Executive Dialogue: Leading at AI Speed

Alan Machuga of Rheem explains why the future of AI isn’t content creation – it’s better business decisions.

Penelope Brown: Hello, everyone, and welcome to today’s edition of Executive Dialogue from the Manufacturing Leadership Council. Today I am super excited to be talking to Alan Machuga, who is the Executive Vice President of Digital Strategy and AI Transformation at Reem Manufacturing, and also the 2026 Manufacturing Leader of the Year from the Manufacturing Leadership Awards. Alan, how are you today?

Alan Machuga: Penelope, I’m doing great. Yourself?

PB: I’m doing really well, and super excited to talk to you today. One other thing I forgot to mention is that you will also be one of our featured speakers at the Future of Manufacturing event this December, and we’ll talk about that a little bit.

But the first question I want to ask you, we’ve been talking a lot around the MLC for about the last year about what it means to be a leader in the digital era, and I really feel like you would have a great expert take on this, since you are the reigning Manufacturing Leader of the Year.

So, what do you think is important or has changed about leadership in recent times in this digital era versus the leadership elements or skills that you think are timeless for any era?

AM: Yeah, listen, I think we’re at an interesting point. It’s interesting that, if you look back the past 40 years, digital leadership’s really been about scaling up. It’s really been about, if I don’t have a certain capability, how can I get that capability put in my business, typically around my business processes.

This period we’re in now with AI is very interesting. It’s really about how do you think about scaling intelligence, right? And it’s going to come at us very rapidly.

What we’ve seen in the past 40 years is going to get shrunk down to about 10 years with how quickly the innovation cycles are moving now in this AI era. And I think it’s going to prove to be very challenging for C-suite teams, because they’ve been used to being able to make decisions in a very methodical way, maybe getting near-complete information.

But what’s going to happen in this era that we’re moving into, the cycles are going to be quicker, and you’re not going to know if you’re picking right.

We’ve been in situations now where decisions we made four months ago are almost null and void with how quickly the innovators in the industry are moving, the supply chain is moving in terms of IT tech, and it’s really putting a pressure on teams right now.

PB: When you think about it, what sort of leadership skills do you think are still relevant from that 40 years ago that you’re still carrying through to today?

AM: Well, I think leadership teams are always in search of value. How can they create value for their constituents? Whether it’s an owner of a company, if it’s privately held like us, or whether it’s for shareholders, you’re always trying to think about, “how can we create value?”

So, things around having clear strategies, defining objectives against those strategies, pacing those objectives out over a roadmap that have you moving towards that strategy, all of those things are important.

Listening to customers, listening to your employees, building trust amongst those constituencies, and quite frankly just remaining curious and continuing to learn. Those things, I think are steadfast with wherever you are.

PB: So, just looking at Rheem Manufacturing specifically, they’re a 100-year-old company, really well-known brand, been around for a long time, but, obviously, likely has some sort of legacy approach to business as well, which is true of so many companies that have been around for a long time. But you’ve successfully led them to become a company that is really positioned as a digitally driven enterprise.

So, specific to a company of this age and reputation and so forth, how did you approach creating a digital strategy and a roadmap that could be successful and sustainable.

AM: Yeah, that’s a great, great question. Penelope, I think about this every day, right? Are we doing all the right things? And I’m going to tell you, it’s a continuously learning process.

I arrived to Rheem during COVID. I actually, arrived, at Rheem to take my role in July of 2020, so in the heat of COVID. It took me one year to meet 12 people physically, because of all the rules on travel, and office openings, and all that type of stuff. So, I joined at a very interesting time.

So, we might have approached the process a little differently, but the way that we approached it during that time was as follows.

We started with the business. The business did not have a digital roadmap, it didn’t have a digital strategy, and we started with an outside look-in. What were the experiences that we wanted to give our customers, our channel partners, quite frankly, our employees. And for us to give those experiences, what type of foundation did we need? What type of architecture did we need to build? And it wasn’t just a technology architecture. It was an operating model architecture. How did we need to position our teams—within tech and outside of tech—to be able to create the change that we wanted in the business?

And given that we were 100 years old, given that maybe we were not cutting edge with technology, we went after a lot of areas in parallel: basic infrastructure, network, cyber, compute on one end of the extreme. On the other end of the extreme, we were working on business processes. We were working on data flows across the organization. Again, thinking about how we would change those experiences and create value for those constituents.

And then we added in the fact that regulatory changes in our industry were driving our products actually to be smarter, if you will, more electronics. So, we began to think about what it meant to create digital products and services around our portfolio.

And again, it wasn’t just technological, it was an operating model, transformation that we began to think about in order for this thing to be sustainable.

PB: Well, that feeds perfectly into my next question I had for you. At the MLC, we just introduced a new critical issue around new business model and product innovation, because digital technology has been really an important catalyst for that type of thing for a lot of manufacturers.

So, can you just dive in a little bit more? How have you identified those specific types of service and business offerings that you’ve been able to add to your portfolio? And what advice would you give manufacturers who might be considering that for their own business?

AM: Applying technology, innovating, often starts with a problem, right? So, we identified opportunities, if you will, to create a better experience for our contractors, for example. In our industry, we have a situation where there’s a talent shift occurring in our industry.

