BACK
Scaling Industry 4.0
Digital transformation is hard. How do we know? From our own hard-fought experience, but also from data!!
According to a recent McKinsey survey, more than 70% of businesses that have attempted some form of digital transformation have stalled in their attempts. More than 70%!?! These are businesses that are full of smart, engaged people working to make sure these projects succeed, so what’s going on here?
The dirty secret of digital transformation is getting to scale is not easy. It is not linear, and it can be messy and complicated!
Saying this probably will not help with our sales pitches, or win us friends in the industry, but we have built our business on being the honest broker for our clients, so it must be said. However, are we all supposed to throw up our hands and give up on it? Absolutely not!
With the right approach, it is possible to work through the challenges and get to the end result. Though, it does involve a change of perspective and approach. Our work with industrial customers during the last few years has led us to some overall guiding principles for how to successfully get to scale with digital transformation:
- Know your goals. You must understand the reality of the digitization process that your business is undertaking and identify what the company ultimately wants to achieve as a result. Digital transformation can be used to affect changes in many different directions, so alignment of what digital transformation can do to achieve your goal is critical – only then can you carve a path to success.
- Expectations matter. Having the correct expectations means your vision must be tempered. You may be able to turn the system on today, but that doesn’t mean the business problem you were targeting can be solved tomorrow. Setting expectations correctly for what impacts will be seen, and when they will be achieved, has a huge effect on perceptions of success or failure.
- Incrementalism is essential. Huge, far-off goals help provide direction, but achieving them requires the journey be broken down into bite-sized chunks. Too often we talk to customers who simply made the project too big and unwieldy by trying to boil the ocean. This meant long lead times with seemingly little to show (though progress was actually being made). Setting achievable, near-term targets helps demonstrate success and provides pivot points for the next stages.
- Pragmatism is your friend. One of the challenges we see frequently is customers have poured significant money (often millions of dollars) into projects and are afraid of pivoting away from the money already spent for fear they will look foolish. This leads to wasting additional time and money on a direction that is not optimal. We help customers take a different approach – figuring out how to extract value from the work already done and how to shift approaches to maximize value moving forward, rather than continuing down routes that aren’t working.
How does this work in practice? Many of our customers pick a specific project as the entry point into their digital transformation. This is not because they lack ambition, but because a tight framing provides a solid basis for the foundational work needed to achieve their goals, while at the same time providing solid KPIs that show impact.
Energy management is one great example of where industrial businesses often start, as this is often one of the biggest operating expenses. For those customers focused on energy management, it is not just about reducing their energy bill. It is also about reducing overall operational “energy intensity” of production.
Starting with energy also opens the door to defining the greater digitization path. Once initial value is proven, then customers can connect energy, operational and production data, for example. At that point, the goal is no longer only about reducing energy, but about overall business efficiency, and understanding how to reduce other costs. An approach like this provides contextual information that can be used as the starting point for further impact across the entire business. Working this way means the impact of digitization spreads organically, delivering value where it makes the most sense.
Digital transformation has the potential to impact industrial businesses in so many ways that it can be tempting to try and attack the whole challenge in one, big bite. However, experience tells us that this often just leads to a bad case of indigestion. Chopping it up into smaller pieces and taking a more incremental, focused approach can help reduce the pain and make the whole process more enjoyable and effective for all!
