Industry 4.0 and Strategic Competitiveness

Dr. Juan Manuel López OglesbyDirector, Graduate Biomedical

Engineering Sciences

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• We will describe this as:othe vertically- and horizontally-integrated

ecosystem an enterprise generates for itself and its partners, suppliers, and clients.

owith a focused strategy on integrating large data streams from this integration into the decision-making process that drive and support the generated ecosystem.

No one answer

• The Industrial Internet where everything is massively interconnected and data drives down costs and increases efficiencies and profits.

Shorter version (slightly)

• 2016, PWC, Global Industry 4.0 Survey [1] o covering over 2000 companieso 9 industrial sectorso 26 countries (including Mexico)

• Lots of great statistics, and I highly recommend reading the whole thing.

• We will be drawing lessons from many different places, but for most this is a great starting point.

Great Paper

• The survey was conducted in 2015 and reported in 2016, with estimated projections into 2020.

• In 2015, there was only 32% digitization in the surveyed companies for the Americas.

• PWC forecast this will increase to 74% by 2020.

We are already behind!

• Of the surveyed companies:o55% expected ROI in the Industry 4.0 transformation to be two years or less. o37% of companies expect that ROI to take 2-5 years.

Making it hard to catch up

• Self-study is key. •We need to size up and evaluate our digital maturity honestly and dispassionately to chart the best strategic direction

Lesson 1

• At the core of all these and so many more examples we find a common thread: oa self-study is a methodical, dispassionate, and

thorough… oexploration, classification, inventory, evaluation,

and documentation… oof specific topics of interest within the

organization.

Lesson 1: Self-Study

• A methodical approach helps guide, shape, and orient the information-gathering into topics and data that are required to evaluate and/or build strategy.

• Dispassionate information-gathering must not shy away from difficulties or disappointing results.

• Discovering a problem, weakness, or misbehavior is a positive step as it allows the risk these previously hidden issues can pose to be managed, addressed, and (hopefully) corrected.

Lesson 1: Self-Study

• A thorough exploration will require open access to all necessary and requested information. o Information gatekeepers cannot obstruct the goals

of the study. • In most cases, before actual information can be

compiled, the self-study team will have to demonstrate a willingness to listen and understand those that have “boots on the ground” in the various departments.

Lesson 1: Self-Study

• The large amounts of data and experiences gathered must then be organized in an intelligible manner through classification and inventory.

• For evaluation to occur, either a standard or a point of comparison must exist. oEvaluation can be one of the more difficult things

to do dispassionately and objectively.

Lesson 1: Self-Study

• All this work will be for naught if the process, discoveries, raw findings, broad and focused evaluations, conclusions and recommendations are not documented.

• All this work needs to be done concurrently and iteratively with the analysis and strategic planning by the

Lesson 1: Self-Study

• This requires a nimble, lean, and responsive Executive team that is able to:odelegate tasks to the most qualified individuals osynthesize and digest the compiled information osift through the chaff to get at the useful points

of evaluation and comparisonore-direct team efforts or strategy formulations as

necessary in the dynamic industrial, social, political, national, and international context

Lesson 1: Self-Study

• The result of this self-assessment process should be a clear picture of:owhere we are owhat we’re great at doing owhat we need to improve owhat we need to stop doing, and owhat is actively or passively hurting our positioning.

• This clear picture can then be used by the Executive team to maintain the institutional guiding strategies focused and relevant.

Lesson 1: Self-Study

https://xkcd.com/936/

•Digital trust will make or break many attempts at transformation

Lesson 2

• Primary digital trust focus areas:oBuilding the digital data infrastructure.oBecoming masters at data analytics.

• The personnel and infrastructure must be in placeoto be nimble, innovative, and creative…ofor building the digital ecosystem…o in which our partners and collaborators can feel:

• integrated, listened to, safe, and informed.

Lesson 2: Digital Trust

• Powerful data analytics can lead toodata miningodeep learningopowerful insightsonew strategies and focuses based on all of the above

Lesson 2: Digital Trust

• We must continue to learn, invest, evolve, and improve our digital ecosystem.

