Presentation done by Michale Porter, Professor, Harvard Business School on Augmented Reality and Strategy at the India's National Competitiveness Forum & #PorterPrize 2018.

1. This presentation draws on ideas from Professor Porter’s books and articles, in particular his work with Jim Heppelmann including: “How Smart, Connected Products Are
Transforming Competition” (Harvard Business Review, 2014); “How Smart, Connected Products Are Transforming Companies” (Harvard Business Review, 2015); and
“Why Every Organization Needs an Augmented Reality Strategy” (Harvard Business Review, 2017). No part of this publication may be reproduced, stored in a retrieval
system, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without permission. Additional information and
references may be found at the website of the Institute for Strategy and Competitiveness, www.isc.hbs.edu.
Why Every Organization Needs
An Augmented Reality Strategy
Professor Michael E. Porter
Harvard Business School
Porter Prize India
May 30th, 2018

2. Copyright 2018 © Professor Michael E. Porter2Porter Prize India- May 30th, 2018
Mechanical Products
& Manual Processes
Value Chain
Automation
Value Chain Dispersion
and Integration
Smart, Connected
Products
1800s 1960s 1980s 2000s Beyond
IT automates
processes and
information
collection activities
within the value chain
The internet enables
coordination and
integration across the
value-chain, across
geography, and with
customers and
business partners
IT is embedded in
products
themselves,
expanding the way
products create
value and shifting
the nature of
competition
Products were
mechanical/
electrical, and
information
processing and
storage was manual
Waves of IT Driven Competition

3. Copyright 2018 © Professor Michael E. Porter3Porter Prize India- May 30th, 2018
Expanding and Shifting Industry Boundaries
Farm Equipment
Weather Data
System
Irrigation
System
Seed Optimization
System
Farm Equipment
System
Rain, humidity,
temperature
sensors
Weather
maps
Weather
forecasts
Weather data
application
Farm performance
database
Seed database
Seed optimization
application
Field
sensors
Irrigation
nodes
Irrigation
application
SYSTEM OF SYSTEMS
Farm
Management
System
Platform
TILLERS PLANTERS
TRACTOR FLEETS
Farm
Equipment
System
COMBINE
HARVESTERS
PRODUCT SYSTEM
+
+
SMART, CONNECTED
PRODUCT
+
SMART
PRODUCT
PRODUCT

4. Copyright 2018 © Professor Michael E. Porter4
DATA GROWTH*
(ZETTABYTES)
* IDC's Digital Universe study, 2014
2013
4.4
2015
8.5
2017
16.4
2020
44.0
The Deluge of Data and Choices
Porter Prize India- May 30th, 2018
Proliferating
Analytics

5. 5Copyright 2018 © Professor Michael E. Porter5
SMELL TOUCH HEAR SEETASTE
How Humans Access and Process Information

6. 6Copyright 2018 © Professor Michael E. Porter6Porter Prize India- May 30th, 2018
The Gap Between
Digital and Physical:
Cognitive Distance

7. 7Copyright 2018 © Professor Michael E. Porter7
WHAT IS
AUGMENTED REALITY
(AR)?
• A set of technologies that superimposes
digital data, images, and controls onto the
physical world
Porter Prize India- May 30th, 2018

8. Copyright 2018 © Professor Michael E. Porter8
Integrating
Digital and
Physical
Heads Up
Display
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9. Copyright 2018 © Professor Michael E. Porter9Porter Prize India- May 30th, 2018
INDUSTRIAL ROBOT
Interact
Superimpose relevant data
to visualize/instruct/guide
An AR-enabled
device identifies a
physical object
AR app retrieves
relevant data and
superimposes it
on the object
AR app connects with
a “digital twin” of the
object in the cloud
The user employs the
app to interact with
the object
Data streams to the
cloud from the object,
and other data sources
User control commands
are received and sent to
the object
Control
Sensor Data
Connect ANALYTICS
DIGITAL
TWIN
AR EXPERIENCE
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TEMP.
16KG
WEIGHT
V2
How AR Works
1. 2. 3.
6.5.4.
245 3 6
Computer Vision
1

10. 10Copyright 2018 © Professor Michael E. Porter10
Screens Heads-up Display Wearables
• AR has emerged using tablets and smartphones
• Smart glasses allow information to be superimposed directly onto the
user’s view, and free up the user’s hands to take action
• Wearables will increasingly be how people interface with the physical and
digital world
Microsoft
Hololens
ODG R-7
Google Glass
Enterprise
Porter Prize India- May 30th, 2018

