BizOps for Digital Transformation in Industries

An Industrial Internet Consortium Whitepaper

Chaisung Lim (Korea Industry 4.0 Association/Konkuk Univ.), Kai Hackbarth (Bosch.IO),
Kordel Kim Isabel (Bosch.IO), Gwihyeon Seo (Korea Industry 4.0 Association),
Jeff McCann (Dell Technologies).

BizOps for Digital Transformation in Industries

Table of Contents

TABLE OF CONTENTS

1 Introduction ...................................................................................................................... 3
2 BDXI Process and IIC.......................................................................................................... 4
3 BDXI Process and IIoT SOs and SPs..................................................................................... 5
4 What is BizOps for BDXI? ................................................................................................... 5
5 Common Features of BDXI Process .................................................................................... 6
6 Variants of BDXI Processes .............................................................................................. 10
7 BDXI Examples ................................................................................................................ 11
8 The Benefit of BDXI Identified from a BDXI Case .............................................................. 13
9 Relevance of BDXI with IIC Testbed Results Report .......................................................... 14
10 Process Conflicts with Management Systems ................................................................... 15
11 Relevance with BSIF ........................................................................................................ 16
12 BDXI Process and Digital Transformation ......................................................................... 17
13 Initiatives to Help Guide BDXI Processes .......................................................................... 18
14 Conclusion and Outlook .................................................................................................. 19
15 Bibliographical References .............................................................................................. 20
16 Authors and Legal Notice ................................................................................................ 21-2-

BizOps for Digital Transformation in Industries

Introduction

1 INTRODUCTION
This whitepaper discusses innovation processes for Industrial Internet of Things (IIoT) solutions1that integrate information technology (IT) and operating technology (OT) in the IIoT solution
operator undergoing digital transformation. The IIoT solution operator (henceforth “SO” or“operator”) is a firm that deploys and operates IIoT solutions found mostly in asset-intensive
industries such as manufacturing, smart city, health care, agriculture, energy, transportation andretail. The firm is a customer of an IIoT solution provider (henceforth “SP” or “provider”).
This paper:• examines reasons why SOs, especially those undergoing digital transformation (DX), needsuch an innovation process, called the “BizOps for Digital Transformation in Industry(BDXI)” process and• advocates that the BDXI process should be powered by a BDXI framework that helps tomanage the innovation process from idea to launch.
BDXI process is an innovation process integrating IT and OT in SOs undergoing DX in products,
operational processes and business model innovation. Due to increasingly fast technical changes
enabling DX, the SOs undergoing DX face the challenge of fast innovation in which “test fast, learn
fast, scale fast” matters (Kane et al. 2019). In innovation, experimentation lies at the core ofinnovation process (Thomke; Von Hippel; Franke, 1998; Thomke, 2003). BDXI process is a fast,
open and customer-centric innovation, given the constraints and complexity of IT/OT integrationand constraints of the physical world. The physical world is not as malleable as the software world.
It is difficult to connect IT and OT systems without intensive effort and investment.
BDXI framework is an innovation framework—an explicitly described framework that offers aguide to a reader to implement BDXI process concretely.
This whitepaper:• defines commonly appearing features of BDXI processes of firms, of creation of solutions
achieved by integrating OT and IT,• identifies examples of BDXI process and BDXI framework driving the process,• identifies conflicts of BDXI processes with management systems and• discusses the relevance of the BDXI process with other IIC documents, such as the Testbed
Results Report (Durand and Lim 2020), Business Strategy and Innovation Framework

1

Solutions that feature physical-digital boundaries and where OT domain knowledge is relevant tophysical devices and processes-3-

BizOps for Digital Transformation in Industries

BDXI Process and IIC(Morrish et al. 2016) and Digital Transformation in Industry White Paper (Morrish andZarkout [Ed.] 2020)
Finally, the paper proposes several IIC initiatives to help guide BDXI processes.
The target industries for application of the BDXI process are smart cities (societal infrastructure,including roads and buildings), manufacturing, agriculture, retail and logistics, transportation,
health care and energy.
Examples of relevant organizations or departments applying the BDXI process would be the IT
department, working together with the domain-specific project team, customer experience datacollection department, product and service sales department, department of planning for digitalstrategy and business model, or the smart products and services development department.