• Our self-study must continuously assess where we are and where we need to be on this important point.

• We must recognize that the “payout” for these investments, as with much investment in infrastructure and maintenance, may be hard to gauge.

• Often, the value is recognized only after failure in either system or infrastructure.

Lesson 2: Digital Trust

• Champions for this transformation need to be o identifiedonurtured otrainedosupportedo incentivized at every level of the organization.

• Transformational leadership will play a key role in this process.

Lesson 3

• Any organization has inertia. • This is not necessarily a bad thing, as an

organization needs to be able to continue to function through the loss of any individual collaborator or even groups of collaborators within teams.

• The inertia takes on many forms – processes, ideas, ideals, goals, strategy, etc.

• This inertia can be survival, stability, and strength. • It can also be stagnation, failure, and destruction.

Lesson 3: Change Champions

• Transformational Leadership is at the core of nurturing these champions from within.

• We won’t go into much detail, as this has already been covered in another iideas conference (presentation, video).

• From this review we can summarize the global trends on two different leadership styles and their effectiveness in this process.

Lesson 3: Change Champions

• Transactional LeadershipoBased on objectives, as well as the use of rewards and punishments (transactions) to ensure compliance.oNot a good fit for places where creativityand innovative ideas are valued.

Lesson 3: Change Champions

• Transformational LeadershipoThis leader identifies a need for change, crafts a vision that guides the change through inspiration, and fulfils that change with the commitment from the group members

oGives collaborators autonomy over specific jobs and the authority to make decisions based on their training

Lesson 3: Change Champions

• Transformational LeadershipoPossess courage, confidence, and willingness

to sacrifice for the greater good.oThis leader will know his team enough to

identify and nurture future change champions, and will have the vision to train, support, and incentivize the behaviors that will lead to the internalization of the vision for change in each of these collaborators.

Lesson 3: Change Champions

• It will also be necessary to foster and bechampions among the leadership in the organization.

• Leadership teams can become their own insular, inscrutable structures.

• Leaders can be comfortable, filled with inertia, and have the same chance as their employees of ending up as critics, bystanders, or victims of change rather than its champions.

Lesson 3: Change Champions

• Failures will occur, and they do not necessarily indicate a failure in the strategy.

• We can learn as much from our failures as our successes.

• Failures can sometimes identify key areas that must be addressed before our strategy can be successful.

Lesson 4

• “Failure is a necessary part of the innovation process because from failure comes learning, iteration, adaptation, and the building of new conceptual and physical models through an iterative learning process. Almost all innovations are the result of prior learning from failures.”

-Dr. Hess, Forbes Magazine (2012)

Lesson 4: Failing Successfully

• Most managers seek to actively eliminate failure or variances from their processes and resultso which is exactly the opposite mindset of an

innovative enterprise culture.

• One way to mitigate the negative effects failures can have on a large enterprise:oRun small-scale experiments of new and

disruptive ideas where their relative success/failure can be examined.

Lesson 4: Failing Successfully

• A study from Wharton indicated that:oOnly 1% of managers ever actively tried new

things that were likely to fail just to see if an idea was worth pursuing.

o22% considered themselves managers who celebrate the insights gained from errors.

• A healthy relationship to failure must also include the leadership at any organization –change champions are not a magical elixir.

Lesson 4: Failing Successfully

• Dr. Kühl distilled 5 habits in leaders who thrive in a healthy failure culture. They:oUnderstand how to lead innovative peopleoAsk for forgiveness instead of permissionoAnalyze the failure and its root causeoAct fastoLearn from failure

Lesson 4: Failing Successfully

• Failure is not generally fun. • Failure is not necessarily enjoyable. • Failure is not often cheap. • Failure is not ever risk-free. • Failure is not often a guaranteed lesson. • Failure is not ever completely avoidable in an

innovation landscape. • We will fail at some point.• How we respond is the key difference

Lesson 4: Failing Successfully

• A focus on the culture and people is fundamental.

• No amount of investment in technology, processes, training, seminars, consultants, or certifications will overcome a culture and people that are not ready to take on this job.

• Transformational leadership again takes center stage.

