When Heinz Gassner was a student in the Eighties, he did a work placement at a 100-year-old company manufacturing mechanical weighing scales. It was a business viewed as a stalwart, and he worked in a small department tasked with designing electronics, as the firm woke up to electronics and IT automation entering manufacturing.
Interviewee: Heinz Gassner - Founding Director, Smart Industry Forum
Gassner says he knew then that the business would not survive what we now know was the third industrial revolution, because the management was not convinced about electronics ever having an impact; within a decade, it was gone.
That made a big impression, and ever since, Gassner has been fascinated by the impact of technological change on industrial companies. As we now move into a fourth industrial revolution, he is working to help manufacturers survive and gaining from change. In 2014, Gassner launched the Smart Industry Forum, to inspire, inform and assist decision-makers in manufacturing coming to terms with technological change. In his day job, he will shortly take up a new role as Vice President, Digital Innovation and Automation at Sidel, a global business headquartered in Italy and an important part of the Tetra Laval Group.
The Smart Industry Forum says on its website, “The fourth industrial revolution is triggered by technology, but what it actually will change is our business models, our organisations, and our way of working and living.” Gassner explains: “When we were approaching companies we found decision-makers who had very little idea about what’s going on, making decisions based on their experience from the Eighties and Nineties. We decided we needed to do something, to help the people responsible for digital transformation share experiments and ideas, and work together.”
In 2016 Klaus Schwab from the World Economic Forum published his book called The Fourth Industrial Revolution, about four years after the term was first curbed. Gassner was alive to the issue early, and says he was immediately reminded of the experience of that mechanical weighing scales business: “Our mission is to translate complicated technology trends to management so that corporate leadership can make the right decisions,” he says. “There is still a grand canyon between the new technologies emerging and what the boardrooms actually feel secure about.”
Leaving aside the agile start-ups driving technological change, he says one of the biggest challenges for management is to get on top of what’s going on: “Management needs to own this,” says Gassner. “They need to drive this topic – it can’t be someone in R&D or someone in the innovation department, it has to be dealt with by top management.”
Until recently, he says the majority of leaders in traditional manufacturing thought the fourth industrial revolution was just another marketing fad, and that it would go away. In the last year or so, there is some panic and a lot of nervousness about its potential for transformation. Some disruptive technologies are already visible, he says, like new data analytics-based services or manufacturing technologies like 3D-printing, but there are plenty more around the corner.
After starting out with a thorough Digital Maturity Assessment, Gassner sets out seven best practice tips for managers dealing with the challenge: The first is to make sure you have digital transformation competence in the leadership team. He also advocates implementing a cross-functional approach; having the courage to question everything; establishing a masterplan; scouting for quick wins; and driving cultural change within the business. Finally, it is important to structure any transformation into small and manageable steps.
He says: “Today, this is 80% a people challenge, and only 20% about the actual technology. The technology is out there; it’s about getting your people on board.”
A key challenge is to form agile and interdisciplinary teams, including stakeholders from the main functional divisions of the business. “Of course, people need to know their disciplines,” he says, “but much more than in the past, they also need to be able to talk to other disciplines. Most companies are rapidly growing internationally, and being able to form globally-functioning teams requires different skills to those that were needed in the past. It’s about a readiness to be in continuous professional development too, because it’s a permanent challenge to requalify and study.”
Some companies are already re-engineering their key skills profiles and looking to close gaps, perhaps with cooperative skills and language training. Others are establishing permanent professional questioning processes, or quarterly challenge meetings, that force the business to keep looking at what might be around the corner.
Gassner says: “In the last 17 years I have worked a lot in Northern Europe, and the culture there is for companies to question themselves a lot. That doesn’t happen elsewhere so systematically and openly, and that is my key piece of advice. What happened yesterday is yesterday’s game; you need to be looking forward and questioning whether what you are doing now is still going to be successful in five years’ time.”
He says there is substantial change coming down the line – if cars can be autonomous and shared, there are estimates that say only a fifth of today’s cars will be needed. As we move from a capital expenditure to operating expenditure models and as we utilize predictive maintenance technologies, the traditionally high income from selling spare parts will decline drastically. What is nice for the consumers might have huge implications for auto and machine manufacturers with all the many small and medium-sized firms that make up their supply chains.
“That’s why companies need to be experimenting,” he says, “and asking what business model are their customers going to be willing to support in the future. Nobody has the answer to that at the moment, but there are front-runners with quite successful experiments underway, and they will be the leaders. A lot of today’s unsinkable ships will sink, but other beautiful things will pop up.”
He sees enormous room for optimism, rather than fear. While 30% of jobs may disappear to be replaced by robots, algorithms and artificial intelligence, those will be the mechanical, repetitive jobs; the opportunities for creative people to drive innovation will only increase.
“In principle, I’m optimistic,” says Gassner. “I’m thrilled by what’s going on, but not every company will benefit and not all will survive. Businesses need to be prepared for huge change.”
To avoid being the next mechanical weighing scales story, managers need to get up to speed, and bring their people with them.