2 BDXI PROCESS AND IIC
This section discusses the impact of BDXI process on IIC member organizations, namely SOs andSPs.
The mission of the IIC is “To deliver transformative business value to organizations, industry andsociety by accelerating adoption of a trustworthy internet of things”. Transformative businessvalue can be achieved by SOs through a successful innovation process focused on integration of
IT and OT domains.
For SOs undergoing digital transformation, successful implementation of innovation processes
integrating IT and OT domains is crucial. A good way to empower this change and manage thequality of innovation is through well-established innovation processes, integrating IT and OT,
which can be driven by an innovation framework.
Managing quality of production is crucially important for competitiveness. To build competitive
production processes, organizations have deployed frameworks for managing quality of
production, Six Sigma being the most popular example (Zhang et al. 2009) with most Fortune 500
companies having adopted Six Sigma (Goh, 2002).
Managing quality of innovation is becoming increasingly important for competitiveness. To build
competitive innovation processes, organizations need to have frameworks for managing qualityof innovation. FastWorks is a typical example of such an innovation framework, developed anddeployed by General Electric for changing in-house innovation processes (General Electric 2015,
Merfeld 2014, Power 2014, Ulrich 2020). The framework is publicly available, but its details are
not published. It also requires customization to adapt it to the needs of various organizations.

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BizOps for Digital Transformation in Industries

What is BizOps for BDXI?

3 BDXI PROCESS AND IIOT SOS AND SPS
SOs, who operate mostly with industrial goods and services, need to adopt an innovation process
to integrate IT and OT. SOs’ dominant innovation process is likely to be OT-focused, implemented
by OT workers with hardware-focused engineering knowledge. Because of the rising share of IIoT
technology, the operators need to integrate OT with IT. The existing process focused on OT would
be a slow and closed process, not allowing fast and open integration of IT. In innovation, SOs
could emulate currently popular innovation frameworks of the IT firms.
SOs face problems in the application of best practices of innovation frameworks of IT firms
because of the complexity of the innovation process of integrating IT and OT and the constraintsof the physical world in which they operate. Software in IT world can be created and tested
quickly, at low cost, but integrating IT and OT takes more time to test. SOs are likely to haveorganizational structures emphasizing hierarchy. The structure aims at perfect quality. They tend
to be slow innovators, and slow to experiment with prototypes of imperfect quality. They may
produce a wrong offering due to the lack of feedback of customers on prototypes of intended
solutions because they prefer to show an offering when the design is perfectly created and tested.
If the SO’s innovation process can be clearly defined, SPs would avoid possible mistakes caused
by a misunderstanding of the process of their customers (SOs).

4 WHAT IS BIZOPS FOR BDXI?
In BizOps for Digital Transformation in Industries (BDXI), BizOps means “BizDevOps” integrating
IT and OT, applicable to innovation of business models, products and operation processes.
The meaning of “Industries” in BDXI is SO industries where integration of IT and OT matters increating innovative outcomes in business models, products and operation processes innovation:
smart city, manufacturing, agriculture, retail and logistics, transportation, health care and energy
industries. Therefore, the full meaning of BizOps for Digital Transformation in Industries is“BizDevOps of integrating IT and OT, applicable to innovation of business models, products andoperation processes, for digital transformation in IIoT operator industries.”
The BDXI can be the one similar to DevOps in Figure 1 by Porter and Heppelman (2015). DevOps
integrates IT, research and development and operations. For an SO, the product development
process should go beyond DevOps for IT development and integrate IT and OT. DevOps needs tobe more tightly integrated with business than before because smart products tend to be linked
with a new business model.
So far, BizDevOps has been an approach to software development that encourages developers,
operations staff and business teams to work together so that the organization can develop-5-

BizOps for Digital Transformation in Industries

Common Features of BDXI Process

software more quickly, be more responsive to user demand and ultimately maximize revenue.
This approach can be applied to the IIoT operator industry undergoing digital transformation.
Development work should be carried out by close cooperation between a collocated team ofdevelopers, operations staff and business teams. However, SOs find that insights from existing
BizDevOps are insufficient to integrate IT and OT. BizDevOps should include participation of OT
engineers, hardware developers, hardware operation staff and hardware business teams too. We
think it is necessary to make BDXI as a kind of BizDevOps extended to apply to innovation
activities of integrating IT and OT.

