Companies today are grappling with the business implications of the digital revolution or “Industry 4.0.” Many companies are early adopters and have realized significant benefits through automation, analytics, artificial intelligence and augmented reality. They are using this technology to capture new value while reducing cost and risk.
However, many companies, even the successful ones, are still trying to come to grips with their place in the digital world. Do any of these situations sound familiar?
Leadership declarations that the company is “going digital” without a shared understanding of what that means or how it relates to the company’s core purpose and strategy
Solution- or vendor-driven approaches that can be chaotic, sub-optimized and disruptive, versus more methodical business-driven approaches
A recognition that innovation is at the core of the digital revolution, but a lack of processes to enable innovation and ensure it is wired into how the company works
A belief that everyone will happily embrace digitization, overlooking how current decisions are made, careers are developed and people are rewarded
A focus on the technical implementation and transition with an underappreciation of what the implications are for the people in the business—roles, accountabilities, skills, organizational structure—and how people need to be engaged in the change journey
Lack of clarity about the landing point—what do you want the organization to look like and what kind of culture do you want to create?
All of this translates to a business transformation challenge. Addressing this challenge requires an integrated approach to developing a strong digital business transformation plan. Evolve’s Organizational Space™ model provides a way to manage change holistically by implementing new processes and systems while working to develop better leadership capability and a shift in culture.
We believe that digital can be transformational, but it is NOT transformation. Companies that are most adaptive – those “learning how to learn” – will be most successful. Our strong bias is that the companies that will effectively navigate the digital transformation journey and create a strong purpose, strategy and desired culture for their business, will share many of the following characteristics:
A clear view what digital can do for your business and a process to discover the technologies to do it, rather than the other way around
A controlled, cross-functional plan for investigating, selecting, trying and applying new solutions and technologies
A discovery and planning approach that is value-driven and identifies and tests underlying assumptions
Less formal or hierarchical structures, but with clear roles and accountabilities and mechanisms for decisions
A focus on building the skills, rewards, and culture for innovation and continuous improvement (a learning environment)—with the processes and systems to support it
A clear roadmap for how the technological change and the people-related change will happen
An appreciation for the disruption that people will experience, and a plan to enroll people in that change
The scale and pace of change associated with Industry 4.0 may be new, but many of the underlying issues are familiar. Revisiting past ERP implementations can be instructive as ERP solutions can create huge value. We have experienced numerous examples where business processes and decision-making didn’t map to the ERP system or people were reluctant to give up their spreadsheets (often for well-intended reasons) which led to a shadow decision-making system that ended up existing in parallel to the ERP system. We worked with one company that was planning the relaunch of an ERP component (after a prior failed implementation) and provided specific support to their implementation team to consider the human change challenges and how to overcome them. This included focusing on how to engage people in the business case for the ERP, while also acknowledging and addressing their concerns. In their case, there was a legitimate concern about the ability to serve customers (the spreadsheets they were using did work) and an increase in the level and duration of training and support to use the new system effectively.
In another instance, we helped our client implement remote operations centers. They recognized that what would really enable those centers to work would be the clarity of the business processes and decision-making, so that people could actually make these centers work. We have had numerous examples where data was available through remote sensing or other technologies, but they weren’t driving analysis, decision and action. In one extreme example, we found that centrally collected data weren’t being shared with the field teams, and field contract operators were being held to a “visit every well contract” standard, rather than shifting to “operate by exception”. Creating real time visibility of performance will only create value if you change the expectations and agency to act on the part of the people who can actually do something about the data.
It’s very easy to get caught up in a swirl of digital seduction. Our philosophy on “Industry 4.0” is that as the starting point, companies need to be clear about their vision, strategy, value drivers and desired culture. You must have a clear view on what you’re trying to achieve, and then be selective about how digital can best enable that goal. We think it is important to have clear principles or decision parameters that guide the digital process. This is not to say that technology can’t be an input—some degree of chaotic experimentation can be valuable and shape strategy—but then you must be able to assess the business value and turn it into a common way of working.
The companies that will be the most successful are those that create the capability and processes for adaptive change and innovation. Just because a specific tool or application can enable a different way of working, doesn’t mean people will necessarily use it in that way. Furthermore, specific solutions will rapidly become obsolete. You are much more likely to be successful long-term If you have brought people along throughout the implementation process. This can be achieved by learning about innovation and change, as opposed to a specific application, and working on the human system as well as the digital one.