recur, as
more road mapping sessions are planned. In this
connection, it helps that Mondragon University
is a leading player, with its solid reputation as
“hands-on” pragmatic university, and with
access to a vast network of companies in the
MONDRAGON Corporation.
In a later “zoom-in” report (scheduled for June
2018), we will elaborate further on this
innovative road mapping approach. For now, we
turn to the next milestone of the AS-FABRIK
project: the delivery of training courses for
professionals.
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4.
A new type of training courses
An important part of AS-FABRIK is the delivery of
training courses in the field of digitalisation, for
professionals working either in the industry or in
the
knowledge-intensive
business
sector.
Progress in the delivery of training courses has
been very good, with some positive surprises
but also difficulties. What has happened in the
last months, and what can other cities/regions
learn from it?
During the last six months, Mondragon
University, led by Eduardo Castellano and Eli
García, seasoned professors in the field,
developed and ran a series of courses for
professionals,
meant
to
enhance
their
“servitization” and “industry 4.0” skills.
Some courses are rather technical, about data
science, embedded systems, or advanced
service design; others focus more on the side of
business
development:
servitization
(i.e.
developing a service-oriented business model)
and the finance of entrepreneurship. Also, in-
company training modules were developed, for
companies that need more intensive training on
site. And finally, Mondragon University and
Deusto set up a dedicated course for policy
makers, about Industry 4.0, from the idea that
policymakers should be up to date with what’s
going on in this complex world of industry
digitalisation.
To understand how the courses are delivered,
let’s take the example of the course on
servitization that ran from September to
December 2017. It was set up as an eight week
expert course (half day per week), where the
participants (23 in total) learned the ins and outs
of servitization. Each session starts with a
masterclass; next, a professional from a “best
practice” advanced company takes the floor,
presenting practical examples of servitization;
and finally, there is a workshop, in which
participants have to apply the newly learned
insights to their own situation, helped by their
peers and the experts. The course ended with a
challenging assignment: each participating firm
had to propose a concrete business project on
servitization, to be elaborated in the next 12
months.
It was here that something unexpected
happened: the course was over, but
participants said they wanted to stay together
as a group, and keep on helping each other
during their project. They decided to continue
meeting, every six weeks, to share their
progress. Mondragon University was willing and
ready to moderate this new ‘community of
practice’, and turn it into a practice community.
In September 2018, the course will be repeated,
for a new batch of firms, and it is envisioned
that members of the community of practice will
play their role as experts. The courses are one
element of the AS-FABRIK project, and they will
be repeated several times during the project’s
timeline. To promote them, Mondragon
University developed a Webinar, with a
summary of the highlights of the course. About
64 companies attended, and some of them will
join the next run.
Looking back, the easiest part was the design of
the courses. Mondragon University has
experience in this field, it has run comparable
course modules before, and Mondragon’s staff
could mobilise experts from their international
network of leading Industry 4.0 experts, for
example from Cambridge University (UK) or
Fraunhofer Institute (Germany). The harder part
was to convince company professionals to
participate, especially people from industrial
firms. The main reason, again: the crisis is over,
their order books are more than full, and the
operational challenges for companies are
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overwhelming. This has a double complicating
effect: first, people have less time to spend on
innovation and business renewal because they
are too busy with day-to-day work, and second,
there is less of a sense of urgency among
company leaders to innovating their business.
For the AS-FABRIK project as a whole, it will be a
major challenge to keep the industrial sector
on board to a sufficient degree. Not only in the
courses, but also in the many other activities,
industrial companies are supposed to play an
important role. Eduardo Castellano and his team
are very aware of this. They realise that the
regional
industry
needs
a
fundamental
digitalisation transition in order to remain
competitive in the longer run, and be prepared
to thrive in the inevitable next stage of the
business cycle that will come in the following
years. Their strategy is to develop activities that
not
only
enhance
the
longer-run
competitiveness of firms, but also bring more
direct and practical benefits for the participants.
