We set out to find out more about the benefits, risks and common mistakes in implementing digital transformation for manufacturers from a CEO of international companies for many years, Mr. Frank M. Bruns. Here is what we learned:
Aren’t we already digital?
That could certainly be answered simply with “yes”. Our world has become very quickly and steadily more digital in recent years. That’s for sure. In my view, we are currently experiencing a real digitalization surge. However, we should be a bit more careful with the now inflationary term “digital” and above all “digitisation”, as many of us have a different understanding of digitisation. According to the definition, digitisation means the transformation of analogue content or processes into a digital form and mode of operation. Digital technology processes and transmits information.
In my companies I have already dealt with digital change processes in the 80s and 90s of the last century. If I compare the state of affairs at that time with the current state of technology and the ever faster development of our IT landscapes and computer capacities, then we have long been digital. The bottom line is that digitization is not new, but is constantly evolving and in all areas of our lives the advancing digitization is unstoppable.
Nevertheless, we are not aware – especially industrially – of the real potentials including all advantages and disadvantages. There is still a need for educational work.
As CEO, would you say that digitization is really improving efficiency?
It has been proven that not all processes can be digitized in a meaningful way and not every automated process is better than a manual one. In my opinion, digitization should not be introduced as a fashionable approach – for example, because others do it or because it is advertised in the media. In order to maintain or expand competitiveness, the focus is on automating processes, in addition to new products and new business models. Not only in production, but also in administration. Only digitalization enables us to continue to automate on a continuous basis. The potential from and with digitization should thus also lead to sustainable organizational and ergonomic improvements for companies and ultimately to increased value creation.
The so-called fourth industrial revolution, or Industry 4.0, in my view plays a key role in the age of digitization. At the heart of Industry 4.0 is the intelligent product, which contains all the information required for production and is thus able to communicate with machines and planning systems – right up to the autonomous control of production. People, machines and products are directly networked via the Internet. Partly this is still a vision, but partly it is already reality.
I see this approach as a really great opportunity to reposition companies. In particular, to enable a new quality through the digitalization and automation of production and, of course, to significantly improve the cost structure.
Ultimately, digitization also presents us with social, economic, and political challenges. Are these factors holding us back?
There are always opportunities and risks. On the one hand, digitization and increased automation certainly lead to job losses in traditional production. But on the other hand, they also create new jobs that will look different and also have a different content. Here, it is important to further qualify the people who are supposedly losing their jobs in order to meet the new challenges. Here the task of the companies is first and foremost to ensure that the employees who are available for disposition are trained and further educated. Personally, I am convinced that almost all employees can take on tasks from digitization.
We’ve been talking about digitization for several decades now. Why does the implementation in the individual areas sometimes take so long?
It is always difficult to say what the reasons are in individual companies. In my view, there are several hurdles that have to be overcome:
For me, digitisation is a matter for the CEO. The management is responsible for digitization, not the CIO, the IT manager or anyone else. There is a need for appropriate competencies on the executive floor, digital innovators; a new digital culture of “hands on” types, doers and pragmatists at C-level and management level, who understand not only their own business model, but also the business model of the customer and the market, and recognize on which topics the company should focus, which competencies and resources are really needed.
Companies should not just rely on the IT industry or its offerings and fall for well-sounding buzzwords, but should develop their own view on digitization, understand it and anchor it in their corporate strategy. Doing it yourself and not relying on third parties is an important point to be successful. Rather involve third parties as consultants or sparring partners.
In addition, customer focus is the key: Digitization is not just about further optimizing products, but primarily about solving the customer’s problem. It is not the best product that is decisive, but the competent and fast problem-solving service.
All this requires a company to have a clear business model, corporate goals and a holistic business strategy in addition to a vision and a mission. So to speak, a description of the way to reach the goal. A rational view of achievable and realistic potentials is generally essential.
What do you think are the success factors for a digitisation strategy?
Digitalization is not an operational but a strategic task and therefore, as I mentioned, it is a matter for the CEO. The CEO sets the goal and lives digitalization – that is one of the success factors for me. Furthermore, digital transformation requires a new corporate culture. But beware: Nevertheless, a balance between tradition and modernity must be maintained, since the company, for all that digitalization is certainly interesting, must continue to operate profitably for the time being. The new culture requires rethinking, demands new types of management and also requires freedom of thought and action as well as the ability to put aside prejudices and to act in an unbiased interdisciplinary and inter-structural manner. Because the working world will become more and more flexible.
The focus should also no longer be on the product, but on the solution approach for the customer. Of course, you have to continue to optimize your product, but the primary goal is to achieve customer satisfaction and to relieve the customer of the problem. The challenge here lies in integrated service with a very clear focus on sales. Selling products with targeted classic advertising was yesterday, if not the day before yesterday, and today digital service is the main focus. The customer wants to see in real time where his product is. Digital service is already and will be even more the USP of many companies.
Industry 4.0 plays a key role and should be rolled out in such a professional manner that it is communicated in a way that is appropriate for the board of directors. What is Industry 4.0? What do we achieve with it? It is very important not to digitize processes until they are “tidy”.
In my view, digitizing processes that are not running smoothly makes little sense. Then it is important to network the processes internally, to integrate them in the best possible way and to take a holistic view of technology and organization in order to improve continuously. Digitalization must never be considered in isolation.
Last but not least, Lean Management is really the perfect method here to present and implement digital transformation very well and simply.
The most important thing is: digitalization must not become an end in itself, because the goal is still to achieve the highest possible added value for the customer and the company.