Seeking Industry 4.0 exemplars

Dec. 12, 2019
Next-gen transformation leaders have yet to emerge.

By Keith Larson, Smart Industry VP of content

Despite the fact that 2020 will mark nine years since the concept of “Industrie 4.0” was first promulgated at Germany’s Hannover Messe, we’re still in the early innings of the transformation promised by the convergence of the cyber and physical.

Smart Industry's Keith Larson

Just last quarter I wrote in this space about how many of the technologies associated with digital transformation seem to be passing through the Trough of Disillusionment that follows the Peak of Inflated Expectations. (The PR folks from Gartner, which first popularized the Hype Cycle model to which I was referring, called me soon after to confirm and clarify.)

But when it comes to technologies, we’re actually much further along the transformation curve than we are with the people and processes. That point was driven home for me at October’s IX Event, an intimate conference of leading industry decision-makers held by LNS Research at Boston’s historic Liberty Hotel.

“We have the technologies, but not the new ways of doing business,” said Matthew Littlefield, LNS president and principal analyst in his opening remarks. He noted the relatively high uptake rate of advanced technologies ranging from artificial intelligence to augmented reality among industry leaders. But we’ve yet to see industry rise above the incremental productivity gains indicative of Industry 3.0 methodologies, Littlefield said.

This isn’t too surprising given that every other industrial revolution has also run up against a productivity paradox. As earth-shaking as it was in retrospect, the transition from mechanical power to electricity, for example, did little to improve industrial productivity at first. Labor and capital were to be fundamentally reorganized, but the industrial processes themselves changed little. “It’s like going from paper to iPad—it’s still the same job,” Littlefield said.

Today’s industrial transformation, or IX as LNS labels it, will pick up where other late Industry 3.0 methodologies such as Lean and Six Sigma leave off. “These last-gen IX initiatives are primarily about people and processes; they actually hold technology at arm’s length,” Littlefield noted. Yet these methodologies have driven steady productivity gains over the past two decades, averaging 3.7% CAGR since 1997.

“But next generation IX initiatives will build on a digital foundation, focus on people, complement existing processes, and deliver significantly more than 3.7% CAGR productivity gains,” Littlefield said.

But for such progress to become widespread, we need role models like those of the previous generation: think GE or Motorola and Six Sigma, or Toyota and Lean. “These companies weren’t first, but they made these concepts central to the organization. For IX to advance, we need those new industrial exemplars,” he said.

Will yours be the one that steps up?