The Fourth Industrial Revolution (4IR) is here but in order for industrial companies to realise a real return on their investment, they need to move to Industry 5.0. People are the missing ingredient in 4IR.
By Willie Ackermann, chief sales and marketing officer at 4Sight
4IR caught the imagination of business generally, and industrial companies in particular, because it was immediately obvious that the individual technologies could deliver significant benefits.
CIOs, CTOs and engineers could immediately see parts of the business where blockchain, advanced analytics, artificial intelligence, machine learning, autonomous vehicles, drones, 3-D printing, gamification, the Internet of Things, virtual reality and, of course, cloud, could play a transformative role.
These technologies are now mature, and are already being used in certain areas to good effect but there’s a general feeling that return on investment is somewhat disappointing. That’s because while the technology may be in place, the company as a whole has failed to digitalise.
This ‘failure to launch’ is depressingly common: McKinsey research shows that 70% of all digital transformations fail. The issue is that digital transformation involves not only integrating the technology into the way business is done, but also leveraging it to uncover new business opportunities or even completely reimagining the business model.
Companies that do achieve genuine digital transformation, which we designate Enterprise 5.0 entities, will be uniquely able to compete in today’s and tomorrow’s competitive marketplace.
The missing ingredient in most failed digital transformations is people. Organisations need to place more importance in understanding if their employees are using the technology and if they have the right skills to do so. It is vital to ensure that employees don’t view the technology as a threat but leverage the tech to work better and faster .
In the end, Enterprise 5.0 is all about aligning the business model and employee organogram to ensure that the humans are working alongside the technology in a way that leverages the unique contribution that each can bring.
Based on our work with a wide range of industrial clients, there are three foundational success factors that must be put in place when integrating 4IR technologies into the business to create the Enterprise 5.0:
- Executive and board must buy into—and, most importantly, lead—the process. Digital transformation must come from the top or the company will resemble a patchwork quilt, with pockets of excellence scattered over an unreformed hinterland. Digital transformation must be a key performance indicator across the executive suite and listed as a corporate strategic objective. At all times, directors and the C-suite must be seen to be driving the digital agenda. A good start would be to rename the IT steering committee the digital committee, broadening its scope to cover all technologies, not just IT.
- Middle management must be brought on board. Middle managers are typically not predisposed to see digital transformation negatively, but they do need assistance in seeing what potential opportunities exist when the technology is implemented correctly and supported by management. Our experience shows that taking a practical approach is key, using domain experts to show managers exactly how 4IR has been implemented in other organisations and the benefits achieved.
Two important points need to be stressed. Domain experts are vital during this phase—an IT professional is not equipped to talk to operational people about how technology can be used in their business or operational processes. And taking a practical approach is vital because middle managers are operationally focused and not interested in theory.
- An inclusive adoption and change management programme must be put in place. One’s approach needs to be broad in scope, even including unions in the process. It is to be expected that the blue-collar workers will feel particularly threatened and will likely resist adopting the technology. This is the shoal on which most digital transformation projects are wrecked: Forbes research shows that 84% of digital transformation projects fail due to the non-adoption of technology.
An inclusive education and awareness programme is the first part of the solution, showing how the technology will assist the workers to perform better and thus make their jobs more secure. In tandem, a skills development programme must be run to provide them with the skills they need to use the technology, or to equip them for new roles if required. Training is equally critical.
The golden thread that connects these three essential steeps is the notion of personalisation—it is only by adding the human touch that the efficiency and automation promised by the 4IR technologies can be achieved on a sustainable basis. The Enterprise 5.0 is one in which people and technology work together to serve the business better, and ensure it competes successfully.