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In Pursuit of Digital Acumen

Overwhelmingly, manufacturing leaders say a new leadership model is required for the digital age, but much preparation and learning about a new approach has yet to be done, reveals the MLC’s new Next Generation Leadership survey.   By David R. Brousell

It almost goes without saying that leadership will be the linchpin in whether manufacturing companies make a successful transition to Manufacturing 4.0. Leaders will have to establish the business goals of the transition, determine appropriate investments, and devise implementation and execution plans based on a timeline – all standard duties of a leader.

Manufacturing company executives will need to exercise many of the traditional skills and competencies associated with leadership in their journey to M4.0, the next wave of industrial progress based on digitization, but the rules of the old playbook may not be enough.

What’s coming into sharper focus, according to the Manufacturing Leadership Council’s new survey on Next Generation Leadership and the Changing Workforce, is that leaders in the M4.0 era will need to develop a new layer of competencies around the digital model. Called digital acumen, these competencies include understanding the potential of advanced technologies to create new competitive advantages, redesigning decision-making processes to leverage real-time data availability, and managing increasingly information-empowered employees in a collaborative working environment.,

These are some of the highlights of the MLC’s new leadership and workforce survey, which also looked at the state of leadership preparedness with M4.0, areas where leaders need to develop knowledge and expertise, challenges leaders face around culture and M4.0 planning, the state of unfilled jobs, and the role of automation in dealing with the workforce issue.

What M4.0 Leadership Means

What is crystal clear at this stage of the industry’s journey to M4.0 is that few of today’s leaders dispute the idea that the digital era requires a different approach and set of skills on the part of manufacturing company leadership. To underscore the point, more than 80% of the new survey’s respondents agree that they must write a new leadership playbook for the digital era (Chart 2). What this means in practice, says a strong majority of respondents, is that leaders, leveraging the powerful capabilities of advanced information and analytic technologies, must establish a fact-based, information-driven culture of decision making.

In addition, it means that leaders must develop both a deep understanding of what it means to fully integrate digital technology in company business operations and skills to orchestrate employees, customers, and business partners in a digitally-drive, collaborative business eco-system (Chart 1).

Tall orders, particularly for highly tenured executives that have relied primarily on their experience and intuition, but they are part and parcel of the overall goal of developing digital acumen – thinking digital first. The new mentality means not only understanding how to apply digital technologies to improve manufacturing, but also how to drive down decision making in the organization (Chart 3).

And, all of this needs to be accomplished as, you guessed it, the business of manufacturing runs hard on a day-to-day basis.


1 ‘Fact-Based Culture’ Leads M4.0 Leadership Descriptions

Q: Which statement best describes what leadership means for the Manufacturing 4.0 era? (Top 3)

2 Strong Agreement on Need for Different Leadership Approach

Q: Please indicate the extent to which you agree with this statement: The emergence of the Manufacturing 4.0 era of information-driven factories will require a substantially different approach and set of skills on the part of manufacturing company leadership.

3 Digital Acumen is Key to the New Approach

Q: If you agree, which statement best characterizes the new approach and skills? (Top 3)

Today, few manufacturing executives dispute the fact that the digital era requires a different approach to and set of skills for leadership.

4 M4.0 Knowledge is Still in Ramp Up Mode

Q: What level of knowledge does your company’s executive management team have today about the concept of M4.0, its requirements, and its challenges?

The State of M4.0 Readiness

That challenge – essentially changing the wheels on the car as it travels at 60 miles per hour — helps explain how hard it is for many companies to get behind the wheel of the digital model of doing business. Today, only a fraction of survey respondents, 13%, say that M4.0 concepts, requirements, and challenges are well understood in their companies. Just over one-third say that they are superficially understood and more than one-quarter indicate they are just beginning to gather information about M4.0 (Chart 4).

But the good news is that many companies are working hard to develop the requisite knowledge. Just over 50% of survey respondents say, for example, that their company’s executive management team is somewhat prepared for M4.0, with another 10% saying they are very prepared. On the other side of the ledger, 26% indicate that their teams are not at all prepared and, in a finding that is noteworthy although not troublesome at this point, seven percent say there is resistance to M4.0 in their companies (Chart 6).

The lack of preparedness, of course, has mostly to do with that fast-moving car. Just one-third of respondents, 34.7%, say that their state of readiness is a function of being too focused on other issues. The lack of understanding about M4.0 requirements plays into the situation, too, as does the related issue, cited by 27% of respondents, of trying to understand how M4.0 applies to their specific businesses (Chart 7).

But the biggest challenge by far, say 62% of survey respondents, is changing corporate culture and the attitudes of employees toward the digital model. Not far behind is understanding the business case for M4.0 and developing a roadmap to get there (Chart 12).

As a result of where they are on the M4.0 preparation curve, many manufacturing leaders understandably express concern about their companies’ future success. In a critical finding, nearly 80% of survey respondents indicate that their companies’ future success is vulnerable due to their current level of M4.0 preparedness. Thirteen percent of respondents said they feel very vulnerable and another nearly 29% said they feel moderately vulnerable. Clearly, these leaders grasp the idea that the digital model is not optional (Chart 8).

