In manufacturing’s new digital era, the requirements for leadership are evolving just as rapidly as the technology that is underpinning the change.
Ask any manufacturing professional with a few years (or maybe a few decades) under their career belt: “When you think of the best boss you ever had, what made them great?”
Chances are those answers will be timeless and still consistent with what would make a great boss now: “They treated everyone fairly.” “They helped me understand how to do my job better.” “They were honest and had integrity.” “They were able to bring out the best in everyone.”
While those soft skills are enduring, the requirements of digital manufacturing have added many layers to what’s necessary for good leadership, as many respondents said in the Manufacturing Leadership Council’s new survey on Digital Leadership and Workforce. Understanding the business and its markets are still a must, but now it’s necessary to understand how technology can elevate performance. Strategic thinking is still essential, but that strategy often hinges on a digital transformation roadmap.
On top of it all, there isn’t much precedent – today’s leaders are often writing the playbook as they go. The disruptions of the past several years have also put those leadership skills to the test, as leaders are more likely tasked with managing teams across multiple locations, now including virtual ones. Organizations are shifting and remaking themselves with different structures and fewer siloes. The bottom line: resorting to the way things have always been done is something that just will not do.
What Does Leadership Mean Today?
Most respondents said that digital leadership comes down to three things: promoting and nurturing manufacturing’s innovation and adaptability in strategies and processes (47%); understanding what it means to integrate operational digital technology (55%); and, most importantly, establishing a fact-based, information-driven culture for making decisions (59%) (Chart 1). Boiled down to its basic essence, the vast majority of respondents (87%) agree that digital operations and business models require a different approach and set of skills among leadership (Chart 3).
Leaders might find themselves haggling over the right technologies to deploy and scale across the organization, possibly leading to unconnected systems.
Beyond how leadership is defined, survey respondents noted that there is also a list of new skills that leaders must acquire. At the top of the list is an understanding of the potential of new technologies and the knowledge of how to apply them (56%). But almost nearly as important is being able to act as a technology evangelist for the rest of the organization to guide actions and attitudes – making a digital/data-driven approach engrained within company culture (54%), while also promoting company structures that are more collaborative and less hierarchical (47%) (Chart 2).
The pandemic, supply chain disruptions, and other sources of business upheaval are also creating a lasting impact for leadership, the most significant being adoption of new procedures for remote and virtual work (73%). Somewhat less impactful but still noteworthy is establishing relationships with new partners and suppliers (59%) and creating channels for more regular top-down communication with employees (53%) (Chart 4).
Leadership Preparation and Planning
Many manufacturers find themselves with limited guidance for digital transformation: Which technologies are worth the investment? How is it possible to keep up with the blistering pace of change? Which data sets are most important to collect, and which ones are most relevant for making decisions? It’s no wonder that manufacturers feel a sense of anxiety about the technology and data-driven future of their businesses.
The survey findings show that most feel their leadership team is only somewhat prepared for managing digital transformation (65%), with less than a quarter of respondents saying their executive leadership is very prepared (23%) (Chart 6). The vast majority – nearly 80% – say that this middling level of digital preparedness leaves their company’s future success in a vulnerable position (Chart 7).
For most organizations, digital transformation is a team sport – 38% say that those efforts are a collaborative effort among multiple executives, with far fewer saying it’s the responsibility of a Chief Information Officer (16%), VP/Head of Digital Transformation (13%), or Chief Executive Officer (11%).
While this collaborative approach is understandable because different executives are responsible for different areas of the business and its resulting digital interests, a potential pitfall is that it could also lead to slower response and deployment. Leaders might find themselves haggling over the right technologies to deploy and scale across the organization, possibly leading to unconnected and siloed systems that do not speak to one another, an outcome that manufacturing leaders must avoid if the goal of a digitally connected enterprise is to be realized.
Where Do We Go Now?
Manufacturing leaders have a lot to consider when it comes to making digital investments and getting that ever-important ROI. The top three challenges that respondents said leadership must consider in a digital transformation are developing a digital roadmap (43%); understanding the benefits and risks of allocating resources to digital assets (36%), and a tie between understanding the business case/return on investment and improving value to the customer (32% each) (Chart 10).
