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Keynote Speaker: Industrial Digitalisation: What’s popular (and what works)

Invitation to speak at the Northeast process Industries Cluster (NEPIC) annual conference 2020 on industrial digitalization and cybersecurity.

Like most conferences, it’s been delayed as the effects of the global health emergency roll on.  Switching to a virtual platform, I presented insights from the first efforts by manufacturers into the adoption of industrial digital technologies (IDTs).  The material was drawn partly through my association with IfM Engage, the knowledge transfer business of the Institute for Manufacturing at Cambridge University.

The results may surprise you.

Depending on your position in the supply chain and your motives for adopting digital technologies might tell a story about your first projects.  But what is attempted in the foray into the fourth industrial revolution, is not necessarily the same as what is the most successful.

Key Conclusions

  • The Hype is real – but so are the Barriers and Opportunities. And the opportunities are well beyond process automation and stretch across manufacturing functional areas, business objectives, types of innovation.
  • Smart digital transformation is a change for companies to rethink competitiveness strategy but full value from 4IR projects emerges when a broad set measure succeed across the operation, the supply chain-level and customer integration.
  • Barriers to the adoption if IDT are much more than technological; Technical success only ‘half the battle’ and requires the building of capability to absorb and exploit the opportunities.
  • Lead with a clear understanding of where value is, and, then assemble your technologies, skills and resources in your Blueprint.

Video and Transcript follows.

“NEPIC (North East Process Industry Cluster) recently ran a virtual Digitalisation conference for its members and associates. We engaged Rob as one of our Keynote speakers due to his comprehensive understanding of the landscape regarding the use of Digitalisation in industry and in particular his knowledge of what was working well and what needed to be improved. His talk on this topic was extremely enlightening and was well received by the audience which included many senior practitioners across the process and allied sectors. The conference and Rob’s talk in particular has assisted engineers and managers in the chemical and pharmaceutical industry to examine how to practically and effectively apply Industry 4.0 to their manufacturing sites and business processes. I would definitely recommend Rob as a useful consultant in this area on top of all his other skills in driving manufacturing improvement and innovation.” Felix O’Hare, Director of Projects NEPIC

“Engineers and Entrepreneurs have been dreaming about Factories of the Future – almost forever…

The 4th Industrial Revolution – 4IR – is a technology platform that is now enabling that dream but now it’s bringing the rest of our businesses with it.

It didn’t seem that long ago that I was working in a NEPIC member not a million miles away on what you might call Factories of the Future.

The manufacturing assets were hamstrung by a combination of old plants at a time of significant growth.

I was there to change the way the manufacturing process was conceptualised and deliver assets fit for purpose in the 21st Century.

The concept brought together a strong desire to “Go Continuous” plus process understanding that drove down waste and used fewer resources to run them more effectively.

We had some success.

But the bit I was most disappointed with about was our inability to access industrial digital technologies at scale.

The digital analytics just wasn’t where it needed to be and eventually the concept went AWOL.

The FotF would truly have been a digital one.

 

Fast forward to 2020 and several things are going on.

A desire by policymakers to address the so-called productivity paradox as well as general economic concerns.

Industrial Digitalization initiatives straddle the globe; the 4IR; in America, China, South Korea.

In 2017 in the UK the most recent attempt by the Made Smarter Commission has sought to bring the game to the UK.

It’s an important plank for the UK’s future industrial strategy and early efforts are in play.

We can see that some countries are more advanced than others, for example in South Korea.

And we are now seeing a range of outcomes.

But from those early insights, what can we glean for companies about what is working? And what is not? And where to place future efforts for best results?

 

We find that companies are doing almost everything and anything in their first efforts in industrial digitalisation.

Many firms that are undertaking digital transformation might be doing so-called Skunk Works of Lockheed Martin fame.

 

But the main message I’ll suggest to you right up front is that for companies to make the real impact from digitalisation, they need to think strategically and focus efforts on high impact, even if it’s difficult to do.

