As I was about to write my next Connected Manufacturing blog on how to take the first steps in turning a Digital Strategy into an executable plan, I was inspired by a number of recent conversations with my clients that touched on a different but very important dimension of the massive industry transformation that is upon us – namely, leadership and leadership culture!

When I discuss digital transformation with my clients, we talk a lot about such tactical aspects as assessment of the current state of their enterprise, the need to align enterprise organizations and leaders amongst OT, IT and various business functions, and of course the crucial factor of the Boardroom support and active sponsorship for the newly emerging digital agenda.

However, what we usually do not touch enough on is the required culture of change. The change that must happen to enable the workforce to adopt a new style of conducting Manufacturing business, if not an entirely new style of professional life. Vice versa, there will be a significant change in peoples’ mindset stipulated if not forced by the high speed adoption of new technologies, new business models and an ecosystem landscape that in the future will not look like it does today. Human beings tend to seek orientation and navigation in life. In times of great uncertainty they seek out the leaders they can trust, leaders who act as captains and navigators on a ship that is under complete rebuilt while sailing from calm waters into rougher seas with tighter winds.

Therefore, I think one of the key leadership challenges, as we enter the digital age, will be about the following success factors:

  1. Understand your cultural baseline and define your objectives aligned with a realistic rate of change. It should be “digestible” for the organization and the people.
  2. Determine if you can change the entire organization simultaneously, or if you better focus on a certain part of it initially. Pilot with pioneers, then deploy more broadly.
  3. Select the right group of change agents comprising of leaders with strong soft skills and empathy (keep the corporate bureaucrats and administrators at safe distance).
  4. Invest extended time in creating an overarching Change Plan and focus on synchronizing business/technology initiatives with enterprise culture and people.
  5. Constantly communicate to your teams in a simple and clear language. Explain what you will do and when, why you are doing it and what exactly it will mean for their day-to-day jobs.
  6. People will have to trust their ‘captain’ before they are open for new direction and responsibility. That is why I can’t stress enough the need to put the RIGHT individuals in the leadership seats!

Many of you may ask why this is different from the change management challenge and applied practice we have seen in the past business transformations. The desired practice is certainly not new, but I am convinced that the meaning of change management, its impact and its speed will definitely be much more crucial to the survival and future success of an organization in our industry, because:

  • It is not only our personal or our company’s decision when the change starts happening and what it will be like. This change has started already and it is disruptive, fast and unpredictable. The need to proactively manage the culture and people change is more crucial than ever and will define your survival.
  • Our people are much smarter than executives sometimes think. They are well informed, educated and clearly understand the need for new digital skills and transformation. Many people are questioning if their company will be capable of catching up, and be part of the winning group. And even more so, people are afraid or at least uncertain if they will be able to successfully manage their skill upgrade or at least re-skilling that will be driven by Digitalization. This dynamic can’t simply be ignored; it needs proactive leadership and oversight into how the new skillset is acquired via training, hiring or partnerships.
  • There is an urgent need, especially for traditional enterprises, to redefine their brand reputation in order to become more attractive for the right people to stay or the right people to join. That is why GE has started to call themselves the ‘largest start-up in the world’ and opens up a fancy facility in the heart of Silicon Valley. That is why GE has started to call themselves the ‘largest start-up in the world’ and opens up a fancy facility in the heart of Silicon Valley. That is why Daimler’s Dieter Zetsche goes on stage in blue jeans and sneakers (as seen in Paris) and why he has defined an overarching strategic initiative named ‘Leadership 2020’.
  • As a consequence of this change, also known as the 4th Industrial Revolution, the ecosystem of our industry as we know it will get redefined. It is not as simple as finding and constantly refining our company’s position in the value chain, because the straight value chains will not exist in the near future but will emerge into fluid value networks. People will face many things but stability won’t be one of them, and it is upon us, leaders and change agents, to prepare our people for unpredictable, fast moving and also potentially very exciting tectonic eruptions of their professional world.

I want this message to be a wake-up call for leaders. Many things described here about the nature of the change we are facing, such as speed and unpredictability, have not been and will not be directly supportive of the development of the leadership behavior and values that are crucially required.

In addition, the pressure on performance targets dictated by the known verdict to everlasting profit growth and difficult restructuring programs have not always fostered the right culture of trust, openness and transparency. So let us all step out of the loud engine room and take a deep breath of fresh air, and then reconsider our professional values as leaders. Refine or adjust them to a better fit what our People, Clients and our Company will need tomorrow!