Next Gen Leadership

One of the major effects of the pandemic that many companies are trying to understand is the impact of remote working. Digital technologies enable not only administrative people to work remotely but also to conduct more aspects of operations remotely.

But the heightened need for digital technologies over the past year builds upon a trend that has been developing over many years. Companies have been slowly digitizing processes from design to manufacturing to assembly, with the goal of an end-to-end digital process in mind.

For more than 10 years, MLC has been tracking the implications of digital technologies on the way manufacturers organize themselves and conduct work. The theory is that the injection of advanced technologies into the manufacturing organization will over time reshape the structure of the organization and its decision-making processes.

What we have seen over the years is a clear shift from traditional command-and-control organizational structures to decentralized structures in which business units have considerable autonomy, a model that appears to be a sort of half-way house to a flatter, collaborative structure.

In our 2010 Leadership study, for example, 67% of the respondents said their companies were organized based on either a highly or somewhat centralized command-and-control model. The decentralized and collaborative models each garnered about 16%.

The results of our 2021 Factories of the Future study, published in February, clearly showed the seismic shift that has occurred. Only 6% remained with the command-and-control model, while 74% were in the decentralized camp. Interestingly, the collaborative model has barely inched forward from 2010, despite repeated expressions of intention by manufacturers to embrace it. Only 18% said this year that they had arrived at this organizational form.

But the tide, pushed by the pandemic’s inflection point, may be about to turn. In MLC’s new Leadership survey, 48.5% of respondents said understanding how the company should be organized as a result of advanced technologies is the number one challenge for leadership. That’s up a whopping 23 points from last year.

Seismic shifts take time. The collaborative model’s place in the sun may be just around the corner.– David R. Brousell


POV: M4.0 Cultures



It is said that extraordinary times call for extraordinary measures, and the COVID-10 pandemic has by far been the most extraordinary period most manufacturers have faced in their lifetimes. When the initial shock came last spring, many may have been tempted to hunker down and try to just do the minimum needed to survive the crisis.

But they didn’t. As manufacturers suddenly were confronted with everything from disruptions in supply chains, to pivoting to new product lines, to ensuring health and safety on the shop floor, they rose to the occasion in an extraordinary fashion by shoring up the keystones upon which a successful Manufacturing 4.0 corporate culture thrives: collaboration, innovation, and integration.

While the shift toward a digitally enabled, collaborative, innovative, and data-driven workforce culture has been underway for some time, the limitations of the traditional command-and-control hierarchy came into stark relief as a COVID-driven need for resilience, agility, and data-driven processes became increasingly apparent. In response, manufacturers ramped up everything from their enterprise connectivity and digital collaboration tools and platforms, to functional integration strategies and innovation processes.

More importantly, these leaps forward in M4.0 corporate culture are not just temporary measures put in place to deal with the immediate crisis. In fact, they represent a permanent paradigm shift in culture, according to the survey results.

Yes, there are still areas of improvement for even those furthest along in their M4.0 journeys. Culture change is never easy, especially when it requires behavior change from the top down and has to be implemented while also keeping the factory working at maximum capacity. Despite the potential difficulties, however, manufacturers say they intend to double down on their efforts to continue transforming their cultures, from increasing their use of data to make decisions to developing integrative and cross-functional structures that will empower a more collaborative and innovative workforce.

The key to success in all the M4.0 benchmarks, respondents said, was the adoption of M4.0 technologies and approaches to corporate culture. Those who are taking that transformative leap are positioning their companies not just to survive the crisis but to thrive in a post-pandemic world.. – Sue Pelletier


POV: Factories of the Future



The acceleration of M4.0 adoption, highlighted in our latest Factories of the Future survey, opens up many important opportunities for manufacturers. One of the most significant is the ability to use the powerful insights and efficiencies that innovative technologies provide to help transition their production footprints from M4.0 to net zero in the years ahead.

It’s a global trend that’s already picking up speed. According to the United Nation’s Race to Zero campaign, in 2020 more than double the number of businesses and organizations announced their commitment to net zero CO2 emissions targets than in 2019. Ford, Colgate Palmolive, General Mills, Pepsi, Levi Strauss, Johnson Controls, Shell, BP and a host more are already among them.