The alternative is that digitalisation efforts will fail and that wouldn’t that be an awful waste of electrons…

 

To bring you up to speed with the Institute for manufacturing at the University of Cambridge.

The IfM has been addressing big challenges that are relevant to manufacturers and the government and has been doing so for several decades.

Manufacturing is a broad topic – Big M mfg from ideas and methods that bring together Technology, Management, Policy.

The working model of IfM is to undertake research, create practice and transfer knowledge to make an impact.

What I am talking to you about today is a result of that working model: from the Centre for industrial policy, The Digital and Automation Group and Centre and The Centre for Business Strategy and BMI.

IfM is trusted by hundreds of organisations globally and, you know, I think it’s a really exciting place to do great work and make an impact on this topic.

 

The first part of my talk is a story about some recent research that has unpacked the hype of Digital.

The Policy Links Unit of IfM develops research-based advice for industry and government in the UK and abroad.

We probably all know at the founding of Industrial Digitalisation which first emerged in Germany in 2011.

But you may have also noticed that the 4th IR is the first IR to be named before it has happened.

And it’s because if that, that there is a danger of Hype: Change, Change and More Change! Might be the mantra.

We can unpack the things that are not new, from the new things.

After a period of fierce change, there is an emphasis on Data and the manipulation and exploitation of data.

Also, Hyper connection of Industrial Digital Technologies – IDTs.

But the emphasis on business value creation is on the data and the manipulation of it.

 

Finally, a definition I will be incorporating….

We a not digitising – that is merely a digital representation of your analogue selves.

 

It’s MUCH more.

We are transforming: we undergo digitalisation of our processes, systems, people and business.

And what is driving DT that wasn’t available in FotF concepts in 2004 is the Collapse in device costs, of power consumption and analytics.

The sheer number of devices in the firm and across the mfg system.

And that customers are much more involved in the extended operating experience and consumption.

The opportunities in DT are quite vast up to and including the reinvention of business.

 

And the work smart appears a lot. Smart Products, Processes, Supply Chains even Customers.

And all of these trends drive the opportunities for new ways of working and for doing business.

Let’s look at the evidence to understand what is being done. But what works and head towards how we can use that insight.

Research by the Policy team at IfM for Innovate UK looked at international evidence from major digital manufacturing initiatives undertaken or supported by national governments.

The study looked at how companies are harnessing these new technologies, and where they are focusing their effort – As well as evidence of how value is captured and on the data on business improvements for metrics (such as reduction of labour costs or reduction of defects and errors).

70 Initiatives globally collected over 1000 cases studies or what individual companies are doing with 212 examined in detail.

First, these interventions were clustered by where in the mfg enterprise they sit and whether they involved single or multiple processes or companies.

You can see that these technologies have been applied almost everywhere.

Technology push approaches have driven this.

And it makes things potentially very difficult for managers to decide where to start.

Their objectives are a combination of companies are to improve productivity, increase revenue, reduction of cost and working capital.

Looking across the Mfg Process and The Enterprise, where IDT projects were attempted.

Mapping wherein the manufacturing processes, you can see where IDTs have been used.

 

About one-third of all cases to were there to improve single processes.

Fewer in planning control and fewer in product design and definition.

 

A key insight I’d like to share with you is that what is most popular are not always the most valuable to the company.

Here, no matter what is the area to address, the top solution is to undertake process control and automation. Is it companies reaching to “automate the box?”

 

Since I was due to present to you back in March a new report has emerged from the IfM Business strategy and business model innovation team.

It highlights less about technology and more about the complete business picture.

Three points reinforce my message about being holistic and strategic about your digital transformation plans.

Moving on from the evidence base, what about the challenges facing companies in terms of barriers?

We can classify barriers classified by the Innovation system concept.

The Generation of technologies and their diffusion and deployment.

 

If I make this tangible at the firm level from the IUK study.

Look at this through the stages of implementation.

And at the level of the system: Person, company, market

And there are lots of barriers.