Figure 1: BDXI position in a smart connected product producer firm
Source: Porter and Heppelman (2015) modified

5 COMMON FEATURES OF BDXI PROCESS
Even though firms have different needs regarding their innovation processes, common featuresof BDXI processes of firms can be identified. The clearest and commonest feature is selective
adoption of best innovation practices from design thinking, lean start-up and agile methods, and
BizDevOps approach.
The following process in Figure 2 is an example BDXI process sharing some common features of
the BDXI processes that can be found in firms.

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BizOps for Digital Transformation in Industries

Common Features of BDXI Process

Figure 2: BDXI process integrating design thinking, lean startup and agile development
Note: Gartner (2016) modified with “open” word added and arrows

The process reflecting design thinking, lean start up and agile approach can be simplified, as
shown in Figure 3. The process includes understanding the customer, with empathy on thecustomer’s life, solution ideation and creating a minimum viable product, testing and learningfrom validation of a solution from the customer and initiation of the solution into action. This canbe summarized as discovering customer needs, developing solutions and learning whether thesolutions are feasible and putting them into action.

Figure 3: Simplified BDXI process-7-

BizOps for Digital Transformation in Industries

Common Features of BDXI Process

The second common feature of the BDXI process that can be found among firms undergoingdigital transformation is that it is open, encouraging collaboration among different divisions andamong different firms, ranging from developers to operations staff and business teams. The BDXI
process facilitates dialogue between IT and OT people who would otherwise be constrained byorganizational silos. This is a challenge to SOs with the “closed mind set” of asset-intensive
industries.
The open process is stimulated by extensive use of IT, leveraging connected things and people,
facilitating open access to data or information of partners, customers and suppliers in both IT
and OT. To solve low interoperability and high integration complexity of integrating SO’s IT andOT systems, the process of open dialogue among “previously strange” actors matters. With the
emergence of an ecosystem in which companies collaborate across vertical and horizontal
positions in the value creation, openness matters. The BDXI process addresses the problems of
the “closed mind set” typical of hardware-driven organizations.
The third feature of the BDXI process is that it is a customer-centric process, achievable under
the constraints of the physical world. First, this customer-centric innovation process is achieved
by application of design thinking, lean startup and agile process, respecting customers’ needs or
outcome through empathy and frequent feedback of customers. Second, the customer-centric
innovation process is achieved by continuous exploration of feasibility of application of newtechnology in delivering a solution to the customer.
The customer-centric process includes checking the validity of applying new IT and new OT increating a solution to the target problem of IIoT solution operators, given constraints of thephysical world. The customer-centric process of checking the validity is made possible byhorizontal communication between IT organization and OT organization (including its interaction
with engineering organization) on minimum viable products (MVPs) utilizing new technology.
The fourth feature of the framework is the facilitation of fast innovation processes while
accepting constraints of the physical world. This is enabled by fast experimentation with MVPs
and other agile methods, such as parallel sprints.
For example, if a data analytic solution provider follows design thinking, lean start up or any other
innovation framework, the SP is likely to fail in achieving a customer-centric innovation process.
Because even though the SP interacts with the customer through empathy and fast creation ofMVPs, the SP would not understand customer needs. Due to the lack of domain knowledge ofthe data analytics SP, they cannot identify the targeted problem of their customer.
Because the SO does not understand the value of the opportunities offered by the new data
analytic technology and cannot decide a target problem to which data analytic technology shallbe applied in the OT domain at an early stage, the operator would have difficulty in offering therequirement of the data analytic solution for solving a problem in the OT domain. This meansthat the operator cannot express what they want to the data analytics SP.
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BizOps for Digital Transformation in Industries

Common Features of BDXI Process

With an SO who "does not know what they want”, the SP cannot start the empathy stage ofunderstanding what the SO wants. The provider might have to wait until the SO realizes what thefirm wants. This aspect was discussed in the IIC’s report on testbed results in Durand and Lim(2020) (Section 8 discusses some part of the report.)
The BDXI process should be customer-centric, where the SP, mainly with IT jobs people, comesto understand the OT domain problem and the SO, mainly with OT jobs people, wake up to theopportunities offered by IT technology. SPs must be able to deal with physical world constraintsof the SO and help the SO’s understanding of IT technology, all while cherishing empathy withthe working style of the operator. This will align IT with OT.
The SO, being unable to know “what the firm wants”, should study opportunities offered by a
new IT. The operator should also experiment with the new technology in exploring the target
problem to be applied. When the target problem is decided, the operator offers requirements ofthe solution with or without interaction with the IT provider.
When creating an IT solution, the operator needs to embrace quick and imperfect deliveries ofMVP solutions. The operator needs to find a cost efficient and fast way of testing MVP solutions.
There can be conflict on fast experimentation between IT jobs and OT jobs people. The
experimental approach of the IT jobs people world can be applied to a limited extent due tophysical world constraints and the lack of cooperation of the OT jobs people. OT jobs people,
who prefer the perfectly planned scheme, need to allow more frequent experiments, which arenecessary for MVPs.
Over the process, there would be OT alignment towards IT and IT alignment towards OT.

