The Manufacturing Leadership Council’s new survey on Next-Generation Leadership reveals that companies are making progress in getting ready for the digital era, though many knowledge and expertise gaps exist.

W he What we think we know, with relative certainty, about Manufacturing 4.0 at this point in time is that the journey to this cyber/physical promised land of unprecedented production agility and efficiency is going to require greater effort around cultural, organizational, and leadership change than technology adaptation.

Now, this is not to dismiss the technological challenges. There are many, they can be complex and, to some extent, the softer issues are linked to the power of technology to transform what we do and how we do it.  Some of the most common questions around the technological challenges are: Should current operational and information technology investments, such as ERP and supply chain management systems, be upgraded or replaced in order to prepare the way for M4.0? To what extent should plant floor systems be networked and IP-enabled? How should increasing volumes of data be managed, and how can value be extracted from them?

But it is the questions concerning how the information resulting from all of this technological activity will affect how decisions are made, how work is performed, how companies are structured, and how leaders must lead differently in the digital age that are perhaps the most difficult for manufacturing companies to grapple with. That should probably come as no surprise since the people and process issues are usually the harder part of any change, let alone an epochal one such as Manufacturing 4.0.

To a very real extent, therefore, progress with M4.0 is governed by leadership’s ability to adapt to the requirements of the digital age, a set of necessities that are being defined in real time as the industry inches forward in developing an understanding of what M4.0 is today and can be in the future.

A Noticeable Uptick in Preparedness

And just how is manufacturing leadership doing these days in adapting to M4.0? According to the latest Manufacturing Leadership Council survey on Next-Generation Leadership, fielded in April, the most encouraging thing that can be said is that leaders in manufacturing are getting better prepared to undertake what will almost certainly be a multi-year trek to become digital businesses.

When asked, for example, how prepared their companies’ executive management teams are to undertake the journey to M4.0, 79% of survey respondents indicated that their teams are indeed in preparation for the change. Fourteen percent of this group said that their teams are “very prepared” for the shift, up from nine percent saying so last year. And the percentage of those saying their company management teams are “somewhat prepared” grew 10 points to 65%. Most importantly, the percentage of those saying their teams are “not at all prepared” dropped 16 points to only 20% of the sample. (Table 7)

This is certainly an encouraging finding and one that reinforces an indication that emerged in the ML Council’s Factories of the Future survey in February that manufacturers have moved beyond the awareness phase of M4.0 and are now more actively engaged in undertaking M4.0 projects of different types.

But a declaration of a broad-scale M4.0 lift-off may not yet be warranted. That’s because the state of knowledge and experience with M4.0 is still very much in ramp-up mode. When asked what level of knowledge their companies’ executive management teams have with M4.0, 63% of survey respondents indicated their teams have achieved some level of M4.0 understanding at this point in time. That finding breaks out as 14% saying “well understood” and 49% saying “superficially understood”, almost a dead heat with last year’s findings. (Table 5)

Part 1:
DEFINING THE LEADERSHIP ROLE

Part 2:
LEADERSHIP IN THE
MANUFACTURING 4.0 DIGITAL FUTURE

“Progress with M4.0 is governed by leadership’s ability to adapt.”

The Distraction of ‘Other Issues’

And when probed about some of the possible reasons for the lack of preparedness, survey respondents this year were pretty much in the same place as survey takers were last year. The highest ranked reasons for a lack of preparedness were that their executive teams have been “too focused on other issues” and that they were still in the process of trying to understand how M4.0 specifically applies to their companies. (Table 8)

But this apparent lack of progress in developing M4.0 knowledge and in breaking away from the day-to-day running of the business doesn’t mean that companies aren’t making headway with M4.0. What it does perhaps suggest is that progress simply isn’t linear; a two-steps-forward, one-step-backward pattern, or the reverse, is the reality.