Lesson 5

• Some time ago, I covered this topic much more extensively in an iideas conference titled: Breaking the chains of culture (Rompiendo las cadenas de cultura).

• We won’t go into every detail here, but rather summarize the most salient points.

Lesson 5: Anchors Aweigh!

• First anchor: Inherited culture• An incredible leader and innovator in the first

computer revolution was Admiral Grace Hopper who had this to say about our inherited culture:o "Humans are allergic to change. They love to say, 'We've

always done it this way.' I try to fight that. That's why I have a clock on my wall that runs counter-clockwise."

• Meanwhile, Elser at Inc.com identifies the six words that will kill a business:oWe’ve always done it this way.

Lesson 5: Anchors Aweigh!

• Second anchor: Ignored culture • This can be one of the more difficult cultural anchors to

face. • These are the contradictions we ignore, hide, and

pretend don’t exist.• We must face our internal cultural issues head-on. • We must be bold enough to change where so many

others do not.• We must be brave enough to hold ourselves to our own

guiding values despite all the external and internal pressures.

Lesson 5: Anchors Aweigh!

• Third anchor: Forgotten culture. • Not all cultural contradictions (ignored culture) are truly

and insidiously on purpose.• In many cases, we have forgotten or lost the reasons

why we do things.• Do we always know why we have knee-jerk reactions to

certain ideas or changes?• Do we know why we’ve never apparently explored

certain avenues of institutional opportunities?• Do we know why it makes us so nervous to challenge

ideas from “on high”?

Lesson 5: Anchors Aweigh!

• However much data we are collecting…it’s not enough.

• We will need to truly grow our data acquisition, processing, and interpretation infrastructure and skillset.

Lesson 6

• At the operational level we must have an ecosystem that allows us to leverage the derived insights into better performance.

• A 2017 review stated that retailers showed a 15-20% increase in return on investment by applying big data analytics (BDA).

• Understanding our market’s behavior, optimizing our supply chain, processes, and systems, and maximizing client retention can all be benefitted by collecting the right kind of data and analyzing it in a useful manner.

Lesson 6: Data, Data, Data

• We must be fully steeped and trained in this data-driven world to be able to integrate this kind of thinking into all our learning experiences.

• We will not accomplish this without transforming our own cultural relationship to disruptive technology and data.

• If we are not becoming data virtuosos at the highest levels, it will be difficult to propagate those values down to the rest of the institution.

Lesson 6: Data, Data, Data

• If we cannot model strategies to continuously improve our decision-making processes, we will remain behind the times.

• If we can’t identify what is driving people to turn their eyes upon us and be impressed by the amazing work being done already at our organization, we will miss major growth and opportunities for social impact.

• If we can’t spot process bottlenecks dynamically, we will continue to waste resources on things that are not contributing to our local, regional, and international leadership.

Lesson 6: Data, Data, Data

• ABET. (2018) ABET. [Online]. http://www.abet.org/accreditation/get-accredited-2/get-accredited-step-by-step/self-study-report/

• Bhaskar Chakravorti, Ajay Bhalla, and Ravi Shankar Chaturvedi, "The 4 Dimensions of Digital Trust, Charted Across 42 Countries," Harvard Business Review, Feb. 2018. [Online]. https://hbr.org/2018/02/the-4-dimensions-of-digital-trust-charted-across-42-countries

• DKE Deutsche Kommission Elektrotechnik, Elektronik Informationstechnik in DIN und VDE, "DIN/DKE – Roadmap: GERMAN STANDARDIZATION ROADMAP Industry 4.0, Version 2," Berlin, Roadmap 2016. [Online]. https://goo.gl/VYMD9e

• Edward D. Hess, "Creating An Innovation Culture: Accepting Failure is Necessary," Forbes, June 2012. [Online]. https://www.forbes.com/sites/darden/2012/06/20/creating-an-innovation-culture-accepting-failure-is-necessary/

• Joe McGrattan. (2017, Dec.) Triple Helix Corporation. [Online]. https://www.3xcorp.com/industry-4-0-become-reality-manufacturers-2018/