Figure 4: Differentiated feature of BDXI

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BizOps for Digital Transformation in Industries

Variants of BDXI Processes

6 VARIANTS OF BDXI PROCESSESThe BDXI process can be varied, depending on the category of the industry and the size of the
firm. Depending on the size and the industry, the process can be complex or simple. In a large
firm, a solution can be created by integrating various types of processes, implemented by various
teams that are interacting with each other in a complex way. These processes can be varied inaccordance with the type of industry.
An SO in the discrete manufacturing industry can have a process different from that of an SO in
a continuous manufacturing industry. We can speculate that the BDXI process would be different
by looking at examples of the different types of product development processes. The productdevelopment process shares some commonality with BDXI process in that it is the process ofcreating a solution. In Figure 5 from Ulrich and Eppinger (2012), we can see that there aredifferent types of the process. We could see a spiral product development process in the software
company while also seeing a complex product development process in the shipbuilding or aircraft
manufacturing company.
Because the BDXI process can be different in accordance with the size and the industry of the SO,
there can be rich variants of the processes.

Figure 5: Various processes of product development- 10 -

BizOps for Digital Transformation in Industries

BDXI Examples

7 BDXI EXAMPLESGE’s FastWorks: The most publicly known case of BDXI framework is GE’s FastWorks, which was
created through the application of the lean start up principle (Ries 2017). GE’s FastWorks is aninnovation framework for creating a solution, integrating lean start up, design thinking and agile
methods. It reflects GE’s tradition of making its own framework by integrating world bestpractices and knowledge on management and engineering. Six Sigma, adopted by GE, is one of
the examples of the frameworks inheriting the tradition.
FastWorks’ process starts from understanding customer needs with empathy, creating a
potential solution, checking leaps of faith (assumptions of potential solution design), creating
MVPs for verifying high priority assumptions identified in “leaps of faith” process and making“learning metrics” from recorded feedback of customers. After a review of learning metrics
created from the fast feedback of customers, “pivot” or “persevere” is decided. Persevere means
continued iteration based on existing product or production process ideas. You pivot when you
realize that your initial idea is wrong, so you change and iterate from there.
The publicly available information on FastWorks shows some examples of the process of
integrating IT and OT, such as paired programming and design thinking workshops, inviting staff
from both IT and OT jobs.

Figure 6: Fastworks of GE as an example

Bosch BDXI case: The “MVP as a service” can be regarded as a BDXI framework. Bosch regards
the classic approach of product development of new IoT solutions as not promising for success.

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BizOps for Digital Transformation in Industries

BDXI Examples

As markets are moving fast, development must be adapted to the uncertain, volatileenvironment in which companies act.
Bosch’s MVP as a service approaches new solution development with an elaborated process thatconsiders user, business and technology aspects from the beginning. Assumptions are madetransparent and validated, and the solution is tested with the customer early on, iteratively. This
minimizes the risk of not meeting the market and user needs when launching the new solution.
As the driver for innovation in new IoT solutions is more the technology push rather than themarket pull, an iterative integration of market and user feedback is crucial for market success.

Figure 7: Process of building MVPs

After clarifying terms, goals, timelines and outcomes of the development process, design
thinking, UX methods, and IoT-specific ideation frameworks, are used for a first ideation of theconcept. This is then transformed into a format that can be validated systematically. First, usecases, and addressed problems are identified and a validation plan is set-up. During validation,customer feedback is key to getting quick and efficient iterations. Using lean startup methods,
key metrics are developed, and the concept is tested and measured. Low fidelity prototypes are
essential to making the solution feasible for testing.
During the validation phase, customer feedback is integrated back into the solution where thetesting and measuring begins again. At this point, it is crucial to embrace changes and be open to
iterate at any time. The solution is iterated until the assumptions regarding user needs(desirability), technical requirements (feasibility) and business potential (viability) of the solution- 12 -