Products are becoming more complex. People are leaving the industry from a contractor standpoint. And we were looking for ways where—with the product becoming more complex, with skill sets needing to increase, with maybe less labor—could we create tools, around our product portfolio to use product data to be able to allow our customers to be able to service those products more effectively, diagnose problems, identify the parts needing replacement, what may be the problem with the equipment. And we began to develop mobile apps, as well as dashboards to allow our customers to be able to get visibility into the products.

What’s interesting, because our roadmaps look out over a period of time, we’re positioning for where our products are going to be five years from now.

So, right now, I’d say our ramp is slow, because we’re not shipping that many of these intelligent products. But we’re going to move from hundreds of thousands to millions of these products by the end of the decade. And again, it’s working through that change management, that learning curve as we’re putting things into the marketplace, getting feedback from the customers about what they’re looking for, and positioning us for where, actually, the industry is going.

That’s one aspect of it. Another aspect is, is that we looked at our products and we said, “Hey, where do our products fit in the overall ecosystem of a building or a home? What type of demand do our products put on the grid?”

And we identified opportunities in the energy space, primarily in these virtual power plants. Being able to enable these virtual power plants to be able to manage the demand side, use of energy differently. And we’ve been in the marketplace piloting those types of activities with different VPPs, different DERMS providers, different utilities, again, positioning for the fact that we’re going to have a lot of these intelligent products in the marketplace by the end of the decade.

PB: Right, so definitely the smart products have been a really important feeder into these kinds of endeavors. So, you just mentioned something a minute ago about change management, and something that was mentioned in, specifically in your award nomination was leadership in bringing together a digital service division, which essentially brought together some IT and product engineering to really look at the company’s technology and business units in one place. So, how did you approach the change management aspects for the teams involved in that, and what kind of payoff are you seeing from it?

AM: Change is tough, Penelope. It’s never easy. One hundred-year-old manufacturer. Predominantly, a lot of our products today, they’re not shipping with a lot of electronics or a lot of software in them. They’re “dumb mechanical products,” right? Not requiring this melding, if you will, of mechanical engineers, electrical engineers, computer science or computer engineers to think about what is this new product that you’re going to be shipping out?

And again, we’re positioning for where the regulations are driving us by the end of the decade. So, we started with one roadmap of what the product portfolio is going to look like.

We brought the team together as one team thinking about the fact that not only were we going to have physical products, we were also going to have digital products that were going to be entering the marketplace.

And, our biggest challenge has been, when we started the dialogue back in 2020, 2030 seemed far away. So, people following the thread and keeping with the thread was probably more of a push than a pull from the teams.

But now that we’re sitting here at 2026, and we’re looking at 2030 coming very quickly, the teams are now pulling on each other to make sure that they’re delivering on the vision that we’re putting together.

So, you know, time definitely was a factor. We’ve been talking about smart products and IoT for longer than a decade, but as manufacturers look into what’s happening with their product portfolios, they’re probably all reaching a moment where all this is going to become more real than not, and positioning the teams to be able to think about physical products and digital products moving down the MPI cycle at the same time, getting launched at the same time, and having the infrastructure to support both physical and digital for the customer base is going to be a critical aspect.

PB: So, just one more question before we let you go back to your busy day, but in just a couple of months, we’re really excited to welcome you on stage as keynote speaker for a Future of Manufacturing Project event in Orlando. So, can you give us any sneak peeks into what you’re going to be talking about there?

AM: I can. We’re going to probably draft it right now, I guess, as we talk out loud, because, again, it’s a few months ahead from now.

But one of the things that we’re thinking about and things that we’re dealing with at Rheem [is that] AI is changing the game.

I talked earlier about how quickly this next era is going to be. The AI era is going to be much faster than the “compute era” that we’ve dealt in.

It’s going to be about how do we scale intelligence, to make faster, better, more accurate, decisions. And quite frankly, our industry is complex. There’s no one silver bullet thing. You have to look across all of our value streams to be able to win in the marketplace.

And if you think about where we’ve been with this AI era, we’ve started with, “hey, can AI do something for me?” Right? And we’ve been dealing in this generative AI world, if you will.

Now, where are we? 2026? It’s all about, can I use AI to get my work done? This Agentic era, right?

We’ve been focusing on at Rheem, we’ve been thinking past those two, not that we’re ignoring them, but we’re thinking about where does AI get to be real, and can I use AI to understand the business well enough to support important decisions.

So, we’ve been thinking about “What is the architecture? What is the model?

What is the ontology that connects the business together so that you can create a system that will allow you or support you in making better decisions, in a more rapid scale.

So, think about our end-to-end value streams. Can you connect those in a way where you’ve got an AI system over the top of it, and it’s helping you to reason through the decisions that you need to make in order to increase profitability, increase production, to scale a product line, you know, just go down the list of all the decisions we make as a manufacturer every day.

You know, generative AI has helped us to create, agentic has helped us to get work done. It’s really going to be about this ontology and reasoning to help us understand the business and what’s occurring in the business at a more rapid pace so that we can create value for our customers and our shareholders quicker.

That’s what I’m hoping to be able to talk to the organization about. That’s what I’m hoping to be able to demonstrate, that we’re at the cusp of being able to do this, not only in our industry, but in other industries.

PB: Well, that sounds like a really exciting session, and we’re going to be really excited to see you there in Orlando. So, Alan, thank you so much for your time and sharing your thoughts with us today.

AM: Appreciate it, Penelope. Thank you for the invite.