LNS Research recently hosted an event for senior manufacturing and industrial executives from organizations that ran the gamut in Industrial Transformation (IX) maturity. According to Tom Comstock, principal analyst with LNS Research, “Where IX is concerned, 8% of all companies describe the IX program as a ‘real success,’ while another 20% report they are ‘making progress and the corporation is seeing value.’ All other companies say they are in the definitional phase, pilot phase, or ‘stuck in’ pilot phase. Not surprisingly, the majority of companies are still in early or pilot stages.”
Research analysts at the event certainly saw evidence of that distribution as they met with attendees. And we polled attendees throughout the conference about their biggest “Ah-Ha” moments from each session and discussion.
Getting senior leadership buy-in is hard
CEOs aren’t eager to open the checkbook for something that’s hard and takes time and resources. However, they consistently respond in favor of a thoughtful business case. In as many as 35% of companies, functional leaders are unable to articulate a return on investment (ROI) justification for improvements. However, it’s not surprising that about 18% are unable to gain executive support. The analysts’ take? Build a solid business case and get help from someone who has experience. Engage one-on-one, listen, help solve problems, and let the functional business leaders own the innovation and solution.
Understand the problem(s) before selecting offering(s)
There’s simply no reason to buy technology unless there’s a problem to solve. The problem doesn’t have to be negative; in fact, capitalizing on market or business opportunities is an excellent reason to invest in process improvement and technology. A major reason companies apply analytics today is to improve quality.
Companies are using gamification to shift from “being a hero” to “preventing events”
Companies are using gamification to engage the next-generation workforce with transparency and a sense of productivity. IX is happening throughout companies, not just in one department. In part, that’s because those involved in IX are focused on business results. Companies that say IX is a real success are 31% more likely to focus on business instead of “tech for tech’s sake.” Ultimately, companies eager for business results want to stop adverse events from happening to focus on growth.
Big companies are doing IX, and doing it correctly
Businesses of every size are pursuing IX, but the most successful IX programs are highly inclusive. The latest survey data reveals that two-thirds of organizations have implemented, are currently implementing, or are planning to implement, an IX program. What’s more surprising than “if” or “who” is investing in IX is that only 6% of companies have allocated more than $100 million over a three-year period, while 40% of companies report revenues over $1 billion (with 20% over $5 billion).
CoQ is still relevant
Evaluating cost of quality (CoQ) dates back to the early 1950s, yet CoQ is more relevant than ever. What’s changed is that companies now have access to analytics tools to effectively measure CoQ without it being a massive accounting project. Also, the tools don’t just measure CoQ as a rear-facing metric; they reveal the root causes of CoQ and what to do about it today to optimize.
We’re not alone in our struggles
All the transformation strategy in the world won’t make a difference if people aren’t engaged in a way that allows for taking risks, making mistakes, and accepting that sunk costs are already lost. IX requires commitment that spans the entire enterprise and potentially many years. There will be failures along the way, but also be successes. So keep going despite difficulties.
Analysts own “Ah-Ha” moments
The LNS Research analyst team was surprised about the growing gap between those working on IX and those just getting started. Compared to those already started, companies that are stuck wondering how to get started and those just getting the ball rolling have lost a lot of ground in terms of performance gains.
The other big realization for the analyst team was that industrial companies are still struggling with data silos and data integration. Throughout the event we heard about how important the right organization structure is. Companies that have jumped that hurdle by successfully converging IT and operational technology (OT) groups are now able to move more quickly and accelerate their progress. Ultimately, that’s what IX is all about—aligning people, processes, and technology to take advantage of business opportunities, and eliminate inefficiencies or deficiencies.
>>Diane Murray senior marketing and research associate, [email protected], is a senior marketing and research associate at LNS Research, which provides advisory and benchmarking services to help Line-of-Business and IT executives make critical decisions.