BizOps for Digital Transformation in Industries

The Benefit of BDXI Identified from a BDXI Caseare validated. Initiation before validation of business, user and technological assumptions, leads
to failure.
Overdone testing and validation can lead to failure too. In OT, fast testing and 80/20 approaches
are uncommon. It needs to be clarified from the beginning that fast progress is more important
than validating all assumptions.
In the solution incubation phase, the first problem/solution fit is already validated. Prototypes ofhigher fidelity are then used to continue the testing so that relevant features can be identified
that meet the user needs and the customer’s willingness to pay. This is done to identify theelements an MVP should contain, staying lean on the cost side but also solving a customer
problem. The MVP can check some of the feasibility of the conceptual design, but it does notcheck all the technical feasibility of the conceptual design.
Reaching the MVP phase, the technical solution, prototype and business concept aretransformed into a product than can already be used and bought, but that contains only theminimum functionalities for solving a customer problem. Device and data center decisions are
made, and a rollout concept is elaborated. The interface is finalized for usage.
The next step is to scale the solution with extended functionalities and additional target groups.
Overall, the described IoT solution development approach is elaborated to fit the developmentof innovative new solutions with a high uncertainty and risk. Experience shows that starting withan MVP instead of a scaling concept at the beginning is the most promising way to become
economically successful with the solution. The MVP process works efficiently for aligningbusiness, technical and user aspects, with the different mindsets from IT and OT perspectives.

8 THE BENEFIT OF BDXI IDENTIFIED FROM A BDXI CASEBDXI can produce better outcomes for customers because of a rigorous process. The FastWorks
teams could have spent a lot of time on customer discovery or they could decide on the basis ofcustomer validation data with rapidly learning cycles. They could rely on the main stakeholders
of a project with horizontal relationships, rather than hierarchical decision making that could
slow down the pace of an innovation project. It would also have shorter product cycles withquicker IT implementation and faster customer responses.
For example, in the new NovaLT16 turbine, the development period was reduced to 30 months
from five years (General Electric 2015). In the case of diesel engine development, thedevelopment period was reduced from five years to two years. The engine to be developed wasa large multi-platform engine, which could operate in various situation, with 20 ~ 30% energy
efficiency. The initial engine, MVP, was developed for a sub-market of the multi-platform engine
market, stationary power generator market. It was created through simple technology forecast
and minor improvement of an existing engine less than six months and sold to a customer. GE- 13 -

BizOps for Digital Transformation in IndustriesRelevance of BDXI with IIC Testbed Results Report
could create the engine for the multi-platform engine market through creating subsequent MVPs
and making improvements of the MVPs by reflecting feedbacks from customers (Ries 2017, 147152).

9 RELEVANCE OF BDXI WITH IIC TESTBED RESULTS REPORTThe testbed results suggest that using the BDXI process, respecting physical world constraints ofa solution operator is to be preferred. Following an initial phase process of design thinking orlean start up process and emphasizing empathy with the customer would not result in a fruitful
outcome. With a lack of domain knowledge of the IIoT solution operator, the solution provider
cannot identify the targeted problem of their customer, even though the solution provider has a
deep empathy for the customer.
Durand and Lim (2020) discusses the preparation phase, an initial stage of BDXI process. In the
preparation stage, an SP should allow time till the SO is prepared to interact with the SP. The
report shows that the SO needs time to study the technology that a solution provider intends tooffer and to be able to identify a target problem. The SO gradually wakes up to opportunities of
new technology in the preparation stage. Some operators undergo the preparation phase byinteracting with the SP and studying the technology. They are initially passive without knowledgeof the technology, according to the report.
The target problem cannot be identified without trials and errors because of the complexity ofintegrating IT and OT under constraints of the physical world of the operator. Defining the target
problem also requires time. In the urban water supply testbed, despite the SO’s engagement in
the development of the testbed, the wrong target was chosen. Later, they realized that visibility
should have been the target because providing visibility to remote assets offers substantial value.
The “Infinite Testbed” was intended to validate the concept of an IoT platform as opposed to abusiness challenge in a specific domain. Initial conversations were exclusively technical. Later,business benefits were identified, and organizational transformation required for IIoT begun to
be discussed. Definition of business benefits needed timing. This implies that there should be aperiod allowing an operator to study and explore the possibilities of new technology as theprovider waits for operators’ response in setting up operational objectives or business benefits.
The report shows that operators are not always able to formulate their requirements upfront.
They need time and constant collaboration, readjustment and discussion with providers.
If the SP follows the traditional model of design thinking or lean start up, they are likely to fail tounderstand what the operator wants.