Boeing is one of the latest. In December the company achieved net zero carbon emissions across all its manufacturing facilities. Last month, it also announced that by 2030 its entire fleet of commercial aircraft will be certified and capable of flying on 100% sustainable aviation fuel.

Digital tools are an essential enabler for achieving those kinds of net zero goals and developing new climate-smart solutions. More sustainable operations – from analyzing and streamlining materials, waste, and energy usage, to replacing paper-heavy or in-person processes with virtual alternatives, to creating whole new circular economy business models driven by end-of-life reclamation and recycling – will increasingly depend on the enlightened application of M4.0 digital technologies.

As Parsable CEO Lawrence Whittle and Francisco Betti, Head of the World Economic Forum’s Shaping the Future of Advanced Manufacturing and Production program, write in their article on sustainable factories in this issue: “Before any meaningful sustainability effort can take hold, the foundation for digital transformation must be built and leveraged by everyone.”

That’s the next big challenge for manufacturers as they strive to create their factories of the future — to use M4.0 technologies and digital transformation strategies not just to help create a more efficient business, but also to create a more sustainable operational model that has a minimum climate impact. The recent U.S. move to rejoin the Paris Climate accord is likely to further encourage such efforts.

In the year ahead, government regulators, employees, partners, customers, investors, and global social media audiences are likely to become ever more vocal about those companies that ignore the growing pressure for more climate smart industrial approaches. Thankfully, M4.0 is here to help. – Paul Tate

POV: Transformative Technologies



Sometimes the most interesting things about surveys are the contradictions they reveal. Over the many years of doing surveys here at MLC, I have been witness to many seeming contradictions involving manufacturers’ perspectives about technologies, leadership, competitiveness, and a host of other topics.

For example, manufacturers will say, on the one hand, that they are intent on acquiring and using technologies to improve their operational efficiency and cut costs for their companies. On the other hand, a notable number will say that their companies have not really established any kind of formal plan and strategy to get there.

Similarly, manufacturers are convinced that the smart use of data holds the key to future competitiveness, but many report that they have no real, viable way to measure the value of the increasingly large amounts of data they are generating from all manner of processes, equipment, and people.

In MLC’s latest survey on Transformative Technologies, 60% of respondents say they agree with the statement that the accelerating pace of new technologies has caused them to fall behind in their ability to evaluate and understand their potential.

Yet, when asked specifically what they think about the potential of technologies such as AI, IIoT, 3D printing, AR/VR, and collaborative robots over the next five years, manufacturers are uniformly positive, even enthusiastic, that not only will they be significant forces in their companies but that some of them will be truly “game changers” for the industry.

So what can we make out of these findings? Is the optimism about the potential of these technologies, given that most companies are at an early stage with them, based on a leap of faith about their efficacy? Are people simply persuaded by effective hyperbole coming from technology suppliers? Or do manufacturers have enough of a theoretical understanding of these technologies to project their importance and effectiveness with some accuracy?

My sense is that it boils down to faith in the future, an optimism that progress will be made. So bring on the contradictions. I’m OK with them.     – David R. Brousell

POV: Next-Generation Leadership



Workers of a certain age likely remember the office-side transition to digital technologies that began in earnest in the 80s and then accelerated through the 90s and 2000s. Typewriters and paper memos went the way of the office ashtray as desks were overtaken with computer monitors and many companies introduced something new – the IT department.

But the technology transition in the office environment started with simpler tasks, things like electronic file storage and retrieval and email, before the days of intense data analysis and what became known as business intelligence. Unlike those early office networks, though, manufacturers today face a much more expensive investment in both equipment and systems combined with a greater need to be highly data savvy. What seemed like incremental changes in the office for the last 30 years is more like a digital cliff for many factories.

According to the latest Manufacturing Leadership Council’s new survey on next-generation leadership, 79% of respondents said their company has no formal M4.0 training plan for leaders or workers. Yet, more than 80% also said COVID-19 brought about new urgency for M4.0 technology investment either to a partial or significant degree. It’s not hard to see how this is heading toward a collision between an urgency to acquire more technology and an organizational lack of digital acumen.

Additionally, 50% of those respondents said they saw their future leaders as ones already being developed inside the organization, meaning that unless M4.0 training becomes a priority and fast, tomorrow’s leaders won’t get the M4.0 preparation they need and will face the same digital skills problems as today’s. That’s why along with making decisions about which technology investments to make, it’s just as important that companies also do an honest assessment of their organizational digital bench strength and leadership skill.