• Josephine Kühl, "Failure Culture—the Key Ingredient for Innovation Leadership," Medium: CDTM, Sep. 2017. [Online]. https://medium.com/cdtm/failure-culture-the-key-ingredient-for-innovation-leadership-37735a48057a

References

• Juan Manuel López Oglesby, "Digitalized Innovation Ecosystem: “iideas”," UPAEP Graduate School, Puebla, Science Strategy Position Paper 2018. [Online]. https://goo.gl/y47hbp

• Juan Manuel López Oglesby, "Industry 4.0 – A Call for Champions," UPAEP Graduate School, Puebla, Science Strategy Position Paper 2018. [Online]. https://upress.mx/index.php/opinion/editoriales/innovacion-y-tecnologia/2594-industry-4-0-a-call-for-champions

• Juan Manuel López Oglesby, "Industry 4.0 and the University - Digital Trust," UPAEP Graduate School, Puebla, Science Strategy Position Paper 2018. [Online]. https://goo.gl/nXfCg7

• Juan Manuel López Oglesby, "Industry 4.0 and the University: Self-Study," UPAEP Graduate School, Puebla, Science Strategy Position Paper 2018. [Online]. https://goo.gl/QkgLgH

• Juan Manuel López Oglesby, "Industry 4.0: Anchors aweigh!," UPAEP Graduate School, Puebla, Science Strategy Position Paper 2018. [Online]. https://upress.mx/index.php/opinion/editoriales/innovacion-y-tecnologia/2696-industry-4-0-anchors-aweight

References

• Juan Manuel López Oglesby, "Industry 4.0: Data, Data Everywhere," UPAEP Graduate School, Puebla, Science Strategy Position Paper 2018. [Online]. https://upress.mx/index.php/opinion/editoriales/innovacion-y-tecnologia/2806-industria-4-0-datos-datos-por-doquier

• Juan Manuel López Oglesby, "Industry 4.0: Failing Successfully," UPAEP Graduate School, Puebla, Science Strategy Position Paper 2018. [Online]. https://upress.mx/index.php/opinion/editoriales/innovacion-y-tecnologia/2644-industry-4-0-failing-successfully

• Juan Manuel López Oglesby, "Science, Strategy, and SWOT," UPAEP Graduate School, Puebla, Science Strategy Position Paper 2018. [Online]. https://goo.gl/WrVVNK

• Juan Manuel López Oglesby, "The University as a Strategic Partner in Industry 4.0," UPAEP Graduate School, Puebla, Science Strategy Position Paper 2018. [Online]. https://goo.gl/YX16Uj

• Justin Roscoe. (2017, Nov.) Training Industry. [Online]. https://goo.gl/TmSy34• KPMG LLP, "digital TRUST," United Kingdom, 2015. [Online].

https://assets.kpmg.com/content/dam/kpmg/pdf/2015/12/digital-trust.pdf

References

• P. Shieber, "The Wit and Wisdom of Grace Hopper," OCLC Newsletter, vol. 167, March/April 1987.

• Paul Schoemaker, "Why Failure Is the Foundation of Innovation," Inc., Aug. 2012. [Online]. https://www.inc.com/paul-schoemaker/brilliant-failures/why-failure-is-the-foundation-of-innovation.html

• PWC, "Building Digital Trust, The confidence to take risks," PWC, Singapore, 2013. [Online]. https://www.pwc.com/sg/en/publications/build_digital_trust.html

• PWC, "Global Industry 4.0 Survey," 2016. [Online]. https://www.pwc.com/gx/en/industries/industry-4.0.html

• Ray Y Zhong, Xun Xu, Eberhard Klotz, and Stephen T Newman, "Intelligent Manufacturing in the Context of Industry 4.0: A Review," Engineering, vol. 3, no. 5, pp. 616-630, Oct. 2017. [Online]. https://www.sciencedirect.com/science/article/pii/S2095809917307130

• Royaly-free images: https://www.pexels.com and https://pixabay.com• Scott Elser. (2014, July) 6 Words Your Employees Say That Will Kill Your Business. Inc.com.

[Online]. https://www.inc.com/scott-elser/6-words-your-employees-say-that-will-kill-your-business.html

References