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BizOps for Digital Transformation in Industries

Process Conflicts with Management Systems

10 PROCESS CONFLICTS WITH MANAGEMENT SYSTEMS
Because the BDXI process for integrating IT and OT is new, the BDXI process is likely to conflictwith existing processes and the management system. These need to be identified and removed.
For example, organizational incentives and structures can be in conflict with the rapid
experimentation process of BDXI. After the training of engineers on FastWorks, when asked of
their intention, engineers responded that they did not want to implement the FastWorks process.
Implementing FastWorks means generating more prototypes and improvement upon them forengineers. According to GE’s management system, creating many prototypes and carrying out
many “reworks”, get negative evaluations for engineers (Ries 2017). This means that FastWorks
conflicts with their human resource evaluation system.
Fast iteration of FastWork cycles allows for pivots, meaning an increased number of projects
stopped or changed due to the change of goals or projects. This conflicts with GE’s funding systemthat has fixed targets, fixed amounts and annual budget system (Ries 2017).
BDXI performance can be positively influenced by resolving conflicts, as shown in Figure 8.

Figure 8: BDXI Processes: Conflicts versus Performance

So, GE realized the conflicts and GE’s management system was gradually changed to resolve theconflicts. The FastWorks evolved from FastWorks 1.0 to FastWorks 2.0 and FastWorks 3.0. Fastworks 2.0 and 3.0 were made possible with changes of the management system (Goldstein 2016).
Changes of the management system are made possible by the changes of a firm’s strategy. All
the application of BDXI processes and identification of conflicts and solution of conflicts by- 15 -

BizOps for Digital Transformation in Industries

Relevance with BSIF

changing management system can be made possible by a strategy that can be achieved with thefollowing mind sets. First, a digital mindset integrating IT and OT while continuously
experimenting with new IT and OT technology and second, a customer-centric mindset to findinnovation processes that can be achieved with fast experimentation and open collaboration.
Considering that IIC member firms would face ample cases of conflicts of the BDXI process with
their management system, information on the cases of other firms would be useful. IIC could
offer a space for sharing cases of the conflicts. The cases shared could be a good resource for afirm with possible conflicts of BDXI processes with their management system.
To help IIoT solution operators, IIC needs to offer a space to share information on BDXI process
or BDXI framework and common features of the BDXI process or BDXI frameworks. The space
would be useful for the IIoT solution providers. Because solution providers’ solution’s
deployment is linked to the operators’ innovation process, the providers need to understand theoperators’ innovation process as they interact with their customers.

Figure 9: Management System and BDXI

11 RELEVANCE WITH BSIF
The Business Strategy and Innovation Framework (BSIF) (Morrish et al. 2016) is a framework for
IIoT business model innovation. Even though BSIF discusses integration of OT and IT, the complex
process of innovation has not been discussed in detail.
This business model can be made possible with product innovation and production process
innovation. The example of a product innovation could be a smart connected air compressor- 16 -

BizOps for Digital Transformation in Industries

BDXI Process and Digital Transformation

enabling a firm to offer a “pay per use” business model. The example of production process
innovation would be smart manufacturing process innovation, using IIoT, enabling a firm to shift
a mass customized production business model to a mass personalized production businessmodel.
The BSIF has a process called ideation, preparation, evaluation and the initiation for IIoT businessmodel innovation. BDXI offers a framework for dealing with detailed complex processes of IT/OT
business model innovation, product innovation or manufacturing innovation.
BDXI makes the iterative approach of the BSIF more specific. In the case of IIoT strategy, strategicplanning can include using elements of BDXI from the beginning, such as reviewing empathy leveland formulating everything in user stories or planning with backlogs (taken from the agile aspectsof the BDXI). From this approach, an experience oriented or outcome-based business model
innovation strategy can be set up. With this approach possible, offering the link, which can beeasily missed, between strategy and implementation can be created.

Figure 10: Business Strategy Innovation Framework and BDXI

Source: Morrish et al. (2016) modified

12 BDXI PROCESS AND DIGITAL TRANSFORMATIONBDXI process can be a part of the processes of the business factor of (industrial) digitaltransformation of a diagram of Digital Transformation Work Group of IIC.
The BDXI process can be a new innovation process, integrating IT and OT for the firms undergoing
industrial digital transformation, in which firms leveraging connected things transform processes
and operations to produce better outcomes, following the definition of Digital Transformation in
Industry (Morrish and Zarkout [Ed.] 2020). The process is argued to be different from the existingprocess of the firm.