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5 Top M4.0 Question: What’s the Business Case?

Q: What’s the most important thing your company’s executive management team wants to know about M4.0?

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6 Management is Getting Prepared for M4.0

Q: At this point in time, how prepared do you think your company’s executive management team is to undertake the journey to M4.0?

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7 ‘Other Issues’ is Chief Reason for Unpreparedness

Q: If your company’s executive management is not well prepared for M4.0, what is the most important reason for the lack of preparedness?

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8 Majority Sees Some Vulnerability Around Preparedness

Q: How vulnerable will your company’s future success be as a direct result of your company’s current level of M4.0 preparedness?

Wanted: Knowledge and Expertise

The velocity that a manufacturing company can attain to move along the preparedness curve is directly related to how fast and how well the company can build M4.0-related leadership skills and competencies and develop knowledge and expertise around new technologies.

First and foremost, say survey respondents, leaders must develop a willingness and ability to re-think the business and understand and embrace a digital model. Equally important is using computer-based analytics to make data-driven decisions. Not far behind are competencies around getting better at cross-functional integration of processes and functions – what the MLC refers to as the One Company model – and developing collaborative skills to manage flatter organizations (Chart 9).

And in terms of developing knowledge and expertise in technology areas, survey respondents placed significant emphasis around cybersecurity and advanced data analytics. Also important are digital factory techniques to link design and production processes and simulation and modeling technology used in the design phase of product development (Chart 10).


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9 Embracing the Digital Model is Crucial Leadership Trait

Q: Looking ahead, what degree of importance would you assign to the following leadership skills and abilities?

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10 Cyber, Analytics Top Techs for Knowledge Development

Q: Looking ahead what degree of emphasis would
you place on the following technology areas in terms
of developing knowledge and expertise?


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11 Majority Sees Home Grown Next Generation Leaders

Q: Where do you see the next generation of leaders coming from for your company?

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12 Cultural Change is Top Challenge for Leadership

Q: In thinking about the requirements and implications of M4.0, what do you think are the most important challenges for leadership? (Rank top 3)

Despite the persistence of the workforce issue, most manufacturing companies don’t have a formal strategy to attract next-generation workers.


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13 Just Over One-Third Have a Strategy to Attract Next Generation Workers

Q: Does your company have a formal strategy to identify and attract next-generation workers for your factories or plants?

A Workforce in Transition

In the U.S., the problems of unfilled job openings and attracting younger people into the workforce have persisted for many years. Yet, a majority of companies, 54% according to the survey, do not have formal strategies to identify and attract next-generation workers. And among the 36% that do have a strategy, only 13% consider those strategies to be very effective (Charts 13, 14).

And so the issue of unfilled jobs across many categories of job functions drags on. Most prominent among jobs that are open for at least six months are production supervisors, quality control specialists, mechanical engineers, and process control engineers. And those that are open one year or more include cybersecurity professionals, digital design and modeling specialists, and maintenance engineers (Chart 16).

Looking ahead at the digital roles and skills that will be required, the survey offers some encouragement that manufacturers are beginning to turn their attention to understanding future needs. Almost half of survey respondents, 48%, say they have some understanding today what the digital roles and skills will be. But with only six percent indicating that these requirements are well understood, there is obviously much distance yet to be traveled before the industry as a whole has a clear picture of what the workforce of the future will look like (Chart 17).

In the meantime, given the persistence of the workforce issue, a significant number of manufacturing companies are looking at automation as at least a partial cure. Thirty-five percent of survey respondents indicate that automation and advanced technologies will help offset the difficulty in filling open jobs and another 28% expect that these technologies will actually reduce the number of workers they require (Chart 18). A small group, 11%, thinks they will require more workers in the future as a result of automation.

However this trend plays out, it’s clear that manufacturing leaders face no ordinary times. The advent of the digital era, the rush of new technologies such as artificial intelligence and collaborative robotics, and the churning demographics of the workplace have combined to erect an unprecedented challenge before manufacturing leaders.

What is the key to victory? The answer may lie within. Leaders will have to adapt to changing times, develop digital acumen, and lead differently. And that’s both the challenge and the opportunity. M

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14 But Strategies Have Been Only Somewhat Effective

Q:If yes, how effective has the strategy been?

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15 Vast Majority of Companies Have Open Jobs

Q: Does your company have open production/operations jobs today that it has been trying to fill?

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16 Many Job Roles Remain Open for Extended Periods

Q: If yes, what types of jobs and how long have they been open?

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17 A Majority Has Some Understanding of Digital Roles

Q: How well prepared do you think your company is in understanding the new digital roles and skills that you will need in the next few years?

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18 Automation Seen as Partial Cure for Open Job

Q: What impact do you think the increasing adoption of automation and advanced M4.0 technologies will have on workforce levels in your company in the future?

Survey development was lead by Executive Editor Paul Tate, with input from the MLC editorial team and the MLC’s Board of Governors.

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