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PTC takes the Strategic Road less travelled and is very happy about it

Five years ago, you could argue that the business at PTC, Dassault Systemes, and Siemens PLM Software looked relatively the same. Today, PTC's CEO, James Heppelmann comments how his company has gone down a road less travelled. And he is really excited about that.

Jim Heppelmann would not trade his strategy with any of his competitors. He would not do that for millions of dollars because he believes the PTC strategy is better – and he is very, very happy about it.

The company takes full advantage of its home town. A partner helping Mr. Heppelmann determine the PTC strategy is Dr. Micheal E. Porter at the Harvard Business School. The common sense side of strategy has two parts. The first is to answer the question, “what are you going to do which is unique and creates value?”. And the second part is to execute that very well. Jim Heppelmann notes that Dr. Porter stresses that it is not a good idea to have the same strategy as the competitors. It's not unique and head to head competition drives down the value of the strategy for your company.

Mr. Heppelmann himself makes the point that PTC, Siemens, and Dasssault Systèmes looked very similar. He contrasts Dassault Systemes approach to find more problems which can be solved with 3D to the value it adds to the company and to Dassault Systemes' customers. Siemens, he feels, has gone deep into the link from engineering to manufacturing. While this makes sense for some industries, for many, many customers, he says this makes no sense at all. He points to the 20 year long trend across the globe to separate engineering from manufacturing. A second point from the PTC CEO : large parts of products today don't get made in the factory. There is no factory to consider. Of course he means the software part of the product.

On the other hand, PTC has long discussed the forces which are transforming the manufacturing world today. The company's product development and acquisition strategy continues to be fully compatible with this public vision of the world of designing and delivering products and services to customers. In fact, Mr. Heppelmann states that the PTC strategy is much more aligned with the direction the world of product creation and manufacturing is heading.

Jim Heppelmann describes how PTC arrives at this unique strategy, and while the company has expert help from the Harvard Business School, it is far from a top-down strategy solution. The company has a small strategy team, however this team drives the process in the company, not the decisions. The strategy process is on-going, inclusive, and data-driven. The strategy process reaches across all of the key operations in PTC so that input, information, and data come from all corners. This avoids a top-down strategy approach and it tends to root out and eliminate biases which decision-makers like himself may carry into strategy discussions and decisions. This inclusiveness creates better strategies which have a higher chance to be well-executed. An example he cites when he states that at the time the company decided to acquire ThingWorx, all of the key leaders in the company wanted to be in the Internet of Things business because they had all been through the logical strategy debates and had concluded that it made sense for the company.

“Integrate apples with oranges, and consolidate apples with apples” describes the PTC CEO's philosophy on product development and acquisitions. To consolidate two systems which do more or less the same task reduces complexity. On the other hand, different platforms serving different needs should be integrated. PTC constantly has questions on integration. An example from Mr. Heppelmann, he states that the company has always resisted to link Windchill and Creo together so that they need to be upgraded together. The integration is robust, but the separation is clean.

As part of the company analysis of the Internet of Things, PTC asked the question, is the Internet of Things disruptive, and they concluded that it is very disruptive. It changes companies' value chains, industry structures, and how companies deliver value to the market. The findings of their research showed that the Internet of Things is a large, influential, trend in manufacturing. This was key to driving the company into this business.

The ThingWorx platform is a big-data platform. This will provide many benefits to PTC clients if they can take advantage of smart, connected products to generate the data which helps customers improve their products and services. Among all the companies with whom Mr. Heppelmann has discussed the Internet of Things, the number one concern from them is security.

However, he does not see security as an issue which will block innovation for the Internet of Things. He sees it as an issue which can be addressed.

Throughout our discussion with Jim Heppelmann, the unique nature of the PTC strategy was clearly visible. And his pleasure in pushing this unique strategy was also very easy to see. He would not trade the PTC strategy with anyone, not even for “millions and millions” of dollars. And that sounds like someone who is confident of the success the future holds for his company.