 

In strategic planning, you must make proper consideration of the barriers to adoption and specifically do things that reduce or eliminate diffusion into and adoption within.

 

Here’s a Hint: Build. Your. Roadmap.

 

Time for a change of perspective: into the planning.

Let’s step into the individual boardrooms.

A lot of confusion: where do you start a digital transformation? With technology? Business? Products? Efficient use of precious resources?

And do this without misfires?

That prioritizes value, first?

 

What is a digital transformation strategy?

We define a digital transformation strategy,

“Linking your long-term business objectives, to your short-term actions, using what you have and what you need, thorough a digital technologies lens”

The Motivation for transformation might be to enhance a brand, stand out in the crowd, install better processes for efficiency or productivity, or chase new sources of value.

A digital transformation strategy is not a functional strategy such as Marketing, Manufacturing strategy.

It is boundary spanning in the business and weaves into all aspects of the firm.

All of these are part of your digital transformation strategy.

An depending on your motivation to understand a DTS, you would enter these at different points and emphasis.

First, start by UNDERSTANDING WHAT VALUE IS, FIRST… AND THEN MOVE FROM THAT POSITION.

Where you start depends on appetite to risk, the rest of the industry, the maturity of the industry.

 

It can be hard for incumbents to change and to think new.

Plan your digital transformation as a transformation.

Three main questions to ask. Why, What, How.

  1. Why? Are you transforming? Simple to say, hard to answer.
  2. What? What it’s the thing in the business be transformed?
  3. How? Will we move forward.

 

First, why relates to the CONTEXT for change? What is happening in the industry, the world.  Then what is going in inside the business; problems to solve. Pains?

Second, question – What – relates to the CONTENT – What to Transform? Where is the value derived? Products, services, solution, BMbusiness model?

Third Question – How – relates to the PROCESS of change? Who will participate? Workshop, procedures, capabilities needed, change management.

 

This approach can help you have the conversation about what is valuable but also about Impact; Even if it’s hard to do.

You’ll know that in change, communication is key.  So, start with your blueprint…

Starting with

–              The overarching vision about your DT

–              Then thinking about the company and competitive environment

–              And about the elements, you are going to change

–              And about the mechanics

 

This would summarise your plans to communicate and develop your ideas; staff, customers, supplier.

I want to nudge you not to forget the people and cultural aspects because what we do around here will be changing to some degree.

A digital transformation blueprint… On – One – Page summarises why digital transformation is important and how digital transformation can generate competitive advantage.

 

Key Conclusions

  • The Hype is real – but so are the Barriers and Opportunities. And the opportunities are well beyond process automation and stretch across manufacturing functional areas, business objectives, types of innovation.
  • Smart digital transformation is a change for companies to rethink competitiveness strategy but full value from 4IR projects emerges when a broad set measure succeed across the operation, the supply chain-level and customer integration.
  • Barriers to the adoption of IDT are much more than technological; Technical success only ‘half the battle’ and requires the building of capability to absorb and exploit the opportunities.
  • Lead with a clear understanding of where value is, and, then assemble your technologies, skills and resources in your Blueprint.

 

Thanks to Dr Carlos Lopez-Gomez and Dr Nicky Athanassopoulou of the Institute for Manufacturing, Cambridge University for insights in the production of this presentation.

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Want to know more?

Rob Munro is an innovation strategist and consultant focussing on improving innovation results for organisations. Please contact me to discuss ways to bring greater effectiveness to your innovation processes.

Read more about my service to organisations for Technology Planning in improving innovation results.

Further Reading

The practical impact of digital manufacturing: results from recent international experience, September 2018, https://www.ifm.eng.cam.ac.uk/insights/digital-manufacturing/the-practical-impact-of-digital-manufacturing:-results-from-recent-international-experience/

OK Computer? The safety and security dimensions of Industry 4.0, July 2019, https://www.ciip.group.cam.ac.uk/reports-and-articles/ok-computer-safety-and-security-dimensions-industr/