Throughout the pandemic, manufacturers have repeated the same thing: The technology is important in a crisis, but the people matter even more. As leadership makes decisions on the digital technologies to help them negotiate the pandemic and its aftermath, it’s important they make that same investment in a plan for organizational digital training.    – Penelope Brown

POV: The M4.0 Data Imperative

There has never been a time in manufacturing history when so much data has been available to help companies understand their operations so effectively and leadership teams to make faster and better decisions.

Multiple M4.0 technologies are now generating data at an exponentially increasing rate – about materials, machines, processes, people, products, networks, customers, suppliers, markets, climate impacts, and, as we see so acutely in today’s devastating worldwide health crisis, disruptive global trends. And those data volumes are only going to get a lot steeper in the years ahead.

But it’s not how much you’ve got that matters, it’s what you do with it.

In many ways it’s still early days in manufacturing’s journey to learn how best to make use of all the data and intelligence being created. The results of our new M4.0 Data survey in this issue of the Journal reveal that many of the most important challenges for the industry go far beyond physically collecting, storing, and using all that data.

Successful data mastery also requires changes in corporate strategies to be able to identify the right data, to verify its accuracy, to analyse it, to share it, and to act on it swiftly to make a proactive difference to a company’s performance.

As more manufacturing companies embrace advanced analytical technologies and techniques such as artificial intelligence and machine learning systems, the focus of analytical attention is now shifting from the indicative and descriptive, to the predictive, allowing them to plan ahead and prepare for what’s to come more effectively.

This pursuit of predictive insights is perhaps the holy grail of the M4.0 revolution, allowing companies to evaluate, extrapolate, anticipate, and, where necessary, mitigate in ways never possible before.

But this transition comes with its own challenges. Unless the basic data used to prime these new analytical engines is trustworthy, unless the predictive algorithms are properly designed to avoid unintended bias and imbalance, and unless the recipients of the final analysis are prepared to act on the results with confidence, the value of those much-sought after predictive insights to improve business performance will be undermined.

As Nobel prize-winning quantum physicist Niels Bohr noted a century ago, “Prediction is very difficult, especially if it’s about the future.”

The challenge for manufacturing companies in the years ahead will be to make that future a lot easier and a lot better – for everyone. – Paul Tate

POV: Future Factories

Winners are starting to emerge in the global competition to create factories of the future based on fourth industrial revolution technologies and new ways of organizing work and people.

Research conducted by the World Economic Forum in cooperation with McKinsey has identified what the duo calls a “Global Lighthouse Network” of 44 factories around the world that have broken out from the pack to achieve up to 90% increases in productivity, 10-80% reductions in lead times, and 50% improvements in energy efficiency, among other metrics.

What distinguishes the Lighthouse factories, WEF/McKinsey says, is their adoption of technologies such as digitization, automation, advanced analytics, augmented and virtual reality systems, and the Industrial Internet of Things. Perhaps more importantly, though, is that these factories work across four key aspects of the transition to the digital model at once – business processes, management systems, people systems, and the IIoT and data systems.

In other words, they are orchestrating digital change across the dimensions of technology, people, and processes, and, as a result, creating new advantages for themselves.

“It is already clear that a small number of organizations are running away with the first-mover advantage,” WEF/McKinsey says.

Among many interesting aspects of the research is what it says about the state of global manufacturing competition. Of the group of 44, only three Lighthouse factories have been identified in the U.S. They are Zymergen, a biotech firm in Emeryville, CA; Johnson & Johnson Vision; and Fast Radius, an additive manufacturing firm in Chicago whose president, Lou Rassey, spoke at last year’s Manufacturing Leadership Summit. Most of the other Lighthouses are in Asia and Europe. The group of 44 is also diverse; some are small businesses and some are the world’s largest industrial companies.

The big issue that many non-Lighthouse factories face, says WEF/McKinsey, is that they “languish in pilot purgatory” with digital projects that they have been unable to scale. And one of the reasons for this is a shortage of people with 4.0 capabilities.

But perhaps the most significant issue is leadership. “Leadership in digital manufacturing is open to anyone willing to commit to it,” says WEF/McKinsey.

That’s a clarion call to pick up the pace of digital transformation. Continued global competitiveness demands it. M