A high percentage of industrial organizations are maturing and transitioning—by looking for fundamentally new ways to improve financial and operational performance, safety, quality and competitive advantage. Today’s CEOs challenge their teams to come up with the best ways to transform the business using digital technologies, streamlining value chain processes, and changing the way the functional departments work together to better serve their markets. Moreover, some are calling for an innovation initiative right along with the transformation—they want new, smart products and services to offer.
Industry refers to these initiatives as smart manufacturing, digital transformation or Industry 4.0. LNS Research holds a broad view of these trends, calling it industrial transformation. Our latest research shows that 64 percent of companies have either started the journey or are planning to launch it within the next 12 months. This transformation isn’t just a fad—it’s highly relevant and necessary for business competitiveness and survival for companies of all sizes.
Pressure, on a deadline
We frequently hear from team leaders responsible for pulling together the company’s industrial transformation strategic roadmap that their executive team charges them to come up with plans in a very short time—in as little as two to three months. That pressure is often the direct result of a senior executive reading an article or attending an executive event where they learn that a competitor or peer organization has already kicked off such an initiative.
We’ve seen time and again that it’s impossible to come up with a high-level future vision roadmap to get everyone excited about the new opportunities in such a short time. Of course, we’ve documented cases of top-level visioning processes that result in both positive and detrimental outcomes. On the constructive side, a clear and consistent vision certainly helps everyone in the organization have a good understanding of the future state, purpose and mission. We have also seen that consistency in the language and dialogue about the transformation can motivate and engage employees, customers and partners alike.
Without a unifying vision, companies often fall into pilot purgatory mode with multiple pilot projects taking place, but no clear picture of how all the initiatives connect or support a transformation of operations and the business.
Success (not the devil) is in the details
A fundamental weakness with the “get it done now” attitude is that it doesn’t provide adequate time to follow through with the necessary planning and steps required for effective transformation. Industrial organizations need to create a detailed and focused functional roadmap to operationalize the transformation vision across the various areas of the organization. The roadmap guides transformation teams to drive sustainable change.
Ultimately, the top-level visioning process is necessary but not sufficient to get the job done. Companies that achieve the most success with a transformation of this magnitude recognize the need for engagement across cross-functional, regional and business unit organizations. A successful transformation requires a shift in viewpoints and attitudes of the people that ultimately implement and use new processes and technologies.
Three to five years is a realistic timeline for industrial transformation. That timetable certainly doesn’t mean that the financial returns won’t start rolling in until then. The transformation journey must have proof of concept, learning, adjustments and economic benefits along the way.
Industrial transformation organizational structure
Working with scores of leading industrial companies, LNS Research has seen that the most successful apply a structured organizational approach to adequately account for the many focuses, goals, roles and responsibilities throughout the business. It’s a holistic technique to encompass the enabling technology roadmap, new process definitions and improvements, financial justifications and ROI, and—most important to success—the people, groups and engagement associated with change management.
Your role in industrial transformation
Depending on your position in the organization, your role and responsibilities in industrial transformation could vary. Temper your actions depending on your position in the organization.
Initiative leaders should recognize that this is a once-in-a-career opportunity to drive transformation in the organization. Today, there are more digital capabilities at a lower cost than ever before in history. Moreover, there is accelerated innovation across all industries. These are just two of the reasons people say the fourth industrial revolution is happening right now. You’re not going to get this chance again, so it’s critical to get it right the first time.
Use transformation activities to create sustainable change in the organization by fully engaging as many people across different organizations as possible. A strong vision is important, but leveraging that vision to help internal leaders and stakeholders (production, supply chain, maintenance, etc.) transform their processes is a much more difficult thing to execute on. Don’t underestimate future challenges associated with change management; it’s the most critical aspect many executives miss. Consequently, they struggle to drive business results and strategic value with transformation efforts. One way to avoid this pitfall is to integrate digital, operational excellence and continuous improvement initiatives.
Value chain leaders are responsible for getting products to market quickly, achieving customer responsiveness, managing customer expectations, and so much more. These obligations aren’t going to change. However, competitors are now using data to gather new insights and empower their people to make better decisions and make them faster. Even though most value chain leaders don’t have industrial transformation as their No. 1 priority, they should get up to speed on how initiatives will impact their own future goals and activities, and partner with initiative leaders to drive transformation.
Management system, IT and operational technology leaders will likely feel the greatest impact on their roles from industrial transformation initiatives. The initiative is your opportunity to shine as a process and technology expert, and as a key change agent. There’s a lot of heavy lifting involved for management system, IT and operational technology leaders. Prepare now for the right governance, vision, reference architecture and roadmap to execute on your company’s vision.
Brush up on creating an operational architecture
A thoughtful operational architecture allows the people in your organization to solve value chain challenges and contribute to corporate strategies. It is the only way to ensure everyone has access to and can apply data from existing assets, people, processes, technologies and products. Learn how to create and manage an effective operational architecture in the report, “The Business Leader’s Handbook for Managing IT-OT Convergence: 10-Step Plan to Create an Effective Operational Architecture,” by LNS Research.
>>Mehul Shah is a senior associate with LNS Research, advising industrial executives in their operational excellence and industrial transformation initiatives. Prior to LNS Research, Shah was a research analyst with Aberdeen Group, with a focus on the operational and financial objectives of industrial executives. He holds an engineering degree from the University of Mumbai and an MBA in finance and international management from the University of Massachusetts Boston.