Another challenge is to increase the
participation
of
demand-side
industrial
companies from a more diverse background.
Currently, 75% of the participants are from
members of the MONDRAGON Corporation. This
is understandable given the close relationships
between these firms, and the links with
Mondragon University. But to enlarge the
regional impact of the programme, a wider
participation is desirable. The plan is to continue
the project promotion and recruitment through
various channels, but it demands more time and
effort than expected. Supply-side knowledge-
intensive business service firms from Bilbao are
very well represented in the Industry 4.0
training courses, e.g. embedded systems, cloud
& data analytics courses.
Figure 2: Leaflet on the course on servitization
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5.
Conclusions and next steps
In the previous sections, we discussed how the
AS-FABRIK tackles the challenge of building
regional competences for Industry 4.0 in an
innovative way, focusing on two main elements
of the programme: the road mapping exercise,
and the training courses for professionals.
The collaborative road mapping tool, tailor
made for AS-FABRIK, is a promising and
innovative way to systematically assess Industry
4.0 challenges and competences in the region,
to find white spots, to discover concrete
opportunities for interfirm collaboration, to
identify training needs, and to discover where
start-ups can find and explore a niche market. In
a later “zoom-in” paper, we will explore the
method more in-depth. The training courses,
developed by Mondragon University, helped
firms to be prepared and to actively work on
new solutions during the course, and already
resulted in a community of practice run by
alumni firms.
The setup of the road mapping exercise and
expert courses can serve as example for other
cities or regions. They help in bringing digital
skills into industrial and service companies, but
also to create a collaborative innovation
community, with longer lasting positive effects
on the competitiveness of the entire region.
However, replication is by no means easy. First,
success depends on the presence of a
university or knowledge institute with a high
level of practical expert knowledge and
experience (both in technical and business
aspects of digitalisation), and a large network in
the local industry. Not all regions are so lucky to
have such an institute within their borders.
Second, success depends on the willingness and
receptiveness of local businesses to enter in
such courses and working sessions. After all, you
may end up in a room with your competitors.
Thus, it requires a certain level of trust and
cooperative spirit. In the Basque Country, this
spirit is clearly present. In the case of Bilbao,
demand-side industrial participants in the
courses (about 75%) are part of the
MONDRAGON Cooperative Corporation, and
already has some form of collaborative ties. This
cooperative structure is rather unique for the
Basque Country. Also, companies share a strong
local cultural identify, and a collective ambition
to keep the Basque Region as leading industrial
power in Spain and Europe.
We must conclude that the success of both at
least partly rests on the “collaborative capital” in
the MONDRAGON Cooperative Corporation:
Mondragon University is a central player in the
course design and delivery, and companies from
the MONDRAGON Corporation form the
majority in the course attendants and
participants in the road mapping activity. A
lesson for other cities that consider a similar
approach to connect closely to existing triple
helix networks and industry associations.
It is some sort of paradox that innovation can be
more difficult in a booming economy and filled
order books. Firms have less time for innovation
sessions, and tend to give priority to day-to-day
operational activities. This asks for a careful
timing of activities, using evening or weekend
time slots for training sessions and workshops.
Also, the value added for companies must be
made very clear.
One key challenge in the project, recognized by
the stakeholders, is to address and convince the
“less receptive” companies to take part in the
journey of modernization and participate in the
AS-FABRIK events and activities; some firms are
very open to new approaches, but others much
less so. This holds especially for smaller, more
traditional manufacturing companies.
The content of this journal does not reflect the official opinion of the Urban Innovative Actions Initiative. Responsibility for
the information and views expressed in the journal lies entirely with the author.
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Urban Innovative Actions (UIA) is an Initiative of
the European Union that provides urban areas
throughout Europe with resources to test new
and unproven solutions to address urban
challenges. Based on article 8 of ERDF, the
Initiative has a total ERDF budget of EUR 372
million for 2014-2020.
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practices identified. The journals will be
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