Industry 4.0 and Change Management: Shedding light on Human Dynamics

Let’s briefly talk about the topic of Industry 4.0, Change Management and Human Capital. Industry 4.0 is most often characterized in the work field by key elements that can be described as either Digital or Process in nature, but perhaps there is more (Human Dynamics; continue reading)

Industry 4.0 coverage in the media: focus on Digital and Process (not on Change Management)

The focus on Digital and Process should not come as a surprise as the very definition of Industry 4.0 relates to value creation through digital transformation. Searching on the internet for Industry 4.0 related search terms will confirm this by displaying applications resulting from these perspectives, such as cloud computing, the use of advanced robotics or digital interconnectivity.

When digging deeper into this subject, the main messages that can be obtained from Industry 4.0 seem to be twofold:

  • The praise and potential with which new technologies are presented
  • The sense of urgency that comes along with that. Stated differently, the Time is Now.

When studying the landscape of this fourth industrial revolution, and its implications on businesses, it is remarkable that such a clear storyline seems to be lacking regarding the Industry 4.0 and change management perspective.

Why is that? It seems to be the case that organisations do have a clear understanding and recognition on the need of Leadership and Adoption when implementing a Digital roadmap.

However, the intricacies and details of Industry 4.0 and the change management perspective are often overlooked and not discussed. Perhaps that is because behavioural change is usually perceived as difficult to implement. Moreover, as a talking subject, it is not as clear-cut as other generic Industry 4.0 topics.

Therefore, this article is written to shed some light on the Industry 4.0, Change Management and Human capital matter.

Here is what was done to achieve that:

  • René van der Laan, a Performance Behavior Specialist consulting for numerous international companies with varying maturity levels in the workforce regarding Industry 4.0, was claimed, seated and presented with quality coffee.
  • An inspiring 30-minute chat was held in which five challenging statements regarding human capital, change management and Industry 4.0 were addressed.
  • The idea of this chat was to demystify the statements, thereby tackling all sorts of fears, opinions or beliefs people seem to possess regarding Industry 4.0 and change management. The statements were developed from scratch, but it was not a difficult task to create the statements, when consulting in a manufacturing environment. All one needs to do is keep eyes and ears open.

So, the statements acted as starting points for the conversation and the goal of the conversation was to (partially) acknowledge or debunk the statements by backing it up with real life client examples and in some cases scientific sources. The conversation is briefly summarized and the result can be read below.

1. Industry 4.0 and change management: a new situation requires a new mindset and a new skillset TRUE

This is true. However, often people seem to wrongfully position a new mindset and a new skillset as some sort of prerequisite of a change, whereas, in reality, it can never be a prerequisite.

A new mindset and a new skillset can only be shaped by efforts such as creating the right circumstances and reinforcing new behaviors.

Therefore, a lack of adoption in changes should always be reviewed and addressed in terms of understanding what activities or lack thereof have positively or negatively impacted these levers of change.

Perceptions are usually a clear indication of the maturity levels within organization and thereby a good starting point for an Industry 4.0 roadmap. For some companies, even words like ‘digital’ seem to be associated with levels of fear, whereas for other companies ‘working digital’ is inevitable and more viewed as a way of working. The way change is implemented and brought about by management and leaders has a huge impact on the experienced perceptions, thus making change management critical in Industry 4.0.

From the Industry 4.0 (quick)scans we do at clients, it is apparent that huge differences in mindset and skillset are noticeable, even within companies or departments.

In general, one can say that industries such as banking or insuring adopted Industry 4.0 changes earlier than industries such as manufacturing and logistics.

To successfully implement new digital technologies, individuals must be mentally ready and have a certain desire for it. Change management is critical in implementing Industry 4.0 initiatives, as it will require a new mindset from workers. This so-called pull will make it easier to implement new technologies and learn new skills. In the end that will determine whether, for example condition based maintenance alerting will be fully adopted by a group of mechanics or viewed as a threat to their expertise.

2. Automation and robotization are the future, but that only holds true for senior management (read: low-skilled jobs will be lost) Unknown

Automation and robotization are clearly the next stopover in the industry. The end of the current industrial revolution will look something like a continuous changing, dynamic and worldwide production network that is synchronized in real-time, along with the pace of the evolution. It is inevitable that work will change. That happens with revolutions and evolutions.

In the 19th century there were no continuous improvement managers or safety coaches. Now, they are part of most big manufacturing plants. Predicting the future in a reliable manner, therefore is a risky business, e.g. not so long ago the computer was feared as being the big replacer for humans. That did not happen, which is not to say that certain skills or jobs will become redundant.

In fact, it is expected that low-skilled workers are at the highest risk of being left behind. If that happens and in which pace that will happen, depends on the level in which people are able, willing and facilitated (perhaps with governmental help) to learn new skills. Thus, change management is critical in Industry 4.0.

