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The massive expectation from digitalization pushes the leaders to take action rather than talking for not missing the next performance leap. A data-driven digital value chain to serve the requirements of “the empowered customer” is the key. A digital community, including employees as well as business partners, is a requisite to manage that value chain. However, in the realization of digitalization, various obstacles appear related with resourcing, organization, and technology in front of practitioners, as they all require radical transformation.
The fourth industrial revolution promises to integrate processes and components vertical and horizontal through exponentially developing technologies. In the virtue of that super integration and high technological leverage, industry 4.0 alleges to overcome the increased challenges such as individualization, volatility, sustainability. However, that technology-driven revolution is more demanding than it seems. There is no universal formula to solve every organization’s transformation equation for overcoming the obstacles in practice due to lack of skill, organizational readiness level, technological infrastructure, massive investment need, and contradictive payback period.
"Many practitioners hope to improve processes through digitalization. This naive idea might be a trap during the transformation and the digitalization of weak processes might result in the inefficiency of the new structure"
How to Tailor Transformation Regarding your Company Shape?
In the matter of digital transformation, the technological challenges mostly seem to be in front.. However, our experience shows that getting smart in manufacturing is more than technology. The most prominent success factors can be segregated into two dimensions:
First, strategic management, including vision, strategy, organization, and leadership approach. Second, the capability of bringing the right combination of people, process, and technology. When this sophisticated equation is not designed by considering company dynamics, wastage of resources becomes inevitable.
The vision and a thoroughly contextualized strategy, regarding the industry and firm conditions, is the prerequisite for framing this change. However, even if the strategy is formulated powerful, the implementation plans are shaped during the change. This shows that i4.0 vision requires a long-term, but a “blurred strategy,” and an adaptive road map. The evolving characteristic of industry 4.0 forces the leaders to envision the way of the future to make people and organizations understand i4.0 expectations.
The strong organizational alignment is an integral part of that “blurred” strategy and its execution. Curating the projects and scheduling them correctly is critical for avoiding the risk of conflict with the organizational goals and resources. In parallel, resourcing i4.0 transformation is a highly controversial topic, as the value may not be reflected in tangible/financial results always for the short-term. However, intangible outcomes, like skill development, are critical to managing the more complex future. Hence, the coherence between today’s results and future expectations is crucial to coordinating resources appropriately.
The “Hidden Heroes” of a Smart Factory
In the matter of smart factories, the most underestimated factor is “human.” We witness many discussions about various other components of the industry 4.0, such as data management, sensor technologies, and more. However, the evolvement and development of people are considered complementary most of the time.
Capable people, who act interdisciplinary and are able to learn technologic development, boost the success of i4.0 transformation. However, the cultivation of digital people is much beyond the expected ICT skill-set. Digital competencies contain a multidisciplinary perspective, innovational ability, authorization for speeding up decision-making, and learning capability. This easy idea is not easy in practice due to hierarchical and “very functional” structures.
Leaders of the Change
In the age of industry 4.0, the new role of leaders is to bring everyone together instead of knowing everything. Leaders should shape the change and pioneer it beyond execution, which requires more knowledge development and openness to be newness, as well as sharing the power and collaborating with the diverse groups. Eventually, even in the best-case, many companies have to manage industry 4.0 transition with “open-minded i3.0 leaders.” Therefore, consciously evolving leadership styles and organizational culture toward i4.0 is realistic.
The impact of i4.0 on organizational structures is crucial as i4.0 changes not only the production environment through developing technologies, but it also shapes the future of work. The capability of the organizational structures is vital to manage the integrated digital value chain. Flat organizational structures are the basis of integration to boost agility. Three points are prominent in enabling the of flattening hierarchy; information sharing, empowering, and the capability of people. While digital tools ease the access to information, organizational transformations and perception about the hierarchy may change in long-term and requires a massive skill investment. Moreover, as the vital element of the “Fluid Organization”, a collaborative working environment needs to be supported by culture, leaders, systems, and performance measures.
The Strategy is There; How about Execution?
The technology-driven opportunities, introduced by i4.0, promise differentiation in many fields. i4.0 implementation requires the unique way of technology and process combination for various cases. Solving this sophisticated equation holistically is vital in order to realize the benefit of innovation and its opportunities. On the other side of the coin, settling the innovation management and culture takes time and requires structured effort from many aspects related to the internal and external environment, such as resource management and skill development. Besides, culture needs to be adapted to value failure in a constructive way or to overcome excellence obsession.
The technical capability of a firm is essential, however, the dynamism of the technological development itself complicates the implementation process. We derive three hints for mastering adaptation of technology. First, people who have deep technical and process knowledge. Second, an accurate business case definition is vital to managing technology projects, together with a well-settled prototyping approach. Finally, capable partners and a high-tech eco-system is a significant accelerator for i4.0 transformation.
Is it Possible to Tidy-Up a Messy Company Digitally?
Many practitioners hope to improve processes through digitalization. This naive idea might be a trap during the transformation and the digitalization of weak processes might result in the inefficiency of the new structure. Digitalization might be used as a tool for process development, not a magic stick. Process infrastructure is a prerequisite not to create a digital mess.
Integrated systems refer to a seamless information flow among the various systems, called “single source of truth,” which is accepted as the value of i4.0. However, integration is still in the infancy phase due to practical issues, such as separately introduced systems, one-way advanced people, or different digital levels of the systems or vendors.
Integration, which is difficult even under a single company, becomes very complex when it covers the entire supply chain. From a pragmatic and practical perspective, the pioneers should push/encourage the partners of the digital value chain to create digital integration.
Trilogy of the Next Manufacturing Revolution
Being part of a digital value chain is inevitable for many manufacturers, however, implementation of industry 4.0 appears to be a path full of risks. This technology-driven change requires several capabilities in different dimensions simultaneously, where many companies struggle to frame this transformation. We formulate the trilogy of the next manufacturing revolution simply.
First, well-structured processes and advanced lean applications are the keys to this transformation.
Second, early investment in technology, in particular, data management systems and people who maintain these systems, maximizes the benefits of digital transformation.
Finally, undoubtedly, people, who are life-long learners, interdisciplinary thinkers, and actors, are the “hidden heroes” of the digital transformation with their new skill-set.