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BizOps for Digital Transformation in Industries

Initiatives to Help Guide BDXI Processes

The literature on digital transformation regards MVP and fast feedback from customers as
essential elements digital transformation. You can find discussions similar to the following
sentences in the literature:•••“Instead of taking the traditional, linear approach to rolling out new initiatives, companies
should quickly bring new ideas to market, gather customer feedback, and refine theconcept iteratively. Many accomplish this by means of the minimum viable product (MVP)process of prototyping” (Fæste; Scherer; Gumsheimer, 2015),“Innovate by fast experimentation (divergent experimentation, convergent
experimentation, MVP, paths to scaling up” (Rogers 2016, 11),
“test fast, learn fast, scale fast” (Kane; Philips; Copulsky; Andrus, 2019). Because of thedifferentiated features of the BDXI process, they are likely to conflict with the
management system.

Figure 11: BDXI and digital transformation
Source: Morrish and Zarkout (Ed.) (2020) modified

Successful performance of the BDXI process can be reached through elimination of conflicts ofthe process with the management system. Therefore, one could argue that there can be progressin digital transformation of a firm through changes of the management systems, solving theconflicts. If you look at a case of GE, GE had this kind of phase change through resolving conflictsof FastWorks with their management system (Goldstein 2016).

13 INITIATIVES TO HELP GUIDE BDXI PROCESSESIn the future, we shall focus on activities for sharing insights and practices of the BDXI process
over the industrial digital transformation and offering documents (such as frameworks forreports) for facilitating sharing insights and practices of BDXI processes.

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BizOps for Digital Transformation in Industries

Conclusion and Outlook

Every firm wants to have information on other companies’ BDXI cases as benchmarking efforts,
but no firm wants to reveal it. IIC can offer an open space for sharing insights and the cases ofmember firms. The possible activities for sharing insights and cases are the following:
•
•
•

•
•

•
•
•
•

presentation of a BDXI tool or BDXI processes by IIoT solution operators leading BDXI bestpractices such as GE and Bosch,presentation of the SP’s best practices in supporting the SO’s BDXI process. SPsrs could
publicize their best practices, while introducing SO using the solution,
presentation of an idea of improving speculated designs or some features of the BDXI tool
by a member. The member can offer an idea of improving the BDXI tool for gaining
reputation of ones’ own expertise on the BDXI tool,
discussion on the IIC’s community forum on sharing insights or introducing cases of BDXI,
presentation of BDXI simulation software by an SP. The software could reflect the bestpractices of BDXI and advance practices of BDXI. This can be made possible by cooperation
with a software supplier firm who would be interested in making the software,revision of this white paper summarizing the presentation of members and the insights
and cases shared over the community forum,a framework paper for BDXI or audit of BDXI that shall reflect the best practices,
standards requirements for innovation management, such as ISO 56000 anda workshop for sharing accumulated cases and insights of BDXI and sharing cases of theconflicts of BDXI with management system.

14 CONCLUSION AND OUTLOOKThis paper identified a BDXI process as a new innovation process for integrating IT and OT of a
firm undergoing digital transformation.
This paper was prepared to suggest that SOs need to adopt new innovation process integrating
IT and OT to achieve a better outcome. The currently available innovation frameworks, such as
design thinking and lean startups, which have been used widely among the software firms, arelikely to be adopted as innovation frameworks driving the new innovation process.
These framework-driven processes would have problems because the environment for the SO’s
innovation process is different from the software firms. While SO’s operate mostly with industrial
goods and services, the software firms operate mostly with software, devices, infrastructures andservices. The innovation process of the SO and integrating IT and OT is more complex than theprocess of integrating IT only.
The SOs should create their own innovation processes suitable for the complexity of integrating
IT and OT and for the constraints of the physical world. The BDXI process is a fast, open andcustomer-centric process, reflecting the features of design thinking, lean start up, agile- 19 -