One thing is a certainty: the impact that individual workers will have in the future is going to be more impactful than only ‘their’ shift or production line. Decision-making will be more data driven and impactful on more levels.

3. The key to Industry 4.0 success is disturbance FALSE

The effect that Industry 4.0 has on the market is certainly disturbing in the sense that competition in the market is now changing faster than ever.

However, the way this statement is worded seems to imply that some sort of disturbance needs to take place, in order for Industry 4.0 related advancements to be effective. With regards to the phrasing of this particular statement, it does not seem to hold any truth in reality when decomposed.

For organisations, disturbance is usually a bad sign. It creates anxiety and will cause people to hinder activities that lead to group/company goals. In a certain way, that is contrary to what this revolution is about and that is: connectivity and breaking through boundaries. People will always need to feel safe as to be able to perform and disruption can break that.

Disturbance, described as some sort of radical change in the way of working, can make employees question their sense of belonging and meaning. It is important to remember what has brought companies where they are today. Therefore, disturbance is not the answer.

Instead, companies need to be open to change and newly formed business models generated from Industry 4.0 technological advancements and willing to seek help to achieve that. Results today is just as important as results tomorrow.

4. Current leadership approaches will be redundant within the coming 5 years, given the speed of Industry 4.0 advancements FALSE

That is quite a bold statement, as behavioural laws and psychological needs still hold true and will not completely change abruptly. Moreover, leadership is a theme that is being studied extensively and written about a lot, thereby implying there is more than one universal truth.

Leadership approaches will need to be customized to specific contexts to evoke the most effective behaviours. Contexts change and the following two trends regarding the context of the workforce are visible and need to be incorporated into future leadership approaches:

  • Different sensitivities towards hierarchy between different generations
  • A workforce that continues to work longer

The challenges that these trends will bring, determine the exact effective leadership practices in certain situations.

One can imagine that mobilising a population for a new way of working through the use of a hand-held device that monitors the output of a production line (as opposed to a classical Control Room setting), will lead to different challenges depending on the characteristics of the population, e.g. tech savviness and multi-tasking.

5. Skills pay the bills – the best way to prepare for the future is to recruit young and skilful people Partially FALSE

The skills part is true. Recent studies have shown that having the right skills within your organisation, is going to be more important than ever in the future. New skills such as holistic thinking, innovative thinking, adaptivity and collaboration will become more apparent.

However, skilled people do not necessarily have to be young. That is a false statement. Luckily, there is usually a ton of unexplored talent within organisations; young and old!

Recognizing and developing that is more feasible than fishing in the same pool in the search of recruiting new talent. Therefore, it is fair to say Industry 4.0 brings many opportunities to People Management and Training & Education areas within companies.

Managing behaviour – and adoption processes in different populations will be extremely important in transitioning organisations. Engagement surveys will no longer be enough (they never were though). Organisations will need people that have deep knowledge on how to stimulate and activate people as to optimally understand, use and adopt Industry 4.0 applications. The good part is that agility and change readiness can be developed.

How Efeso is leading digital transformation in Industry 4.0

Efeso has a rich history in offering leadership programs. The recent joining of ROI Management Consulting, a leader in industrial digitization, established the focus on Process, Human and Digital elements.

More specifically, it enriched the leadership approach by integrating it with the development and execution of a digital roadmap, thereby making the newly required behaviours and skills more tangible.

The ‘traditional’ leadership framework that Efeso is known for remains intact and still serves its purpose, also in a workforce and a workplace that is developing in levels of digital maturity. This approach is designed in a way that it is integrated in daily business. The main components of the program are:

  • Understanding of the High Impact Moments and related behaviours. Stated differently: recognizing the moments when and how leaders can make an impact.
  • Have a support structure in place to anchor and sustain the development of leaders.

One can imagine the chosen focus and key for success for leaders to be different between companies as a function of their specific digital maturity level. 

Change management and human-oriented Industry 4.0: key takeaways

So, do we now have a storyline on the change management and human aspect of Industry 4.0 related changes, as hinted on earlier? Perhaps, that is for the reader to decide. At least light has been shed on Industry 4.0 and change management, thereby making it apparent that all key concepts regarding behaviour still hold true, even though contexts and required skills are rapidly changing.

It seems to be, that, change management, especially in terms of Adoption and Leadership is going to be a skill to master, more than ever. This is crucial for Industry 4.0 optimizations to reach their full potential in practice.

After all, benefits are not reaped whenever real time data is not trusted and acted upon (mindset) or whenever state of the art AGVs are misused by the workforce (skillset). Just to be clear: the last examples are not fictitious but are actual observations of organisations underestimating the impact of Human Dynamics in Industry 4.0 implemented applications.

For more in-depth discussion on Leading Digital Transformation and our approach, please contact Angelique Spaas, Senior Business Developer for EFESO Consulting.

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