[pullquote] Automation and other technology suppliers often scramble to react to, deliver on and get in front of key technology trends in an effort to provide the toolsets their customers need to stay competitive. Often, suppliers use many of those technologies for that same purpose. ARC Advisory Group had had numerous discussions with technology suppliers about their digital transformation platforms, their apps, the connectivity and the focus on solutions to customer problems. Many talk about “eating their own dog food” (using their own products) to validate their offerings. This is all well and good, but the technology is secondary.
Companies are finally beginning to understand they need to focus on their most pressing business problems, instead of just buying the newest “shiny” technology. Industry leaders realize that transformation is an exercise in gaining the biggest competitive advantage they can achieve. Those leaders understand that technology isn’t going to provide that edge on its own. Technology is just an enabler.
Convergence Of Tech
Digital technology began with small isolated flashes of brilliance. Both its scope and associated capability were small. Industry witnessed the maturing of digital technologies over the last 50 years. Generally, the scope increased as computing power increased, memory became more capable and compact, and networking technology became faster and more robust. More importantly, we watched $5,000 10 MB hard drives become $50 1 TB storage devices. That is, cost dropped inversely. But computing technology is only one part of the equation for successful competitiveness.
In 1973, the Defense Advanced Research Projects Agency (DARPA) initiated a research program to investigate techniques and technologies for interlinking packet networks of various kinds. The objective was to develop communication protocols that would allow networked computers to communicate transparently across multiple, linked-packet networks. Initially called the Internetting project, the system of networks that emerged from the research became known as the “internet.” The system of protocols developed over the course of this research effort became known as the TCP/IP Protocol Suite. The internet has become ubiquitous, connecting mobile phones, tablets, mainframes and personal computers. Today, it has reached into washing machines, refrigerators, traffic lights and even individual sensors.
The combination of digital computing technology and the internet led to the advent of cloud computing. Cloud computing makes incredibly powerful computing resources available quickly and ubiquitously to end users while minimizing the cost and management complexity associated with traditional software architectures. This allows software-based solutions to provide new levels of geographic reach, flexibility and number-crunching prowess. Analytics that existed only in the academic libraries of theses came to life and became practical for business use with the availability of the massive computational capabilities and available the data storage.
Hype and Scramble
In the mid-2000s, ARC Advisory Group noticed this intersection of technology and began writing about the Industrial Internet of Things (IIoT). This branch of the Internet of Things (IoT) connects the entire gamut, from sensors, smartphones and smart machines and appliances to compressors and airplanes. Not surprisingly the industrial media became awash with talk of IoT. Organizations formed. Standards were pursued. The European Union adopted Industrie 4.0 to codify, nurture, and fund IIoT.
Over time, this has morphed (more or less) into digital transformation. Business journals began to hype up the need. Even the C-Suite woke up to the buzz. Suddenly, directives were coming down from “on high” to “do something.” New positions were created to head up digital transformation initiatives. Pilot programs were initiated, throwing technology at specific challenges. Suppliers scrambled to fill the technology need for their customers as well as themselves. Startups also popped up to fill the niche.
But they hit a wall. Technology is the easy part. The technology doesn’t make a company competitive, in and of itself. Not anymore (if ever). In digital economies, the strategic, timely, and proper use of technology and data makes a company competitive. Everyone has access to the technology now. In short, digitalization alone doesn’t transform an organization, people do.
The “New” Competitive Edge
Every company has access to the same technologies, with limits only driven by the size of a company’s budget. This has been true for a while. Some have access to more resources to implement technology faster or wider, but this isn’t where the differentiation comes. ARC has witnessed plenty of technology that’s been implemented, but not fully utilized because the company culture didn’t accept the change.
The “new” competitive edge is people-centric. Competitive companies are companies with an agile culture of innovation. As solutions are rolled out, the company culture is poised to accept these, providing early buy-in from all affected stakeholders. Employees are informed as part of the process and understand their roles in the change and the benefits for themselves and the company. Change is expected and managed. Organizational change management is part of the cultural fabric.
Follow the Culture
Manufacturing companies and software companies traditionally have different cultures. Agile, innovative workplace cultures are not associated with heavy industry. It is associated with tech companies: Amazon, Google, Microsoft, and the like. Manufacturing leaders need to study these cultures. Companies with better knowledge, proper skillsets, and a better transformative culture will outperform their competitors, regardless of their products.
The adage that “culture eats strategy for breakfast” is true. Having a corporate culture that embraces change allows the company to quickly realize the benefits of whatever technology or technologies are being deployed and allows it to maintain that benefit. This doesn’t occur naturally; it must be cultivated and nurtured.
