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For tomorrow’s manufacturing leaders, technological expertise, agility to thrive in flatter organizations, and the ability to orchestrate across functions won’t be optional—they’ll be the baseline.

 

Good morning, everyone, and welcome to the fifth annual Future of Manufacturing Project event.

In the months preceding the launch of the Project in December of 2021, MLC undertook an in-depth research project to examine the economic, demographic, and technological trends that would shape manufacturing by 2030.

What resulted was a 52-page white paper entitled “The Next Phase of Digital Evolution” that laid out a set of decision points for the manufacturing industry in the years ahead. Whether it was the strategic use of data, the challenge of defining the human-machine relationship in the age of AI, the prospect of autonomous operations, or the emergence of digitally-driven business ecosystems, one imperative stood out across all trends – the importance of enlightened leadership.

Since its formation in 2005, MLC has believed that enlightened leadership is the key to successful digital transformation. MLC’s definition of enlightened leadership has three main components:

• The ability of manufacturing leaders to understand the potential of advanced technologies to reshape how things are made, how people work, and how operations can be made more efficient, productive, and faster.
• The ability of manufacturing leaders to manage and orchestrate change in flatter, more collaborative and cross functional organizational structures characterized by data-driven decision-making processes and information-empowered workers.
• The ability of leaders to adopt and practice a digital first mindset that emphasizes continuous organizational learning, agile response to change, the ability to form and manage multi-constituent networks, and a heightened willingness to take risks.

Of course, all of these digitally inspired skills, competencies, and behaviors need to be layered on a set of basic business competencies that are eternal. Every manufacturing leader needs to understand the business they are in, what their customers want, how to motivate people, and how to make a profit. They need stamina and passion, and even a sense of humor, particularly in times of disruption. They need to inspire, create a culture of trust and fairness, and always wonder what’s next.

All of these basic things are true and will remain so.

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Our task today is to try to understand how digital leadership might change in the years ahead. I pose it this way because this is not a question. It is a certainty. Our jobs are about to become more complicated and challenging, but also more exciting.

To understand what digital leadership will need to look like in the years ahead, we need to take a page from that MLC white paper I mentioned and think anew about the larger trends shaping our world.

Contrary to what some would wish for, the world is getting more interdependent, not less.

In an essay last month entitled “Welcome to Our New Era. What Do We Call It?” New York Times columnist Tom Friedman said that old binary left-right concepts and systems have given way to multiple, interconnected ones.

We had thought of the world as a set of binaries – East/West, Communist/Capitalist, North/South, Aligned/Non-Aligned. Communities had been defined by a single ethnicity or faith and are now what he calls “polyglot, polychromatic, and polyreligious.” National economies were based on bilateral trade of discrete goods between countries with clear borders and self-contained industries.

Today, our economy is “an interdependent web of knowledge, skills, technology, and talent”.

Take, for example, the chip in your smart phone. The essay points out that the chip was “imagined in California, designed using software from the US and Europe, manufactured in Taiwan using Dutch lithography machines and material science innovations from Japan and Silicon Valley, and delivered by a global logistics network”.

A similar wave of interconnectedness and interdependency is playing out in our companies as Manufacturing 4.0 matures.

The years we have spent trying to implement digital manufacturing, and the challenges that have arisen as a result, have shown us that a holistic, cross-functional approach to digital manufacturing that leads to full organizational integration is required to achieve true game-changing results.

As an article in the Harvard Business Review in October, by Herminia Ibara and Michael G. Jacobides, said “Failure to capture value from technology is typically about failing to align technology to the value proposition and missing the opportunity to leverage technology to change the organization.”

Organizational alignment, adapting processes to take advantage of what technology has to offer, and rethinking how people, teams and functional domains work are key orchestration challenges facing manufacturing leadership today and in the future. You can’t manage digital transformation effectively in a linear fashion.

According to former MLC Board member Pietro D’Arpa of P&G, there are three types of orchestrations manufacturing leaders need to master. They are:

• Technical orchestration: bringing together IT, OT, data, and AI into a coherent and manageable whole;
• Organizational orchestration: aligning roles, incentives, workflows, and governance with the way digital operations actually work;
• Ecosystem orchestration: working more closely with suppliers, customers, institutions, and technology partners in a world that is becoming more interconnected.

***

If that isn’t enough, things are about to get more complicated as the age of AI unfolds.

