A New Era of Value Creation – Vertical Value Creation

Abstract

Increasing cost pressure due to actual crises and growing competition and actual skill shortage are affecting today's manufacturers. Higher capacity utilization and an increase of workers’ and machines’ productivity are possibilities to face those challenges. Based on knowledge management as well as usually Machine Learning (ML) a new and complementary approach for value creation is presented in this article. It enables companies to face the above-mentioned challenges and is called Vertical Value Creation (VVC). Its aim is the targeted multiplication of data, information, knowledge, and competencies during the regular operation of production systems to make them tradeable. VVC can be distinguished into Human Vertical Value Creation (H-VVC) and Machine Vertical Value Creation (M-VVC). Whereas H-VVC is already known partially, M-VVC can fundamentally change value creation in production systems. In contrast to the approaches of knowledge management or intellectual capital, information, knowledge or competencies can be implemented in software code automatically due to ML and thus can be made explicit, fungible and tradeable. VVC extends the existing value-creating area by adding a value-creation dimension to the classic understanding of value creation. The article starts with some basics and related work concerning value creation. Thereafter, prerequisites for VVC, in order to fully exploit its potential, are mentioned. This includes an additional view on value-adding distinguishing three points in time: the creation of (potential) value, the possibility for realizing created values, and the realization of created values. Followed by the vision of a data production system, some hypotheses regarding VVC are presented in the article.