The mechanisation of the British textile industry at the end of the 18th century marked the beginning of the first industrial revolution. Henry Ford continued over a century later, mastering the moving assembly line and piloting us into the age of mass production.
While we have entered the third industrial revolution, focusing on digital manufacturing with technologies such as 3D printing, we are already paving the way for the fourth industrial revolution in which a giant leap in manufacturing innovation will be taken with smart technologies and devices taking control of machines, while communicating with each other. We are nearing a tipping point of a technological revolution that will fundamentally change the way we work and live unlike humanity has ever experienced before, in a combination of digital, material and biological domains. Staffing agencies for robots are being founded, materials are ‘telling’ machines how they should be processed and factories are running automatically on big data analysis, without any human intervention; the industry is readying itself for ‘4.0’.
Winston Churchill: “To improve is to change, so to be perfect is to have changed often”.
Even the best-connected and most well-informed leaders indicate that the speed of both innovation and disruption are tough to follow or anticipate, and constantly cause surprises. These challenges arise as existing industry value chains are significantly disrupted. At the same time, innovative competition is flourishing thanks to access to all necessary digital platforms operating the business, and to the major shifts in consumption as a result of growing consumer engagement, behaviour and transparency. New York Times journalist James Surowiecki once said “The desire for reinvention seems to arise most often when companies hear the siren call of synergy and start to expand beyond their core businesses”, which perfectly indicates the opportunities available today provided we can get employees integrated and collaborating on the changes, while highlighting the risk if we cannot.
How to keep on creating and capturing value as an organisation, within the industry 4.0 framework? Some remarkable companies are already working on the transformation of their organisational foundations in order to remain in the ‘paradise’ environment (top right). The leading consumer goods multinational Unilever indicated, just like sports brand Nike, that they will become a ‘software company’, delivering software to their consumers to print their food and shoes at home instead of buying it in a store. While several shipping carriers see 3D printing as a threat, UPS consider it an opportunity and is investing heavily in 3D print plants, shifting its business model from solely moving goods to also producing them on demand. Rolls Royce was already a thought leader in the aircraft engine branch, when they changed their financing model from selling products to leasing them, and now they have partnered up with Microsoft to gather and analyse big data from the 13,000 engines that are used worldwide, making their engines work more efficiently, and giving the company another revenue stream.
How to keep up with the rapidly moving framework?
Four design principles identify and implement the industry 4.0 scenarios, according to Hermann, Pentek & Otto, who performed extensive research on this particular topic:
- Interoperability: The ability of machines, devices, sensors, and people to connect and communicate with each other via the Internet of Things (IoT) or the Internet of People (IoP).
- Information transparency: The ability of information systems to create a virtual copy of the physical world by enriching digital plant models with sensor data. This requires the aggregation of raw sensor data to higher-value context information.
- Technical assistance: Firstly, the ability of assistance systems to support humans by aggregating and visualising information comprehensibly for making informed decisions and solving urgent problems on short notice. Secondly, the ability of cyber physical systems to physically support humans by conducting a range of tasks that are unpleasant, exhausting, or unsafe for their human co-workers.
- Decentralised decisions: The ability of cyber physical systems to make decisions on their own and to perform their tasks as autonomously as possible. Only in the case of exceptions, interferences, or conflicting goals, are tasks delegated to a higher level.
New and different value propositions are needed to solve today’s and tomorrow’s needs, for customers, and through them for society. The challenge for any organisation is to keep breaking through the ceiling of current performance towards new levels of value creation. This requires an internal dynamic and leadership that challenges the patterns that brought success in the past, to realise new and better ways to create value, and to capture it. More of the same is unlikely to bring us to the next level.
The fourth industrial revolution has a great potential to keep connecting billions more people to the web, to radically improve the efficiency of organisations, and to help revitalise the natural environment through better asset management, possibly even undoing all the impairment previous industrial revolutions have caused.
Consumer behaviour is changing at a faster pace than many organisations can deal with. Consistently, across the board, old-fashioned firms in all sectors are failing to bring what their customers want and expect in the digital age. For those that fail to keep up the impact can be significant. Is your organisation already thinking digitally from the top down?