11. Copyright 2018 © Professor Michael E. Porter11Porter Prize India- May 30th, 2018
Capabilities of Augmented Reality
Visualize Instruct/Guide Interact Simulate
Where needed, virtual
reality adds a fourth
capability that can be
incorporated into AR to
overcome practical
constraints such as
distance, time, size, and
hazardous environments
Enhance the user’s
ability to understand
the physical world by
overlaying relevant
real-time digital
information or possible
future states
Train or guide users to
perform tasks via
overlaying digital data
and instructions, or
enabling real-time
expert guidance
AR as an interface
enabling control of the
product via overlaid
graphics or natural
user interfaces such
as voice commands,
gesture control, or sight
tracking
• Augmented reality enhances the capabilities of smart,
connected products

12. Copyright 2018 © Professor Michael E. Porter12Porter Prize India- May 30th, 2018
Impact of AR on Competition
Improving
Productivity in the
Value Chain
Differentiating
the Product

13. Copyright 2018 © Professor Michael E. Porter13
AR and Product
Differentiation
Porter Prize India- May 30th, 2018

14. 14Copyright 2018 © Professor Michael E. Porter14
AR Across the Value Chain
Product
Development
Manufacturing
Operations
Logistics
Marketing
& Sales
Service
Human
Resources
N = 107. Average of 2.3 functional areas chosen per respondent.
18%17% 17% 14% 19% 13%
• Collaborative
Design Review
• Digital Design
Review
• Maintenance
Work Instructions
• Operator &
Assembly Work
Instructions
• Virtual Product
Companions
• Augmented
Brand
Experience
• Retail Space
Optimization
• Augmented
Operator Manual
• Heads-up
Display
• Augmented
Interface
• Service Manual
and
Instructions
• Service
Inspection &
Verification
• Remote
Expertise and
Coaching
• Job Specific
Training
• Safety &
Security
Training
• Expert
Coaching
Porter Prize India- May 30th, 2018

15. Copyright 2018 © Professor Michael E. Porter15
AR: Production Line
Interface
Wemo sheet-metal
production line includes
an AR interface that
allows an operator to
monitor and run several
machines at once and
switch using gesture
commands
Porter Prize India- May 30th, 2018

16. Copyright 2018 © Professor Michael E. Porter16
Logistics
DHL is using AR to
access pick lists and
guide workers through
the warehouse to the
location of each
product to be picked
Porter Prize India- May 30th, 2018

17. Copyright 2018 © Professor Michael E. Porter17

18. Copyright 2018 © Professor Michael E. Porter18
Marketing
& Sales
Porter Prize India- May 30th, 2018

19. Copyright 2018 © Professor Michael E. Porter19
Service

20. Copyright 2018 © Professor Michael E. Porter20
AGCO uses a 3x3 cross-training
model where each employee knows
how to perform three jobs, and each
position has three people who can do
it.
• Before AR it took 50-90 days to
train a new hire in one operation
• Now it’s 30-45 days for multiple
operations
Bradley Quinn
Manager of training and development
Training

21. Copyright 2018 © Professor Michael E. Porter21Porter Prize India- May 30th, 2018
3
4
5 1
2
AR Requires Additional Strategic Choices
What is the range of AR opportunities,
and in what sequence should they be
pursued?
Product Differentiation
Where will AR have the greatest impact
on cost reduction?
Should the company make AR
design and deployment a core
strength, or will outsourcing or
partnering be sufficient?
How will AR change broader
communications with stakeholders?
Which Opportunities?Shifting Communications Model
AR Talent and Resources
How will AR reinforce a company’s
product differentiation?
Operational Effectiveness

22. 22Copyright 2018 © Professor Michael E. Porter22
Machine Advantages:
• Physical power
• Consistency
• Resistance
to harsh environments
• Calculating power
Human Advantages:
• Power of sight
• Flexibility
• Ideation/creativity/
innovation
• Broad sensory pattern
recognition
• Complex
communication
• Sophisticated
sensorimotor skills
Human-Machine Interface
Implications for Humans
Porter Prize India- May 30th, 2018
?

23. 23Copyright 2018 © Professor Michael E. Porter23
ANALYTICSDIGITAL
TWIN
Smart,
Connected
Products
Machines Advance
Porter Prize India- May 30th, 2018

24. 24Copyright 2018 © Professor Michael E. Porter24
Augmented
Reality
ANALYTICSDIGITAL
TWIN
Smart,
Connected
Products
AR the Equalizer: Smart Connected Humans
Porter Prize India- May 30th, 2018

25. 25Copyright 2018 © Professor Michael E. Porter25
HBR AR

26. 26Copyright 2018 © Professor Michael E. Porter26

27. Copyright 2018 © Professor Michael E. Porter27Porter Prize India- May 30th, 2018
@MichaelEPorter@Michael.E.Porter.Harvard @meporter.hbs
www.isc.hbs.edu
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