That pattern can be a positive thing, particularly when it comes to motivation. As Machiavelli perhaps would say, fear can be a great motivator. When asked, for example, how vulnerable their company’s future success will be as a result of their current level of M4.0 preparedness, 78% of this year’s survey respondents indicated either a slight or moderate level of vulnerability exists, a finding up seven points from last year. (Table 9)

Part 3:

DEVELOPING KNOWLEDGE AND EXPERTISE

The Need to Master Analytics

When thinking about what leadership skills and technical competencies they need to develop to be successful with M4.0, survey respondents again this year placed a high degree of emphasis on computer-based analytics, particularly to help manufacturers make data-driven decisions. (Tables 10, 11) Not far behind on the leadership front was the ability to manage accelerating market and technology change and, with regard to technologies, simulation and modeling and digital factory techniques to link design and production. But the technology subject that garnered the highest degree of emphasis, in terms of developing knowledge and expertise, was cybersecurity.
It is not the learning curves on specific technologies, however, that respondents see as the most fundamental challenges in the journey to M4.0. The most significant challenge cited by survey takers, at 63% of the sample, is the need to change their corporate cultures to be in line with the realities of the digital era and the need to migrate their businesses to the new paradigm. A close corollary to these needs is understanding the business case and return on investment from M4.0, standard business requirements but complicated by the fact that M4.0 business and ROI models are still emerging in the industry. (Table 12)

As this chapter in the still-developing M4.0 playbook gets written, manufacturing executives also appear to be getting clearer about what really distinguishes leadership in the digital era. They are well grounded, of course, in the perennial fundamentals of what leadership means in business. As the new survey’s results overwhelmingly show again this year, having a vision for the future and a strategy to get there remains the most important aspect of general leadership, followed by doing right by customers, employees, and shareholders. (Table 1)

A Consensus of M4.0 Leadership

These leadership aspects will and must remain in place, of course, regardless of the historical phase of manufacturing we find ourselves in at any given point in time. But at this moment for M4.0, a powerful consensus has emerged that leadership in the new era means a substantially different approach to leading and managing must be adopted, backed up by specific things. (Table 3)

Part 3:

DEVELOPING KNOWLEDGE AND EXPERTISE

“The state of knowledge and expertise with M4.0 is still very much in ramp-up mode.”

On the leadership approach and skills front, survey respondents strongly support (79%) the idea that M4.0 leaders need digital acumen, meaning that they need to understand and use digital technologies to advance manufacturing. Respondents also stress that manufacturing executives will have to be comfortable and able to work in a collaborative environment, will have to rely on data analysis more than intuition or experience, and will have to allow decision-making to be pushed further down in the organization. (Table 4)

A strong majority of respondents also say (69%) that leadership in the M4.0 era requires promoting and nurturing innovation and adaptability in manufacturing strategies and processes and establishing a fact-based, information-driven culture of decision-making. It is this environment that will depend on the power of advanced technologies to provide heretofore unrealized insights from a variety of production, customer, and supplier data sources, applied in a flatter, more collaborative culture of empowered manufacturing leaders and workers. (Table 2)

That, in essence, is the promise of M4.0. And it is an opportunity that requires manufacturing executives to master the three dimensions of change – technology, leadership, and organization – that define the journey to the digital era.

By the look of things today, the industry is hard at work preparing itself for just that.   M

Part 1:
DEFINING THE LEADERSHIP ROLE

1 Vision, Strategy Dominate General Leadership Definition

Q: Which statement best describes what leadership in general means to you? (Rank Top 3)

Innovation, Adaptability
Define M4.0 Leadership

Q: Which statement best describes what leadership means for the Manufacturing 4.0 era? (Rank Top 3)

LEADERSHIP IN THE
MANUFACTURING 4.0 DIGITAL FUTURE

1 Vision, Strategy Dominate General Leadership Definition

Q: Which statement best describes what leadership in general means to you? (Rank Top 3)

1 Vision, Strategy Dominate General Leadership Definition

Q: Which statement best describes what leadership in general means to you? (Rank Top 3)