Building a Successful Transformation Strategy

Digital technology plays an important role in any modern manufacturing environment. It’s how we operate, connect, visualise and measure to make sure our production facilities are functioning as efficiently, safely and cost-effectively as possible.

The temptation for industrial leaders is to look at digital transformation purely as a technology matter – one that can be addressed and solved by simply spending more on all the latest hardware devices and software solutions available in the market. Time and time again, this approach has proven ineffectual and short sighted. I myself have seen evidence of many sporadic, splintered and siloed transformation projects that have exhausted innovation budgets without making a dent in core business imperatives.

Successful digital transformation must be seen through a business lens. Without the business objectives factored into transformation projects from the very outset, the odds of yielding success are limited. 

Drivers of Digital Change

There are many factors driving the desire to digitally transform. Today’s manufacturing leaders are becoming increasingly sensitive to changes in end-user demand, regardless of whether or not their business interfaces with those users directly. As a result, manufacturers are seeking the agility to react faster to insight and feedback received from the field. To do this, they need to close the feedback loop so that this end-user-focus is quickly fed back into the production process in order to make necessary adjustments.

The second notable driver has been the desire to experiment with innovation. With the availability of new capabilities, such as machine learning and augmented reality,  manufacturers want the flexibility to be able to test and – if evidently valuable – seamlessly integrate the technologies that will allow them to produce new products and services.

Further, manufacturers are seeing value in being able to use digital technologies as a means of differentiation. Conventional boundaries between market segments have lowered, if not evaporated completely, meaning that incumbents need to consider the risk of disruption. Smarter tooling enables a degree of customisation that’s never previously been possible.

The final major factor has been the need to adapt to exogenous market conditions. This past year in particular has underlined the importance of having the ability to make rapid decisions and substantive changes – at both a technological and operational level – in response to environmental and market factors, such as the pandemic.

Addressing Strategic Challenges

With the universal nature of these driving factors, manufacturing leaders understand the importance of getting ahead of the game. What, then, is slowing progress in implementing digital change?

The challenges facing leaders typically come long before the choice of which specific technologies to implement, and are usually the result of gaps in the company’s strategy. To make impactful and holistic change to manufacturing operations, these challenges need to be tackled from the outset. 

From my observations, there are multiple reasons why a transformation programme may stall.

• Unclear business objectives

Transformation needs direction. Without clearly defined goals, the risk of drift becomes too great. While those on the factory floor may be forgiven for any blind-spots on the corporate goals, studies have shown that even business leadership is often none-the-wiser either. According to MIT Sloan, only 28% of executives and middle managers responsible for executing strategy could list three of their company’s strategic priorities. To increase the odds of success, start from a position where the business value and objectives are clear to all involved.

• Misguided focus

Organisations have conventionally operated on a domain-specific basis, with each department holding a fixed focus and set of responsibilities. As a result, various teams and functions are often closed off from discussions around investing in and modernising IT and OT systems. Digital transformation is, however, cross-functional and multi-disciplinary in nature. Everything from product engineering through to distribution and supply chain needs to be connected, at both a strategic level and through a seamless digital thread. Where, then, the considerations around digital investment are siloed within the IT department, it’s unlikely that transformation will be achieved in an all-encompassing way.