How To Succeed In The Fourth Industrial Revolution: 5 Key Insights From Intel's New "Accelerate Industrial"
Today Intel released “Accelerate Industrial”, a new study on the evolution and future of Industry 4.0.
Intel’s report is based on a two-year research effort led by Irene Petrick, Senior Director of Industrial Innovation and Faith McCreary, Principal Engineer. They conducted extensive interviews with over 400 participants from the manufacturing ecosystem, including both those who develop the technologies and those who need to adopt them into manufacturing processes. Their research has yielded a wealth of interesting material; this report is just a first installment, but it already includes many illuminating findings articulated in a clear framework. Here are 5 key insights that will help you understand and navigate the digital-industrial revolution.
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1. The digital-industrial transformation is here and there is no turning back. Most companies plan to invest in advanced technologies including AI, robotics, 3D printing, predictive analytics, and smart asset tracking or monitoring in the next 2-3 years; skepticism has been replaced by fear of missing out.
2. A technical skills gap stands out as the number one obstacle to a successful digital transformation—flagged as crucial by over a third of respondents. Intel’s report highlights a dramatic shift in the mix of skills needed for success: Manufacturing companies believe the top 5 skills they will need for future growth are all digital skills, from data science to cybersecurity. Manufacturing skills, ranked as today’s second most valuable ability, rank only # 6 when looking at the future. Crucial will be the workforce’s “digital dexterity”, that is the ability to understand both the manufacturing process and the new digital tools. To leverage the full value of digital-industrial innovations, companies will need to truly meld digital technologies into their manufacturing processes, and this requires a workforce fluent in both sets of skills.
The skills gap represents a tremendous challenge for companies. At the moment, companies are trying to address the gap by setting up training programs in specific digital skills. This, however, will not be enough. “In the future training programs will be much smaller in terms of the individual modules, but will be more cumulative, customized and personalized” to allow workers to build the right set of skills and upgrade it through their career, says Intel Irene Petrick. Addressing the skills gap will require a change of pace and mindset in the education ecosystem, to develop training programs that can provide a broad range of skills that companies can mix and match over time.
3. Manufacturing companies need to adapt their organizational structure, culture and mindset. To set up an effective digital-industrial strategy, people need to reach and build connections outside of their traditional organizational silos, both inside and outside the company. New digital technologies cannot simply be superimposed on existing processes, they require you to think differently and re optimize your operations and organizational setup. Smaller companies, with a lighter bureaucratic structure, have an advantage, but what really matters is the mindset at the top: “Size matters, but the quality of leadership is crucial”, says Irene Petrick, especially the leaders’ vision and their willingness to experiment, change assessment and reward strategies, and to realize you cannot “count” everything that matters in this transformation.
4. To succeed, manufacturing companies need a long-term strategic plan for their digital transformation. This is a hard challenge for companies subject to the short-term financial pressure of quarterly earnings. Intel’s report notes that Lean practices, with their focus on cost reduction and short-term Return On Investment (ROI) can become a major impediment to a structural digital-industrial transformation. Because this transformation requires new skills and a shift in culture and organization, it will need a few years to reach its full potential. And because it will improve existing processes in multiple ways, it’s harder to define and predict its ROI. Irene Petrick argues that companies should also consider key non-financial measures of ROI. “If I am implementing a digital transformation that will improve my processes and using data to drive decisions, one metric I should look at is: does this digital innovation allow me to revise or reconsider my decisions less frequently?”
The long-term plan will need a clearer view of how different technology solutions can bring value. For example: AI tops the list of the planned tech investments for the next 2-3 years, but manufacturing companies often struggle to comprehend the data challenges they will face to implement effective AI solutions. Irene Petrick says “We’ve been advising companies to first think about their specific operations, how digital transformation could help them, and to develop a vision, then start small and experiment and learn. The vision will evolve, but companies need to start out with a holistic vision and then organize it in actionable projects.”
5. The different players in the digital-industrial ecosystem will need to work more in sync. “Accelerate industrial” notes that technology introduction today outpaces technology adoption by a significant margin. Tech companies are focused on developing and pushing out to market new versions of their technologies at a fast pace. This overwhelms manufacturing companies, for which implementing the new technology is a long and complex process. Over 70% of manufacturing leaders surveyed in Intel’s study worry that they might not be able to keep up with the pace of technology development. Ecosystem participants will need to communicate better and technology developers will need to be more attuned to the needs of manufacturers—including the pain points of the adoption process. For their part, manufacturers should probably become more open to share the data which are crucial to improving the technology solutions: nearly half of the manufacturing participants in the study say they would not be willing to share data with outside partners.
Intel’s new research provides a comprehensive analysis of how complex, pervasive and challenging the digital-industrial transformation is. Digital innovations hold enormous potential. But leveraging that potential requires manufacturing companies to acquire and nurture new skills, to change their operations, organization and culture—a digital-industrial company is a fundamentally new organization that thinks and operates differently, not just a traditional manufacturing company with digital add-ons. It also requires a coordinated effort by all the players in the ecosystem: technology developers, service providers, education institutions and manufacturing companies need to communicate better, trust each other more and collaborate more closely.
The digital-industrial revolution will transform the way we work and boost efficiency, productivity and economic growth once we surmount the execution and adoption challenges.
This insightful new report will help manufacturing companies and ecosystem players address the challenges and build the right strategies—and will provide a clearer guide for everyone trying to understand the fourth industrial revolution.