When it comes to what are the most important areas of technology for a manufacturing leader to know, survey respondents say it’s understanding the data, and, even more importantly, keeping it secure. Advanced data analytics ranked high on the areas where knowledge and expertise should be emphasized (79%), with cybersecurity ranked slightly higher (82%) (Chart 9). Digital threads and AI were ranked as areas where leaders should place a moderate level of emphasis, at 61% and 57%, respectively. Social media and new Metaverse technologies placed on the lowest end of the technology importance scale.
The most important areas of technology for leaders to know are understanding the data, and even more importantly, keeping it secure.
But just as important or perhaps even more so will be developing future digital leaders and bringing on the right transformational workforce. Most survey respondents believe that their next generation of leaders will be internally developed (51%) (Chart 12). At the same time, 64% of respondents said that their company has no formal training plan to educate workers and leadership on digital transformation (Chart 14). Realizing the goal of developing next generation leaders internally will obviously require closing the training gap.
The Future View
The skills and requirements for manufacturing leadership are evolving almost as rapidly as the technologies that are emerging on the factory floor. As multifront disruptions, changing customer requirements, and ever-changing products and markets require manufacturers to respond with agility, those efforts must be led by those who are ready and willing to take on the task.
Technology is bringing to reality possibilities that were once the fancy of imagination, and ideas that were once insurmountable are now coming to life. It is an exciting time, indeed, but choices can become more complicated when there are so many of them to make. Possibilities may be expanding more than ever before, but to meet its full potential, leadership in this new world will need to be as transformative as the technology underpinning the digital era. M
Part 1: THE MEANING OF DIGITAL LEADERSHIP
1. Understanding Technology, Innovation, Digital Ecosystem are Key
Q: Which statements best describe what leadership means in the digital transformation era? (Rank top 3)
2 Building Digital Acumen, Cultures is Necessary
Q: Which new leadership approaches and skills do you feel will be most important for the digital transformation era? (Rank top 3)
3 Skills Requirements Are Substantially Different
Q: Do you agree or disagree with this statement: “The emergence of digitally driven operations and business models will require a substantially different approach and set of skills on the part of manufacturing company leadership.” (Select one)
4 Remote Work, Cybersecurity Influence Leadership Approach
Q: What impact has the pandemic and other recent business disruptions had on your leadership approaches to managing your manufacturing enterprise? (Rank by degree of impact)
Part 2: LEADERSHIP AND DIGITAL TRANSFORMATION
5 The Biggest Question: What Has the Most Value?
Q: What’s the most important thing your company’s executive management team wants to know about digital transformation? (Select one)
6 Most Leadership Teams Only Somewhat Prepared for Change
Q: How prepared do you think your company’s executive management team is to lead and manage digital transformation? (Select one
7 Lack of Preparedness Means a Vulnerable Future
Q: How vulnerable will your company’s future success be as a direct result of your company’s current level of preparedness for digital transformation? (Select one)
8 Team Approach to Leading Digital Transformation
Q: Who is leading the charge around your digital transformation efforts in your organization? (Select one)
Part 2: DEVELOPING EXPERTISE
9 Highest Emphasis on Data Analytics, Machine Learning
Q: Looking ahead, what degree of emphasis would you place on the following digital technology areas in terms of developing knowledge and expertise? (Rate each on scale of Low/Medium/High)
10 Leaders Must Understand Benefits, Risks for Resources
Q: In thinking about the requirements and implications of digital transformation, what do you think are the most important challenges for leadership? (Rank top 3)
11 Digital Technology Important to Boosting Efficiencies
Q: Looking ahead, what degree of importance would you assign to the following digital leadership skills and abilities? (Rate each on scale of Low/Medium/High)
Part 4: THE FUTURE ORGANIZATION
12 Most Future Leaders Will Be Homegrown
Q: Where do you see the next generation of leaders coming from for your company? (Select one)
13 Future Digital Roles Are Only Somewhat Understood
Q: How well prepared do you think your company is in understanding the new digital roles and skills that you will need in the next few years? (Select one)
14 Only a Third Have Formal Digital Training Plan
Q: Does your company have a formal training plan to educate workers and leadership around the requirements of digital transformation?
15 Automation Will Have Moderate to Significant Impact
Q: What impact do you think the increasing adoption of automation and advanced digital technologies will have on reducing unfilled job openings in your company in the future? (Select one)
About the author:
Penelope Brown is the Content Director for the Manufacturing Leadership Council.
Survey development was led by Paul Tate, with input from the MLC editorial team and the MLC’s Board of Governors.