Christian Ritter, Anna Maria Oberländer, Bastian Stahl, Björn Häckel, Carsten Klees, Ralf Koeppe, and Maximilian Röglinger
This case study describes how WashTec, a global leader in the car wash industry, successfully explored and developed new digital business models. The paper outlines the company's structured four-phase exploration approach—Activation, Inspiration, Evaluation, and Monetization—which serves as a blueprint for digital innovation. This process offers a guide for other established, incumbent companies seeking to navigate their own digital transformation.
Problem
Many established companies excel at enhancing their existing business models but struggle to explore and develop entirely new digital ones. This creates a significant challenge for traditional, hardware-centric firms needing to adapt to a digital landscape. The study addresses how an incumbent company can overcome this inertia and systematically innovate to create new value propositions and maintain a competitive edge.
Outcome
- WashTec developed a structured four-phase approach (Activation, Inspiration, Evaluation, Monetization) that enabled the successful exploration of digital business models. - The process resulted in three distinct digital business models: Automated Chemical Supply, a Digital Wash Platform, and In-Car Washing Services. - The study offers five recommendations for other incumbent firms: set clear boundaries for exploration, utilize digital-savvy pioneers while involving the whole organization, anchor the process with strategic symbols, consider value beyond direct revenue, and integrate exploration objectives into the core business.
Host: Welcome to A.I.S. Insights, the podcast powered by Living Knowledge, where we translate complex research into actionable business strategy. I’m your host, Anna Ivy Summers. Host: Today, we’re looking at how established companies can innovate in the digital age. We're diving into a case study titled "How WashTec Explored Digital Business Models." It outlines how a global leader in the car wash industry successfully developed new digital services. Host: To help us unpack this is our analyst, Alex Ian Sutherland. Welcome, Alex. Expert: Thanks for having me, Anna. Host: Alex, let's start with the big picture. WashTec is a leader in a very physical industry—making car wash systems. What was the problem they were trying to solve? Expert: It's a classic challenge many established companies face. They're excellent at improving their existing products—what the study calls 'exploiting' their current model. But they struggle to explore and create entirely new digital business models. Host: So, it's the innovator's dilemma. You're so good at your core business that it's hard to think outside of it. Expert: Exactly. WashTec saw new, digitally native startups entering the market with app-based solutions, threatening to turn their hardware into a commodity. They knew they needed a systematic way to innovate beyond just making better washing machines. Host: How did they go about that? It sounds like a huge undertaking for a traditional, hardware-centric company. Expert: They developed a very structured, four-phase approach. It began with 'Activation,' where senior management created a clear digital vision—a "North Star" for the company to follow. Host: A North Star. I like that. What came next? Expert: The second phase was 'Inspiration.' They held workshops across the company, involving over 50 employees, and even brought in university students to generate a wide range of ideas—110 initial ideas, in fact. Host: And after they had all these ideas? Expert: That led to 'Evaluation.' They built prototypes, or what we'd call minimum viable products, for the most promising concepts to test assumptions about what customers actually wanted. The final phase was 'Monetization,' where they developed solid business cases for the validated ideas. Host: It sounds incredibly thorough. So, after all that, what were the results? What new business models did this process actually create? Expert: It resulted in three distinct digital business models. First, an 'Automated Chemical Supply' service. This is a subscription model that automatically reorders chemicals for car wash operators. It reduced customer churn by an incredible 50%. Host: That’s a powerful result. What else? Expert: Second, they created a 'Digital Wash Platform.' This is a consumer-facing app that connects drivers with car wash locations, allowing them to book and pay digitally. Operators on the platform saw a 10% increase in washes sold. Host: And the third one sounds quite futuristic. Expert: It is. It’s called 'In-Car Washing Services.' It enables drivers to find and pay for a car wash directly from their car's navigation or infotainment system. It's a strategic move, anticipating a future of connected, self-driving cars. Host: Fascinating. So this brings us to the most important question for our listeners: what are the key takeaways? What can other business leaders learn from WashTec's journey? Expert: The study highlights five key recommendations, but I think two are especially critical. First, set clear boundaries. Innovation needs focus. WashTec decided early on to stick to the car wash domain and not get distracted by, say, developing systems for washing trains. Host: That makes sense. Aimless exploration is a recipe for failure. What's the second key takeaway? Expert: Consider value beyond direct revenue. Not every digital initiative has to be a cash cow from day one. The automated chemical supply, for instance, delivered immense value through customer loyalty and operational efficiency, which are just as important as direct sales. Host: That’s a crucial mindset shift. Any other important lessons? Expert: Yes, they made their digital vision tangible by creating a 'digital target picture' that was displayed in offices. This visual symbol, their North Star, kept everyone aligned. They also made sure to involve a mix of digital-savvy pioneers and experts from the core business to ensure new ideas were both innovative and practical. Host: So to summarize, it seems the lesson is that for a traditional company to succeed in digital innovation, it needs a structured process, a clear vision, and a broad definition of value. Expert: That's a perfect summary, Anna. It’s a blueprint that almost any incumbent company can adapt for their own digital transformation journey. Host: Alex, this has been incredibly insightful. Thank you for breaking it down for us. Expert: My pleasure. Host: And thank you to our audience for tuning in to A.I.S. Insights. Join us next time as we continue to connect research with reality.
digital transformation, business model innovation, incumbent firms, case study, WashTec, digital strategy, exploration
