The Fourth Industrial Revolution
In this issue of TextileFuture’s Newsletter we continue our series on Industrie 4.0 with two opinions, one from pioneer Robert Glaze and another from Prof Birgit Vogel-Heuser of the Institute of Automation and Information Systems at TUM, the Technical University of Munich, Germany
The Fourth Industrial Revolution : The Return of the Business Leader
By Robert Glaze
The Fourth Industrial Revolution will be Business Led Not Technology Led. The transition period between the Third Industrial Revolution was highlighted by the radical mutation of the digital and internet decades which significantly disrupted what had been traditional business and even technological evolution models. Industry 4.0 is actually the further fulfilment of the advances that were made in computation, automation, artificial intelligence, digital media and a variety of digital distribution systems
As Industry 4.0 emerges the disruptions and displacements will be even more significant than in the past two decades. Advanced technologies must now be managed and led by business and no longer by technologists. The technology executives, in general, lack the interdisciplinary business knowledge and are very mono-focused on the services or products with very little consideration for the end to end aspects of business and industries.
In the Fourth Industrial Revolution the rise in complexity will not be easily addressed by algorithms alone. A new form of business leader must be developed and emerge during the transition years of Industry 4.0 in order to guide and lead the development of a Fourth Industrial Revolution that does not increase the various forms of inequality and addresses the uncertainty that will come from a new era of integrating scientific and technological advances within societies and both economic and political institutions.
In particular, there is as much work to be accomplished in the area of evolutionary economics and establishing public institutions that will be watchful over assuring alliances between technological and political powers are in the interest of populations, social capital and social trust.
There will be an eagerness by technology and political leaders to leverage technologies for developing increased order and controls among a nation’s populations at the expense of individual privacy and freedom.
The Fourth Industrial Revolution must be shaped for the benefit of human beings and our planet, spaceship earth. However, this shaping cannot be left to the technologists alone. Business Management and Leadership, as disciplines, must reassert themselves as capable of developing new leadership models that can effectively work across an increasingly complex and rapidly changing business, technological and scientific environments.
The future of our world is too important to leave to science and technology alone. We are in a new place in space.
Industry 4.0: A Transition Phase
In 2009 I introduced at the Oxford Strategic Leadership Program a concept called digital industrialization. As I repeatedly brought forth this new platform of technology and scientifically enabled manufacturing and services models there was less than an overwhelming acceptance of my presentations.
Fast Forward: Since then I have made many presentations from Lisbon to London, Paris to Tokyo and Amsterdam to America. This past year, 2016, I had the opportunity to lead numerous Industry 4.0 strategic advisory sessions, seminars and workshops for over 200 CEO’s, senior executives and EMBA students from Singapore and China. In addition, I also led numerous strategic briefings in a broad range of industries from manufacturing to digital infrastructure.
The western world is today waking up to Industry 4.0. Unfortunately, Asia and China in particular began its ten year 2025 blueprint to aggressively move from the Third Industrial Revolution through Industry 4.0 to Digital Convergence to the Fourth Industrial Revolution several years ago. Quickly adapting the early Industry 4.0 thinking developed by Germany to support its advanced manufacturing industry.
Leadership 4.0: Leading in a World of Uncertainty
The advent of behavioural economics and psychology in the 1970’s formed the new standard in decision making and forecasting up through today in 2016. Creating what might be called “choice architecture” that was based more upon the framing and presentation of the potential decision than on the direct elements of the decision itself.
This created less of decision theory and more of a preference theory as people and leaders didn’t really choose between one decision, or another, instead they chose between the description of one decision and the description of other possible decisions. These created what were called framing effects and have been used extensively by leadership development, governments, marketing and advertising and even in how major business decisions and strategies are both developed and decided upon.
Thus, the appearance of certainty has become a core element of the past twenty years of technological advances due to the framing effects of how technologies have been introduced and rationalized as value adds to individuals, advertisers, markets and societies.
The purpose of this model was to address uncertainty by attempting to eliminate any possibility which would allow for the decision or strategy being incorrect. This was used in both qualitative and qualitative analysis. If a decision, strategy or even a technology allowed for being incorrect, than it would introduce uncertainty into the process and subsequently into the minds of people, markets and confidence in the purveyor of the framing effects.
