Posted on 10/4/2017

Four Steps to Industry 4.0 Excellence

Pavan Muzumdar

Industry 4.0 is one of those terms that appears to have as many definitions as there are experts. First coined by the German government with the intent to further the digitization of manufacturing, the term has captured the imagination of technologists, manufacturers, consultants, academics, and policy makers.

The 4.0 stands for the fourth industrial revolution. Since the late eighteenth century, we have seen manufacturing progress from the use of manual and animal muscle power to the smart factories of today. Each industrial revolution has a seminal invention that is firmly ensconced in the inflection point leading to the next revolution: the steam engine, electricity and computers.

The invention this time is a bit fuzzy, yet probably the most significant, and that is artificial intelligence (AI) becoming a reality. The concepts of AI and its techniques have been discussed in academic circles and labs for decades. However, it is only in the early 21st century that we have had access to enough inexpensive computing power for AI to have commercially viable applications.

At Automation Alley, we dissect Industry 4.0 into eight sectors. Four of these are information or digital technologies: modeling, simulation, and visualization; big data and artificial intelligence; cloud computing; and cybersecurity. The other four are physical technologies: additive manufacturing, which includes 3D printing; the Industrial Internet of Things; advanced materials; and robotics.

Together, these eight technology spaces are bringing the dynamics of information technology into the world of making. Industry 4.0 has the promise of letting us manufacture at the speed of information. In addition to providing us with new capabilities to conceive and create the products of the future, the fundamental change driven by these technologies will be the human impact and it is very difficult to know ahead of time how it will unfold. For example, in 1999 during the early days of e-commerce, analysts were predicting the demise of traditional retailing before the first half of the first decade of the new millennium. It is only today that we are seeing real pains in traditional retailing. And the story hasn’t played out yet. Amazon, the leader of the pack in e-commerce, recently announced an intent to purchase Whole Foods, a very traditional retailer.

Juxtapose that with predictions made during the turn of the century that self-driving cars wouldn’t be possible for decades. Yet, Google’s first self-driving prototype was developed in 2007. To be sure, the development of reliable, safe and completely independent self-driving vehicles will most likely have a very long tail, well in to the future. However, we are already seeing early versions of this technology in use today.

The point is, trying to predict where Industry 4.0 will lead us is probably a futile effort. The risk of making a catastrophic bet is too high. This is not a linear dynamic. The other observation is that in general it appears that isolated technology applications get adopted rapidly (self-driving vehicles), while business models change slowly (e-commerce vs. retail).

With that in mind, Automation Alley has identified four steps that businesses need to internalize and organize around, in order to manage changes as they navigate the complexities of Industry 4.0:

1. Define an overarching purpose and vision for your company

The purpose of any organization must be defined within the context of the human impact it has. For example, Kodak was the leader in photographic film technology and its research labs invented the digital camera. However, it never commercialized this technology for fear of cannibalizing the film business and now is a fraction of the size it once used to be. Perhaps if it had seen itself as a company that helped its customers capture memories, as opposed to a film maker, things might have been different.

Automakers appear to be heeding this advice and many see themselves as mobility providers. And even then, there isn’t consensus. Sergio Marchionne, the CEO of FCA recently said, “Contrary to what some of my colleagues believe, we are not in the mobility business…we are only building the tools that allow people to be mobile.” The takeaway is that whatever purpose you come up with, ensure that it is centered around the human context.

2. Create a learning culture

Look back at all the technological predictions over the last fifty years, and the pattern is clear. Many predictions turned out to be duds, and some of the technologies that we take for granted today snuck up on us and experts never saw them coming. Industry 4.0 is no different. There will be a lot of hype, and there will also be unanticipated disruption. The only way to get around this is to have a learning culture that is comfortable with the idea of throwing out old assumptions in light of new information.

If you’re in Southeast Michigan, attend Automation Alley’s Tech Takeovers, held every Wednesday at the Automation Alley offices in Troy, Mich. Free to members and at a nominal fee for future members, these nuggets of information will go a long way in making your company a learning organization. For a more immersive experience, attend Automation Alley’s Industry 4.0 conference, Integr8, and learn from your peers and experts. Both are inexpensive ways to get educated on the opportunities and challenges posed by Industry 4.0.

3. Take option like risks

The term comes from stock options where for a fraction of the price of a stock, you can purchase the right, but not have the obligation to purchase a stock at a set price. Options can provide a temporary opportunity to gain from a stock without having to put up all the money. Options are generally inexpensive and hence limited in risk. Buying a lottery ticket is like taking an option-like risk. If you don’t win anything, you’re out the price of the ticket, which hopefully won’t set you back too much. But if you win, the windfall could be many times the price of the ticket.

Industry 4.0 technologies have the potential to provide huge upside to a company if used properly. Knowing how to get there might mean having to do controlled experiments to determine the best methods, systems and processes to realize these gains. Each of these controlled experiments should be set up as an option-like risk. The experiment itself should be inexpensive and if it doesn’t work, should result in learning for the next experiment, but not cause any harm. If it succeeds, then it can provide the insight for the next experiment or the path to commercial success.

4. Roll out and collect data

A full-scale Industry 4.0 transformation within your organization will involve major disruption and radical changes ahead, so start small and begin by implementing a pilot project within a segment of your business. From there, you can scale up deployment if your initial test run goes well.

Learning to get value out of data will be the key to the success of your digital transformation. This is the foundation of Industry 4.0. Once you've rolled out new technologies across your business, the data you generate, analyze and communicate will help you to increase revenue, decrease costs and think more strategically. And when you do that, your company will be ready for Industry 4.0 and whatever comes after that.

About the Author

Pavan Muzumdar | Automation Alley

Pavan Muzumdar is Automation Alley’s chief operating officer. In this role, Muzumdar is responsible for facilitating the smooth functioning of Automation Alley, enabling the organization to execute its strategic goals with excellence and realize its vision. Muzumdar has an extensive background in organizational management and is the creator of the organizational tool icube™, a collection of simple, effective techniques and disciplines that help companies run smoothly. In addition to serving as Automation Alley’s COO, Muzumdar is the lead facilitator of the icube™ methodology in the organization’s successful entrepreneurship program, the Automation Alley 7Cs™


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