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The M4.0 Paradox: People First or Technology First?

Tech deployment matters, but the real success for culture transformation lies with an engaged, collaborative workforce. By Livia Macedo

“Yes, excessive automation at Tesla was a mistake. To be precise, my mistake. Humans are underrated.” In this tweet in April 2018, Tesla founder and CEO Elon Musk showed a rare glimpse into the weakness of the Manufacturing 4.0 world: The focus on technology strategy is so strong that the people strategy gets left behind.

A part of the reason manufacturers may be placing most of their focus on technology is that the human capital side of things has become stomach-droppingly dire. With each passing year, the increasingly digitized workplace is requiring workers who have new and different skills. And with unemployment rates historically low and the competition high for top tech talent, it’s difficult to attract the right kind of workers, particularly as manufacturers have been slow to adopt many of the cultural shifts that their counterparts in other industries may offer.

At the same time they are struggling to attract new talent, most manufacturing companies are also grappling with retention issues, as turnover remains high and baby boomers are retiring in droves.

While it’s clear that the work ahead will not be easy, manufacturers that make their people strategy a top priority will be the ones that find competitive success in the world of Manufacturing 4.0. And that starts with building leaders who can create the kind of culture where people want to work, stay, and contribute.

Here are three areas where companies need to focus on building a leadership strategy that will foster a corporate culture ready for M4.0.

Create Strategy Amid Chaos 

At times of seismic shift, like M4.0, it’s human nature to quickly feel overwhelmed with the sense of unreadiness, including at the highest leadership levels. This fear can create a borderline panic, often causing companies to try to pursue multiple initiatives to quickly close the gap. It’s very common, however, that these multiple tactics are run by different individuals and done in random spurts, lacking a cohesive strategy.

This is not an uncommon trend among manufacturing companies. One frontline leader interviewed by our company told us that innovation would happen in fits in his company. “Oftentimes, the big boss would go to a conference and hear a new idea,” he said. “He’d come back and expect us to implement it ASAP. But for the most part, those ideas would draw our attention and could pull us off track.”

While the leader was feeling pressure to innovate immediately, it was a distraction rather than a strategy. Rather than making workers feel energized and pushed toward innovation, they can become overwhelmed and confused, feeling pulled in multiple directions without a clear purpose.

This issue of needing a more cohesive strategy is reflected in data. When DDI senior analysts looked at the data from executive assessments at 180 top organizations over the past few years, clear trends emerged related to a unique need for strategy and alignment for manufacturing leaders.

For example, among the most commonly desired skills for executive leaders across all industries, manufacturing stuck out with the strongest need for leaders who could establish strategic direction. Furthermore, when looking at the most frequent business drivers across industries – which are the areas that companies identify as most important to their success over the next few years – manufacturing companies stood out with a unique focus on needing to create alignment and accountability among their leaders.



Fear can create a borderline panic, often causing companies to try to pursue multiple initiatives to quickly close the gap.

The common thread is that while every industry is facing challenges related to change and disruption to some degree, manufacturing employees are uniquely feeling a sense of turmoil and unfocused direction. The result of this chaotic environment is often increased disengagement, absenteeism, and a strong antipathy toward change and new technology.
These behaviors not only represent dysfunction in the current workforce, but also tend to drive away the energetic, growth-oriented people that will be needed for the company’s successful future. Creating a cohesive innovation strategy across teams requires leaders to:

  1. Plan for innovation: Rather than leaving innovation to fits and starts, companies need to have a clear innovation strategy in place. In some cases, that may mean creating a distinct innovation team, or creating cross-functional teams dedicated to solving specific problems.
  2. Focus on purpose: While asking people to adopt a new technology or innovation can be disruptive and frustrating at times, it’s up to leaders to focus on the benefits that the changes will bring and build a vision for how those changes will enhance overall team or company performance.
  3. Collaborate at the senior level: Employees often feel bombarded by the number of changes happening at one time, such as switching email systems at the same time they’re implementing a new invoicing system while also introducing new machinery. Senior leaders need to be collaborating on the implementation of these changes and creating manageable change that will not overwhelm the workforce.

Build Collaborative Teams 

Picture it: A VP is walking around the manufacturing floor and notices a group of workers standing around.
When she asks what’s going on, they tell her a piece of equipment is broken. The machine is a high-tech version of an older machine, and none of them feel very comfortable using it yet. No one is making a move to correct the problem.
As she digs in further, it turns out that the previous shift was also having trouble with the same piece of equipment, but no one mentioned it at shift change. What’s more, the equipment has been faulty for months, causing frequent delays. One worker had mentioned he had some ideas for stopping this from happening again, but his manager had told him just to focus on fixing it and getting back on the job.
Unfortunately, this is an everyday scenario at many manufacturing plants, representative of a wide range of cultural issues related to M4.0. The first problem is that employees often don’t feel engaged in their jobs or empowered to take ownership of their work. Gallup’s 2017 State of the American Workplace report showed that the occupation with the least engaged employees was manufacturing.
The second problem in this instance is that the employees were uncomfortable with the new technology. But rather than focusing on learning about it, they avoided it. The lack of collaboration on the team meant that everyone was waiting for someone else to take charge of the problem. Above all, any hint of individual innovation was squashed by a manager who was focused only on the short term without a view for the long term.
Now compare that with a story from GE that recently made some headlines1. A team of technicians at a GE aviation manufacturing facility saw that, at the pace they were going, they’d miss their production goals at the end of the year. Without prompting from their boss, the team created a schedule so that the machines would never be idle, even though it meant skipping some breaks, staggering lunches, and changing their own schedules.
By the end of the year, they’d met their goal.
The difference between the two scenarios is all about the team. In the first situation, the team was very much a group of individuals, each looking out for themselves. In the second, the team was highly collaborative, taking ownership over the project as they felt responsible not only for meeting the goal, but for helping each other. Together, they created an optimized solution to best leverage the capabilities of the equipment.

