Frank T. Piller

Digital twins (DTs) are virtual representations of real‐world entities like production assets, processes, or products. They are updated at a defined fidelity and frequency along the entire life cycle from development and engineering over the production or implementation of a product or process until its usage stage. Interconnected digital twins (IDTs) are DTs shared and connected across organizations with the objective to create holistic simulation and decision models of an entire physical system. In this paper, we investigate how IDTs shape future digital manufacturing scenarios and impact innovation management. We present the results of a real‐time Delphi study, analyzing quantitative and qualitative estimates on a set of 24 projections, forecasting the future of digital manufacturing with a projection horizon towards 2030. Using this data and 22 additional use cases of IDTs in manufacturing companies, we present a baseline scenario where our Delphi panel reached a consensus, representing a likely future of digital manufacturing in 2030. By analyzing projections where our expert panels' evaluations vary widely, we identify key design decisions that may impact innovation management along the dimensions of variation, choice, and control in digital manufacturing. We explain how IDTs will impact external knowledge inflows, the emergence and governance of industrial data spaces, and the potential of data‐driven and AI‐enabled applications for prediction and regulation to drive better decision‐making and continuous innovation.

Manufacturing firms that engage in digital transformation develop increasingly smarter versions of their tangible products to reinvigorate growth in shrinking markets. However, they often struggle with translating their investments in digitalization capabilities into actual returns in the form of sales growth. The associated technological advantages often remain unexploited, and digital product innovations frequently fail. Building on the resource‐based view of the firm and the demand‐side perspective, we theorize that there is a need for complementary capabilities that integrate heterogeneous customer demands, thus, allowing firms to capture more value from smart products. We empirically investigate the mediating role of smart customization capability on the relationship between digitalization capabilities and sales growth. Moreover, we argue that this relationship is further strengthened by integrating information and data across sales and service channels (i.e., channel integration). We test and find support for our hypotheses based on a dataset comprising survey and archival data of 136 smart product manufacturers in Austria, Germany, Switzerland, and the United States. In doing so, we enhance the theoretical understanding of resource and capability configurations needed for digital transformation in general and smart product success in particular. We further update the traditional concept of mass customization by showing how customization with smart products helps manufacturing firms provide personalized solutions at scale.

Digital manufacturing technologies offer many opportunities for established companies to innovate. They promote data‐driven gains in operational efficiency and enable the transformation of current business models or the creation of entirely new differentiation opportunities. However, many digital innovation projects in manufacturing fall short of their initial ambitions and result in incremental improvements to an existing manufacturing system, if at all. To understand the reasons for the discrepancy between initial ambitions and achieved outcomes, we conduct a longitudinal qualitative study based on a collaborative research project with eight companies and additional expert interviews. Applying a paradox lens, we identify three tensional knots that reveal interrelated, multiple tensions of digital innovation management projects in established manufacturing firms: (1) amalgamating physical and digital assets, (2) innovating in an existing modus operandi, and (3) integrating internal and external stakeholders. These tensions result in the simultaneous occurrence of dynamic and conflicting forces that turn digital innovation projects in manufacturing away from their high initial ambitions. Our findings explain why digitizing the manufacturing system is a non‐trivial endeavor for established firms, which need to balance the complexities inherent in digitization efforts and manage conflicting goals. For managers, the findings provide ways to manage the interrelated tensions in their digital innovation efforts, enabling them to better capitalize on disruptive innovation ambitions.