As AI, which MLC calls a pervasive technology, is incorporated into the many systems used to run factories and plants, and as it increasingly augments human activities from complex data analysis to report writing, manufacturing leaders need to address serious and consequential questions surrounding the human-machine relationship.

To what extent should we allow intelligent machines to act? What types of decisions should they be empowered to make? Should they be trusted? Can they be co-equal partners with human beings? How shall we define the status of AI-powered intelligent machines in relation to human beings? And to what extent do we want to embrace autonomous manufacturing?

It is incumbent upon us as manufacturing leaders to define where the lines are of what is permissible and desirable and where the guard rails should be even as the AI technology matures and becomes more powerful and capable. This is a moving target, and it is accelerating.

Without trying to be hyperbolic, I think this is the existential challenge we face as manufacturing leaders in the years ahead. Just about all else pales in comparison.

***

In researching the literature on digital leadership as I was preparing this speech, I was struck by how often the word “agility” appears in the many lists of recommendations on how to lead in the digital era. The literature abounds with titles such as “5 Digital Leadership Skills”, “8 Components for Being an Effective Digital Leader”, “5 Critical Skills Leaders Need in the Age of AI”, and the “5 Cs, 3 Ls and 4 Ps of Leadership.” Almost all of them mention agility as a key competency, usually married to the phrase “in times of disruption.”

Frankly, disruption has been a part of the human condition since we began to stand upright. What’s changed, and what I think underlies the emphasis on agility in times of disruption, is the almost instantaneous communication of change we have today.

So, when things speed up too much, leaders need to slow them down and allow time for careful consideration. A proper reaction, the solution to a problem, a change in strategy may not at first be obvious or clear. As Peter Drucker once famously said: “In times of disruption, it is not the disruption that matters. It is acting with yesterday’s logic.”

The point about agility leads me to some other thoughts about the requirements for digital leadership in the future. Here are a few recommendations:

• Craft a Digital Vision – Establishing an idea of what your business could be in the digital age is critical to give the organization and the people in it a sense of destination, of where you are going – with the understanding that the direction and ultimate destination can and probably will change over time as technological developments occur. And support the vision with no more than three goals. Focus is key.
• Keep Up with Technology – I know this is easy to say but hard to do. MLC research has shown for years that staying abreast of new technological developments is one of the biggest challenges operational executives say they face. But, going back to what I said about the three main components of enlightened leadership, understanding the potential of new technologies will help you avoid a “Kodak moment” of surprise and even disintermediation. How do you do this? Task a person or a team to function as a kind of lab or investigative unit. Put them off on the side and let them run.
• Diversify the Bench – As you think about and plan your leadership team for the future, in conjunction with your HR people, think about hiring in an unconventional manner. Consider hiring people with degrees in philosophy, the arts, in literature. Think about brain power not in a linear or binary fashion, but in a network fashion. There is great strength in diversity and in our increasingly poly world we need all we can get. And always be recruiting for the best minds you can find whether you have a job opening at a particular moment in time or not.
• Have the Courage of Your Convictions – Success with digital requires seemingly endless communications with multiple constituencies inside and outside the organization. The ability to communicate clearly, comprehensively, and persistently Is at a premium in our complex age. What becomes key is what Pietro D’Arpa calls Narrative Agility, the leader’s ability to frame and reframe the meaning of change as technology continues to reshape the business. Helping people understand why shifts are happening, what they imply, and how they fit into the organization’s evolving purpose is increasingly essential in a fast-moving environment.

And this needs to be done in a collaborative environment where a leader often must function more as a coach, often employing Socratic technique. But decisiveness and responsibility are also important. People need to know where the buck stops, as Harry Truman once said. And this is where courage comes in. Have the courage of your convictions.

• • Increase Your Stamina – Success, or victory, in the digital age may be less dependent on skill and talent than the wherewithal to see things through. The ability to persevere through wins and losses, good times and bad, often determines winners and losers. We know there is no finish line in the digital journey. Never give up.
  • Mitigate Complexity – I’ve talked about this one before, but it bears repeating. We are building complex structures of IT and OT technologies in our companies, layer after layer of software and systems to run every aspect of operations and the business. Now, the AI wave is about to engulf us. Find ways to beat back complexity, to simplify wherever you can.
  • Lastly, Maintain a Sense of Humor – This shouldn’t just be all work. Let’s have some fun with digital transformation. After all, we are in the process of creating a better future for manufacturing. Let’s celebrate and enjoy it! M

Photos by David Bohrer / National Assoc. of Manufacturers