Cracking the code to create a more collaborative team culture starts with:

  1. Using data to make hiring and promotion decisions: In a manufacturing setting, management promotions are often given based on seniority or performance. But in an M4.0 setting, it’s far more important that leaders are chosen based on things like their ability to drive change, adaptability, innovation, and learning agility. Assessments can help organizations get an objective look at which candidates have strength in these areas, and if necessary, which leaders need to develop those skills. 
  2. Building leadership skills among non-leaders: To build a truly collaborative team, every member of the team needs to be able to show leadership to some degree. While every team member doesn’t need to be an exceptional leader, building a set of core leadership skills among them can help them interact better with one another, such as giving positive and constructive feedback; respond to personal and practical needs of their coworkers; and demonstrate strong EQ.
  3. Involving the team to build ownership: In the past, leaders often came up with solutions, and employees simply waited to be told what to do. But building a culture of innovation and collaboration means leaders need to involve their team in building solutions together. Getting employee involvement not only gathers more diverse and innovative ideas, but also gets employees to feel ownership over the solutions they create together.
  4. Focus on coaching: Manufacturing has long been an environment in which managers gave directions and employees executed them. But in a fast-changing M4.0 culture, leaders need to learn to coach more than give direction. Coaching means they guide their team toward coming up with their own answers to solutions, which supports creativity, builds trust, and maintains everyone’s personal responsibility for adapting to change.

Get executives comfortable with discomfort 

Ultimately, the success of creating a company culture designed for M4.0 hinges on getting the buy-in of senior leaders, which can be a blind spot for many organizations. Senior leaders often view themselves as the ones solving the problems at lower levels of the organization – and don’t realize they may need to change, too.

For instance, one manufacturing company that we worked with in Mexico had done a tremendous job hiring the right leaders who would succeed in the world of M4.0. Their selection strategy had helped them find people who not only had the right technical skills, but also the right attributes for learning, performing and growing in a highly collaborative environment.

But after about six months, turnover and dissatisfaction began to rise. It was puzzling – they’d done all the right things! It turned out that the problem was that they had only applied the new requirements for personal attributes to their frontline leaders, but not for their higher-level leaders. These more senior leaders were still being chosen based only on their previous experience and technical expertise, with no regard to whether they had the right mindset to drive the new culture forward.

At first, workers and frontline leaders came into the job energized to learn, grow and adapt. But they quickly hit a roadblock with higher level leaders who were not ready to change and learn. As a result, years of investment into hiring a top-tier workforce were wasted as there was a mass exodus of the newly hired talent.

Senior leaders putting a damper on innovation is another common problem across all industries, not just manufacturing. Nearly every company today will state that they are committed to innovation. However, when push comes to shove and it’s time to put money on the line, senior leaders often get cold feet. It still seems safer to do things the old way, not to stick their necks out to advocate for new ideas, and to continue promoting the same types of people.



Employees often don’t feel engaged in their jobs or empowered to take ownership of their work.

We have seen this reflected repeatedly in our data. In our study titled The Frontline Leader Project2, we looked at how these leaders responded to common challenges. When we asked more than 11,000 global frontline leaders whether they felt that failure in pursuit of innovation was embraced in their organization, only 7% said yes.

Creating a positive company culture for M4.0 requires senior leaders to:

  1. Get an objective view of how senior leaders are performing: Once leaders get promoted to senior levels, they often get less honest feedback about how they are perceived by others. Assessments can help promoted leaders understand their strengths and weaknesses – which may be things like innovation or encouraging collaboration – before they start the job. Once leaders are in their roles, regular anonymous feedback such as a 360 assessment can help them understand how they are really coming off to others. They may find they are squashing innovation and collaboration more than they realize.
  2. Fail with purpose: The trick in manufacturing leadership is how to encourage people to make the right kind of mistakes. For example, trying a new process that may or may not produce positive results is critical to foster innovation. At the same time, embracing failure cannot go so far as to include careless mistakes, such as overlooking a safety issue or failing to meet quality standards. Train senior leaders to make the distinction between the two, and, most importantly, to follow through on using failures for the sake of innovation as learning experiences rather than as negative performance measures.
  3. Get real about the priority of learning: Most executives would say that learning is a priority for the organization. At the same time, when faced with tough decisions about making learning a priority – which means time away from the job – leaders often put learning on the back burner, saving it for a better, less-busy time that is unlikely to ever arrive. Alternatively, they may put the onus back on individuals to pursue learning on their own time, nicely branding it as being “on-demand.” The reality, however, is that neither tactic works. Leaders need to reinforce learning as a priority, even when it means temporarily taking workers away from their jobs.

Make it happen 

Manufacturing is at a unique crossroads. On the one hand, it’s facing a talent gap like we’ve never seen before, painting a bleak future. On the other, there is opportunity for success and innovation like we’ve never seen before. Being able to produce more goods using fewer resources, creating less waste, at higher profitability, and with less impact to the environment are just a few of the dazzling rewards ripe for the picking. The question is simply whether you can get the right people on board to get you there.

All it takes is the right leadership strategy.   M

1.  GE has a version of self-management that is much like Zappos’ Holacracy – and it works.

2.  The Frontline Leader Project: Exploring the Most Critical Segment of Leaders.

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