Just as steam power fuelled the first industrial revolution, electricity the second and computers the third, the Internet of Things (IoT) will drive and enable the fourth: Industry 4.0. The smart factories of Industry 4.0 will boost production and revenues. They will also present huge challenges to those who manage them. Industrial companies deploying Industrial IoT technology may have the potential to reinvent their business, but it’s easier said than done.

The term Industry 4.0 refers to the combination of several major innovations in digital technology, all coming to maturity right now, poised to transform the engineering, technology and manufacturing sectors.

These digital technologies include the following: 

• Simulation 
• Horizontal and vertical system integration 
• Autonomous Robots
• Additive Manufacturing 
• The Cloud
• The Industrial Internet of Things
• Big Data and Analytics
• Cybersecurity
• Augmented reality 

The automation of work and the digital disruption of business models place a premium on leaders who can create a vision of change and frame it positively. Industrial business leaders believe they now have the ability to combine these tenets to have a revolutionary effect on engineering, technology, and manufacturing businesses.

The digital era is expected to affect the roles and competencies of executives and senior managers. A study by the Institute for Leadership Culture in the Digital Age showed that most business leaders expect teamwork to become more important. Furthermore, customer ideas will play a more important role in product development, according to 80% of the managers surveyed, while 79% foresee that partner networks will become increasingly important. We asked Redline Executive Director Andrew Raymond how business leaders should prepare their teams for the next industrial revolution.

Focus on people and digital transformation

“The biggest challenge of industrial leaders isn’t technology - it is the people. While digital technologies are rapidly becoming a commodity, success largely depends on an organisation’s Digital IQ, especially how well its digital leaders like the CEO, CTO, or CIO define, lead, and communicate the transformation,” says Andrew. “It’s also dependent upon the digital qualifications of the employees who need to roll out digital processes and services. Radical disruption isn’t always comfortable for the people who make it happen, so change management will also be critical. And with data analytics becoming a core capability for every engineering or manufacturing company, enhancing skills and organisational structures will be critical.”

Focus on people and culture to drive transformation

Andrew continues: “A company and its leaders will need to make sure staff understand how the company is changing and how they can be a part of it. From our discussions with Redline Executive’s engineering and manufacturing clients, the biggest challenges centre around internal issues such as culture, organisation, leadership and skills rather than external issues such as whether the right standards, infrastructure and intellectual property protection are in place or whether concerns about data security or privacy concerns can be overcome.”

Forging partner networks

Forging partner networks creates one of the key challenges for company executives: to take full advantage of the possibilities of smart factories, businesses will have to collaborate in information-sharing clusters.

Extended enterprise

Enabling the ‘extended enterprise’ of customers and partners to exchange information for greater collaboration will undoubtedly involve pain, but it is essential to delivering the vision of the next industrial revolution: Industry 4.0.

The future of a company will depend on constant wide scale adaptation of its digital infrastructure. In some cases, companies will even need to disrupt their own business model, before a competitor does it for them. To address all the challenges that lie ahead, the CEO and the CFO will need to work closely together with the CIO to develop the business strategy.

As your company becomes active in Industry 4.0, you’ll find the benefits go far beyond extending your digital reach or selling new types of products and services. It will establish your company, your employees, and your entire ecosystem of suppliers, partners, distributors, and customers as a fully interconnected, integrated digital network, linked to other networks around the world.

To have a confidential discussion, please call Andy Raymond – Head of Executive Search on +44 (0)1582 878907 or send an email to ARaymond@RedlineExecutive.com