Many business leaders feel they are ready to take on digital transformation. The question is, what do they want to accomplish with new technology-driven approaches beyond simply digitizing existing processes or business lines? Some forward-looking companies, recognizing the pointlessness of going through a digital transformation exercise for the sake of digital transformation, intend to do more with the new possibilities technology opens for them. There needs to be something meaningful and purposeful at the other end — such as promoting socially responsible approaches — that makes it all worthwhile to employees, customers, partners, and the world at large.
This is the course set at Viessman Group, a 104-year-old climate control solution company, which recognized that digital transformation means more than simply adding new technology – it means unwrapping newly acquired resources to promote sustainability, opportunity, and new solutions to vexing problems. “Shape the purpose of your organization, make sure everybody understands it, and make it a deep part of your offerings,” says Max Viessmann, CEO of Viessmann Group. Viessmann, who leads a family-owned company, based in Germany with 13,000 employees across 75 countries, is transforming itself from manufacturing to digital services provider. Initiatives underway include the provisioning of smart devices that communicate health and status from customers’ homes or offices to Viessmann’s monitoring services, research and development into systems that employ alternative energy sources such as hydrogen or solar, and other green initiatives.
To stay ahead of the curve, Viessmann supports a constellation of venture capital units – VC/O — that supports the growth of emerging technology companies and technology ventures. “We incubate a lot of business models outside of our core, but still related to our core, because we saw that we need to learn a lot, and we need to engage within an ecosystem,” says Viessmann. This includes investing in artificial intelligence and quantum computing ventures. “It’s clear if we do not embrace digital technologies, we would not be able to succeed. We invest in companies that are highly disruptive to our base, to other industries, and we engage with them.”
Viessmann’s investments cover two main areas – deep technology, and clean energy, with a philosophy of investing in base technologies as they emerge, then building specific solutions on top of those technologies over time. Areas of investment include the Internet of Things (IoT), artificial and machine intelligence, frontier tech hardware, enterprise software, distributed ledger technology, cyber security, augmented and virtual reality, and autonomous systems. “When people start investing in AI or in quantum computing, it’s super generic in the beginning when the technology is being developed or adopted,” says Viessmann. “But at some point in time, you will see that a technology has a horizontal impact on many sectors, it’s generally a good investment. But it also allows you to understand how this can be applied to our own vertical. That’s why we invest in horizontal technologies, because we can understand it much earlier than other companies.”
Currently, the company is an investor in IQM, one of the largest quantum computing companies in Europe, as well as companies in the EnergyTech and PropertyTech space – which focus on bringing digital, data-driven solutions to living and working spaces. The word “digital” is even disappearing from the company’s lexicon, Viessmann says. “If you look at our strategy in 2017, it was still a lot of digital scale, end-to-end supply chain management — a lot of buzzwords, and a bit fuzzy maybe at some points. Today, whatever we initiate needs to have that digital element to it, otherwise it’s just not giving us a competitive advantage. In our strategy looking forward to 2025, we don’t use the word digital, because it’s not a building block, it’s just a hygiene factor. Things are now at a higher level.”
This includes initiatives to build more software-driven and AI capabilities into its product lines, enabling company technicians to predict and resolve issues at customer sites before they arise. Solutions can be downloaded to customer installations automatically, without the need for a technician to arrive onsite. “We’re able to optimize and update the systems over their lifespan,” says Viessmann. “Our service partners can anticipate if something goes wrong, so they can fix the problem before it even occurs. A problem may arise with a device over a course of 20 years, depending on different conditions. Technology is helping us to understand some of the patterns."
At the same time, there isn’t necessarily any magic with AI, Viessmann emphasizes. “AI is such a big word, and it helps a lot of equity stories to be written, obviously,” he points out. “But if you just look at the deep learning side of it, you're just understanding is there a pattern, and can adjust what the algorithm is about to do, based on the learning and the pattern that has been recognized. AI allows you to handle that complexity, and to make it much more productive and efficient, that you wouldn’t be able if you control it manually, or if you would have a static algorithm that just does in and out. For us, it’s not rocket science, it’s just understanding patterns and learning from it.”
This, in turn, raises energy efficiency to new levels, thereby reducing carbon emissions resulting from coal-fired power plants, he continues. By employing software-driven installations supported by AI, moving to alternative sources of power without the onerous labor required in the past. “We’re using technology to reduce the time that is being wasted on inefficient commissioning processes and inefficient service processes,” he states. “A one-and-a-half-hour exercise, now it’s done within a split second.”
It’s not technology for technology’s sake, Viessmann emphasizes. “We want to have the most positive impact on the environment and on living spaces, and whatever helps us to achieve that from a technology perspective is worth trying out,” he explains. “A few years ago, IoT was a generic term. We invested in protocol or communication companies that enabled IoT. It was clear that vertical solutions within sectors would be created. So we created our own solutions for the climate and energy side of things, based on the technology that was available.”
Digital transformation has not only meant providing digital services to customers, but also transforming the company’s corporate culture. Employees are encouraged to develop ideas which often make their way to piloting and production. For example, when the Covid pandemic hit, a group of employees took materials from around the company’s plant and created ventilators for Covid patients, eventually shipped to hard-hit areas such as India.
The Covid crisis, for one, provides many lessons for corporate social responsibility, Viessman says. “The pandemic has shown all of us how deeply affected we can be from a change in our environment,” he explains. “A pandemic shows us who we are and not who we think we are. There’s a curve to the pandemic. But if we look at some of the consequences that are a result of progress in climate change, it’s just made it transparent to all of us that is not just going to go away.”
Businesses need leaders to seek to achieve sustainability and greater purpose. “Make it your own,” Viessmann urges. “It’s our uppermost responsibility to look beyond our bottom-line performance and see the impact we’re having on the environment, and to what extent we can actually improve that. Every company must become a climate solutions company. It must come straight from the heart of people already believe. We need to emphasize the responsibility that we have in the future, and be aware of how we live today will impact future generations. If it’s part of why people buy your products, or engage with your services, then it becomes a true part of your DNA.”
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