Industry 4.0 organizations: Identifying Threats & Opportunities

1 Industry 4.0

2 How will 4.0 impact organizations?

3 The illusion of control

4 Threats and Opportunities

Over the past decade, there has been a “perfect storm” of change driven by consumerization, cloud, mobile, and the Internet of Things. It has changed how we think about enterprise information and IT – and changed how we think about the kinds of skills needed to adapt to these changes.’ AIIM

How can the organisations of tomorrow succeed in an ever changing world? 

What are the common denominators across different structures and sectors?

The purpose of this article (in a series of four), is to discuss some of the main issues for industry 4.0 organizations – organizations contributing to or affected by the fourth industrial age, developing the context for ‘agility with simplicity’. Some big questions are addressed, discussed in terms of industry 4.0 principles, and how these can be aligned to developing the intelligent organization of tomorrow.

1. Industry 4.0

Getting to grips with disruption and change is no easy matter. It is a complex undertaking. Companies and organisations around the world are uniting in the recognition of the fourth industrial revolution called industry 4.0. Introduced as ‘Industrie 4.0’, the term represents the high-tech strategical development initiated by the German government that has since spread into the World Economic Forum’s drive for recognition and adaption. WEF recognise that the acceleration of innovation and the velocity of disruption are hard to comprehend or anticipate, being drivers of constant surprise rather than change. Industry 4.0 is a fitting response – an initiative for placing and understanding the challenges and opportunities in efficiency, safety, service, experience as business, science and politics unite by comprehensive digitalisation and connection-automation. The results are happening all around us, from IoT robots and sensors, restructuring centralised processes into digitally decentralised routine automation, industry 4.0 decreases cost while improving quality of product – and life.

Today the ‘industry 4.0 agenda’, the fourth industrial age, is fast becoming an established context for organizations, sectors and industries. This involves the future of people, technology, the impact on work practices, and the need to align endeavor to the intersection of artificial intelligence and human Resources. However, just how we harness those resources to intelligence – answers concerning ‘the how’, how people can be aligned to new ideas and organizational needs remains diffuse.

2 How will 4.0 impact organizations?

All of my well-sighted ideas have come from the field, not from the literature, from seeing something from the real world and trying to figure what is going on.

~ Michael Rushman, Harvard Business School

In a 4.0 age, there is no longer any one right answer, only consensus. In a 21st century Organization, nothing is static. Everything is in motion. Products are never finished, constantly adaptable, developable and ‘optimizational’, or if not, soon become redundant. People change too, providing value by learning as much from others as from the sector knowledge they provide, interacting in places and spaces, using processes that may not prove to be as useful as they used to be.

It is increasingly necessary for teams to learn and grow together, developing own core unique skills, taking ownership of product, feeding a flux of ideas over time into the organization. As a result, organizations need to address many different aspects, especially, if ‘the tale is wagging the dog’.

For established organizations, 4.0 may be experienced as disruption, requiring introducing in turn, own disruptive processes and new types of interaction – people interaction, processes adopted, processes deployed, spaces deployed to develop and share knowledge that increasingly, must be sourced from inquiry rather than procedure or database. Inquiry-based processes adopt ‘back to first principles’, team-based learning being one of many different bases that need to be covered in organizations where nothing ever stands still.

The 4.0 agenda is very much a ‘reinvention’ one. And to reinvent requires agility, which according to McKinsey, is the ability of an organization to renew itself, adapt, change quickly, and succeed in a rapidly changing, ambiguous, turbulent environment. Agility is not incompatible with stability—quite the contrary. Agility requires stability for most companies. Agility relies on skills within the organization, another catch 22 since most of these skills cannot be found on a CV. Agility has to be found from within, from those managers whose skills are needed to make it a reality, while the culture of the organization exercises control, preventing agility from arising in the first place.

3 The illusion of control

Part of today’s paradoxes lay in an illusion of control. This questions the effectiveness of strategies following predefined paths. Another part resides in the nature of people, how they develop ideas, share them and interact, and how these processes can be captured and applied to frameworks that result in the desired KPI’s, at a time when fixation of KPI’s prevents the development of open dynamic processes needed to produce them in the first place. To do this, organizations of tomorrow need to be able to constantly tack where the wind blows best, as a sail-ship does when heading into the wind.

Organisation 4.0’s are those organisations founded in the fourth industrial ‘network vision’, where IoT (Internet of things) feeds in real-time data telling us where what and when as it is happening, feeding machine intelligence by online data-streaming.

How does this affect our organisations?

How can we know when change is happening all around us?

Context may not be known can could be HR-oriented, customer-oriented, customizable or innovative according to individual organizational needs where no one-size will fit all.

This is examined in simple terms of threats and opportunities:

4 Threats and opportunities

Threats

For those companies who are not prepared, 4.0 challenges could be daunting. Especially, in the wake of unplanned-for disruptive tendencies, continuing business as usual poses a threat for sustained existence. Perhaps the biggest of all threats, is addressing the issue of complexity. Software developer Russell Miles, puts this into perspective, stating that:

Complexity is the silent killer of delivering the right software, or change, at the right time; it is singly responsibly for killing many good ideas and companies. A focus on simplicity is the answer, but simplicity is not easy.”

What is needed are sophisticated, yet simple to understand techniques and practices that work with complexity, but makes it easy, or at least easier. A risk can also be identified of oversimplification, the most simple of all continuing along a path of ad-hoc reactionary development based on what we already know. This is the illusion of control. New conditions tend to throw bigger and bigger ‘spanners into the works’, a term coined to reflect how even the best oiled machinery can grind to a halt when new unexpected conditions arise. In the meantime, we continue along predefined and preconceived paths that become increasingly out-of-sync with the need for a more dynamic self-adaptive practice.

Increasing risks can be identified including failure of processes to navigate complexity and purpose due to intelligence needed to develop objective insight. This can be understood as developing the right products for the wrong market for example, or implementing the right solutions to the wrong problems affecting the core of organizational capability, with time, market and resource implications.

Opportunities

It is already incumbent to work with greater agility than ever before, and more creatively, as people-intelligence becomes manifested in new ways. For those organizations who are aligned to new people interactions and processes, 4.0 also represents enormous opportunities to create value-building, meaningful and actionable transformation for those organizations plugged-in to a 4.0 mindset.

New environments, functional, real and virtual, need to be developed that provide a forum for such new processes to be developed, used and improved. With the focus on intelligence, the advantages for those organisations able to liberate the workforce from ‘business-as-usual’ routines through agility with simplicity, tacking the risk of complexity itself, organisations can significantly greater resources for developing insight capability.

It is predicted that (and much is already happening):

  • organizations will migrate to a more local strategically-adaptive skill set rather than follow top-down direction without objective assessment
  • focus will be more on project-inquiry and inquiry-based team performance
  • the regular pay-rolled workforce will be replaced by high-level skills based teams
  • new innovative practices will benefit from process regulation and automation defined by the organisation
  • new spaces of interaction will increasingly adapt to support dynamic team-based exchanges and local intelligence development aligning separated working methods
  • the workforce will adopt a self-alignment with focus on exploration and testing of alternative strategies instead of following the one set out by management
  • the impetus for agility will evolve around an increasing appreciation and adoption of strategic ownership of own processes