Innovation culture and organizational maturity the bedrock of digital transformation

REPRESENTING a wave of converging technologies, big data, machine-to-machine communication, smarter robots, 3-D printing, and mobility are all gaining global traction as manufacturing organizations seek to harness the benefits of a modern value chain.

But to truly benefit from the opportunities offered by digital technologies, companies first need to develop an innovation culture that promotes continuous improvement in all functions.

The new technologies emerging from digital disruption present manufacturers with great opportunities, but also with great challenges. While the shift to digital brought an abundance of new tools to create smarter and leaner factories, manufacturing companies have also become more complex and globally dispersed. These global economic forces accelerate the need for increased innovation, collaboration and visibility. As a result, companies must continuously question existing processes and adjust them where necessary.

Operational excellence as a driver for digital transformation

Pursuing a digital transformation strategy without focusing on operational excellence is a futile exercise just as much as pursuing operational excellence today without considering the need to leverage digital transformation. For instance, the convergence of applications in smartphones is similar to the convergence in manufacturing equipment technology.

A good example is in the beverage industry where bottling plants traditionally used different machines to rinse, fill, and cap a bottle. Some time ago, these procedures were replaced by a so-called “superblock” – a single, integrated machine that could perform all three functions up to 50% faster.

Although globalization, new technology and customer demand continually shape the world of work, some principles will always remain. A simple example is the oil levels in a motor vehicle. In the past, we used to have it checked when going to the petrol station, an action which has since been replaced by sophisticated detection sensors that warn us when the level is low. However, the fact that the vehicle cannot run without oil remains, so technology does not replace the need for awareness. Of course, the adoption of electric vehicles will soon impact this too.

While technology will undeniably simplify issues, it will also create a level of abstraction that carries a high risk and waste level. Monitoring screens used in control rooms, for instance, can discourage operators from also checking the actual equipment performing the task. They get lulled into a false sense of security that “everything is fine” even if, for example, sensors are defective. Faulty valves could cause product, energy, or water “flushing to drain”, resulting in huge wastage and costs.

Greater responsiveness needed to achieve smart business objectives

To develop and manufacture an increasing number of products that meet rapidly changing demands, manufacturing companies must become more responsive to changing market and operational conditions, without sacrificing overall efficiency. They must also become more flexible and collaborative.

Business leaders recognize that to achieve these objectives and become globally competitive, their organizations need to do a better job at getting the right information to the right people at the right time, and in an integrated format. Only then can they make quick, smart business decisions.

However, only organizations with a sufficiently high level of operational excellence – achieved through an incremental, maturity-based approach – will genuinely gain from the benefits of new technology in the digital age. Such an approach prepares the organization to adopt and adapt new technologies at the correct pace by ensuring the right foundations are in place for sites and production units.

The 2020 Gartner Hype Cycle for Manufacturing Operations Strategy draws specific attention to this point. The report recommends the use of a “stage-based maturity approach to define the iterative progress and stage-based achievements to phase the deployment of your corporate production system.”

Therefore, to harness the full benefit of a digital value chain, organizations must match their digital transformation plans with their state of operational maturity. Such an approach is critical for organizations to progress to next-generation production systems, or digital operating systems as they are currently known.

Cultural convergence essential to break down barriers

While technology and network convergence have gained a foothold with relative ease in many manufacturing companies, organizational and cultural convergence often proves to be the bigger test. This is a critical convergence since it breaks down barriers and eliminates silos of information and systems. Without it, an organization cannot align its business objectives with technology, nor can it become more efficient and responsive.

It is still the interaction of people-process-technology that yield the benefit, so automation or technology alone will not necessarily result in competitive capability, but rather its creative use and adaptation. As technology becomes more sophisticated, the fundamental people engagement practices such as teamwork, leadership and goal alignment play an increasingly important role.

Reaping the full benefits of digital technologies requires a cultural shift to ensure all employees know and support the transformation. Then, with the right technology in place, leadership can redesign processes to accelerate maturity development in organizations. However, as with childhood development, organizations can speed up the pace, but they cannot skip the growth phases on their way to maturity.

Download the how-to guide: Managing change across the organisation to find out more about successfully leading and managing a digital transformation in your organisation.

By Dr Dino Petrarolo, Senior Vice President, CCi