This model of managing uncertainty will not scale or address the complexity inherent in in the Industry 4.0, Digital Convergence and Fourth Industrial Revolution.
Leadership 4.0 will require a more substantive decision set than creating descriptions and frameworks of possible approaches to managing uncertainty that are more directly correlated and contextualized. Our work in senior executive knowledge building and both strategic decision making and management is based on the new principles of cognitive development in ecosystems of humans and machines.
The Business of Technology: The New Path for the Global Executive
Almost twenty years ago when I was guiding the MCI Telcom Leadership Development effort for the 8000-person Network Operations Division I encountered entire leadership groups of engineers of many varieties, technologists and other technically educated executives. The only ones who went on to become global CTO’s. CISO’s or COO’s were the ones who were not primarily educated or even worked extensively as technical managers.
I had encountered this earlier in my work with large scale banking and financial institutions, the non- technical generalists who could deeply understand the business of technology became not just C-Level executives, but leading global performers in their fields. Of course, I would like to think the leadership development and knowledge building development programs we used were a significant contributor to this success.
Understanding “the Business of Technology” is a going to be a requirement to be successful as an executive and as a company in Industry 4.0. It will not be enough to have taken an engineering degree followed by an MBA. My work at the Oxford Praxis Forum at Green Templeton College, the freedom that I am given at the Zurich Institute of Business and the underlying studies and conversations with the late Douglas Hague on the topic “Beyond Universities” has revealed much in the role an advanced university can play in exploring this concept.
My work as a strategic advisor and tutor with the senior practitioner has held additional value in observing the way the senior executive, who is pre-disposed to be a business leader, can be supported through effective knowledge development, learning from the past and practicing in the present in order to anticipate the future.
The Politics of Technology: Public Institutions Struggle to Keep Up
In my briefings I frequently state that when a new digital technology emerges it is 3-5 years ahead of the ability to actually provide a minimal level of security for it. The security for the technology is then 3-5 years ahead of the legal and regulatory to manage the technology. Legal and Regulatory are then 3-5 years ahead of governments to actually understand the technology. So governments and politicians are 9-15 years behind the ability to understand the technologies implications for individuals, societies and economies.
This lack of knowledge has contributed to technology firms to develop and drive invention and innovation into societies, nations and throughout the world in a relatively unfettered and untethered manner.
This allowed the massive social and economic costs and disruption to achieve the perception that it was a new “knowledge economy” traveling on an “information highway” when the net economic results of the emergence in the USA and Europe further depleted traditional business layers and structures under the banner of progress.
Public Institutions must see technology as a social agent, an enabler of business and social entrepreneurship rather than as an end in itself in order to provide the ability to retain the individual and social capital necessary to leverage industry 4.0 and the Fourth Industrial Revolution as a foundation for new forms of metropolis and micropolis to be built on the new circular industrial, market and economic models.
Governments must see technology as worthy of not just a cabinet minister or secretary position but as a thread that runs through every area of governance. The natural tension between democratic republics and various forms of capitalism must be more effectively harmonized to allow for sustainable economies. In China, there is a priority for economic rights as opposed to political rights which more deeply integrates the government, banking and business sectors to more rapidly achieve economic and business goals and objectives.
This will require that governments become less bureaucratic and more entrepreneurial as a partner in supporting business while redefining its operational roles in the public sector and the types of people required to serve in this new era of civilization.
The Economics of Technology: The Dismal Discipline becomes a Digital Discipline
There has been very little evolution or change in the basic nature of economic exchange systems over the past 60- 70 years. Economists educated and who practice in the traditional schools of economics have tried to squeeze the digital emergence into those traditional and classical models of economic theory. Industry 4.0 will create new challenges that will bring forth new ways of valuing economic exchange and technological innovations like block- chain and even the demonetization of economies for digital values will not satisfy the core complexity of circular models on the individual, corporate, industry, nation of economic union levels.