BizOps for Digital Transformation in Industries

Bibliographical Referencesdevelopment methods, BizDevOps, given the constraints of complexity of integrating IT and OT
and physical world constraints. Over the process there will be OT alignment towards IT, and ITalignment towards OT. The new process can be settled by creation and diffusion of the BDXI
process, which could be driven by BDXI frameworks, and resolving conflicts of the BDXI processwith existing processes and with organizational structure and others of IIoT solution operators.
The paper has been confined to defining the BDXI process and discussing how IIC can support
SO’s efforts to settle the new innovation process that are crucial for digital transformation. The
new innovation process of the digital transformation is a huge topic influencing almost every
department of a firm.
The topic of the future works would be clarifying common and variant features of BDXI process
among different groups of IIoT SOs. There should be further studies on examples of personas of
BDXI and BDXI processes and personas of various firms undergoing digital transformation with
implementation of BDXI processes in different industries.
Further topics include further discussion on the influence of organizational incentives andstructures on the innovation processes through collecting cases of conflicts between the process
and the organizational incentives and structures, and the role of several departments, innovation
project teams, workshop group and roles of CEO, CDO and CIO affected and influencing theprocess.

15 BIBLIOGRAPHICAL REFERENCES
Durand. and C. Lim (2020) A Compilation of Testbed Results: Toward Best Practices forDeveloping and Deploying IIoT Solutions, Industrial Internet Consortium (IIC): Boston.
Fæste, L.; Scherer, M.; Gumsheimer, T. (2015) How to Jump-Start a Digital Transformation, 25
November 2020.
General Electric (2015) GE Report, General Electric: Boston.
Goh, T. N. (2002). A Strategic Assessment of Six Sigma, Quality and Reliability Engineering
International, 18(5): 403-410.
Goldstein, V. (2016) How to Grow New - Lean Startup Week 2016, Nov11, 2016, accessed on 17
July 2019.
Kane, G. C.; Philips, A.; Copulsky, J.; Andrus, G. (2019) The Technology Fallacy. The MIT Press:
Cambridge, Massachusetts.
Merfeld, D. (2014) GE is in a Startup State of Mind. Research-Technology Management 57(6):26–32.

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BizOps for Digital Transformation in Industries

Authors and Legal Notice

Morrish, J., Figueredo, K., Haldeman S. and Veronika Brandt (2016) The Industrial Internet ofThings, Volume B01: Business Strategy and Innovation Framework, Industrial Internet
Consortium (IIC): Boston
Morrish, J., Zarkout, B. (ed.) (2020) Digital Transformation in Industry White Paper, with A.
Ferraro, C. Lim, S. Lin, J. Morrish and B. Zarkout as authors, Industrial Internet Consortium (IIC):
Boston.
Power, B. (2014). How GE Applies Lean Startup Practices. Harvard Business Review, April 23.
Ries, E. (2017) The Startup Way, Penguin Random House: New York.
Rogers, D. (2016) The Digital Transformation Playbook: Rethink Your Business for the Digital
Age. Columbia University Press: New York.
Thomke, S. H. (2003) Experimentation matters: unlocking the potential of new technologies forinnovation. Harvard Business Press: Boston.
Thomke, S.; Von Hippel, E.; Franke, R. (1998) Modes of experimentation: an innovation
process—and competitive—variable. Research Policy, 27, n. 3, p. 315-332..
Lichtenthaler, U. (2020) A Conceptual Framework for Combining Agile and Structured
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16 AUTHORS AND LEGAL NOTICEThis document is a work product of the BizOps for Digital Transformation in Industry (BDXI)Contributing Group in the IIC, co-chaired by Chaisung Lim (Korea Industry 4.0 Association/Konkuk
Univ.), Kai Hackbarth (Bosch.IO).
Authors: The following persons contributed substantial written content to this document:
Chaisung Lim (Korea Industry 4.0 Association/Konkuk Univ.), Kai Hackbarth (Bosch.IO), Kordel
Kim Isabel (Bosch.IO), Gwihyeon Seo (Korea Industry 4.0 Association), and Jeff McCann (Dell
Technologies).
Contributors: The following persons contributed valuable ideas and feedback that significantly
improved the content and quality of this document: Zarkout, Bassam (IGnPower).
Technical Editor: Stephen Mellor (IIC staff) oversaw the process of organizing the contributionsof the above Authors, Editors and Contributors into an integrated document.
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BizOps for Digital Transformation in Industries

Authors and Legal Notice

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Group, Inc. (“OMG”).
All copying, distribution and use are subject to the limited License, Permission, Disclaimer andother terms stated in the Industrial Internet Consortium Use of Information: Terms, Conditions &Notices. If you do not accept these Terms, you are not permitted to use the document.

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