Digital Asset Creation and Orchestration: Empirical Evidence from Industrial Manufacturing

This paper addresses the challenge faced by many industrial manufacturers engaged in digital transformation as they rearchitect their physical products into digital assets that can be orchestrated by the firm’s business customers as part of their own digital strategic initiatives. In the context of a century old firm that pioneered the professional coffee machine market, we find that architectural innovation occurs at multiple levels – within and outside the individual machines – driven by three design principles: programmatic bitstring encapsulation, hardware abstraction, and physical extensibility and decoupling. Each principle is enacted through a series of cohesive design moves that result in a design hierarchy inversion subverting the historical supremacy of the machine's mechanical architecture over the software, and the resulting digital solutions. This inversion is an example of ontological reversal, pushing our understanding of the phenomenon in industrial settings beyond the current notion of a temporal reversal in design. Our observations suggests that ontological reversal has deeper roots and far-reaching implications than the above view implies, challenging the very foundation of firms’ value creation activities