The disintermediation of labour and management that will accompany Industry 4.0 must also have a new form of economics applied to the growing under-employed, displaced and unemployed populations. The grand assumption that the macroeconomic stability of markets and GDP will continue is, at best, a challenging supposition in the coming decade
We have built a Third Industrial Revolution set of economic models that will not be extendable into the Fourth Industrial Revolution. The vast industries of law/legal and accountancy/audit will find themselves replaced by automation and cognitive computation as legal and economic actions and calculations will become real time.
Industry 4.0 and the Digital Convergence will be all encompassing in how it impacts the world of commerce, business and economics. Competing for the future will become increasingly difficult and complex.
The Complexity of Technology: Limits to Technology?
For the past few hundred years technology invention and innovations have largely been linear. This has allowed there to be period of absorption of the various waves of technology by societies as they changed their business and economic models to fit the advances with a minimum of social disorder and individual displacement. Additionally, this linear model allowed for the more orderly evolution of the ways in which technology and business was managed. In the past century the “science of management” emerged and later a less quantifiable attribute called “leadership” was developed to achieve higher levels of performance out of a primarily human workforce.
Industry 4.0 introduces a new level of layered circular complexity as technology becomes not only the tool of humans, it also can become the co-worker, colleague and manager of the human in the workplace. The new Technology must also must overcome the traditional integration and interoperability challenges that will be a sign of seriously flawed design and engineering architectures and result in an immediate lack of agile competitiveness.
The past hundred years of innovation have been driven by patents, proprietary solutions and intellectual property. These may become serious limitations to a given technology becoming successful in the Fourth Industrial Revolution. Open source in all areas of technology and know-how may well become the standard. The present model has given technology as a vendor, disproportional power when compared to the businesses the technology supports or enables. Historically the argument has been made that progress and advances need to be based on IPR in order to provide the necessary incentives for technology companies to invest in research and new technologies.
New hybrid consortiums, joint ventures and other new forms are being developed that will take the place of the traditional technology company. This will enable the rise of a massive number of entrepreneurial efforts to rise with more immediate impact on creating businesses and sustaining local, regional and national economies.
Technology Risk Management: Cyber Security Unplugged
Let’s start by looking at the obvious; the internet was never, that is never, designed to be defended. The digital data packet is little more than a house with the back door always open. This is not to say that there have been no advancements in attempting to create cyber-security strategies, perimeters, penetration engineering and a myriad other “solutions” to the global cyber security crisis.
For several years I have been cautioning against too much enthusiasm for the Internet of Things, this “platform” is easily the most insecure and high risk scale free network of devices that has yet been imagined. It remains so today. The number of cyber security companies that go into business every week in America alone is quite stunning. The opportunity costs associated with IoT are still too great to contemplate at this point in time.
The Industrial Internet of Things is a bit different in that access can be contained within a manufacturing or company site based footprint.
Cloud based services are more robust from a security standpoint, this does not mean that they cannot be successfully penetrated. Most all of the major hacking and large scale security incidents you have heard of over the past year were cloud based.
Sixteen years ago I wrote TRM: Technology Risk Management, a comprehensive manual to technology risk and security for the then primarily cable based internet networks and systems. Many of the protocols developed then have not changed appreciably except for today being largely automated. For those screaming at their laptop or tablet screen that IPV6 and DOCSIS 3.1 are solutions, I regret I cannot concur with those thoughts.
Today we must begin to look at new distribution models that replace nature of data and networks that have been in use for 20-25 years; perhaps new science and technologies that go “beyond digital and broadband”.
Robert Glaze would like to thank:
Pierre Wiertz, head of European Trade Association EDANA, for his courage in inviting Robert Glaze for many keynotes, workshops and briefings on Industry 4.0 since 2013. He is a visionary in an advanced commodity industry! Dr. Marshall Young, head of The Oxford Praxis Forum at Green Templeton College at Oxford University for his continued support of Robert’s projects as a Visiting Associate Fellow. .
Dr. Philipp Boksberger, CEO of the Zurich Institute of Business for his confidence and freedom to create and deliver innovative programs and seminars for their global constituencies of graduate and executive students.
The author Robert Glaze and his organisation, Brenva Institute, and Brenva Research Services offer 2017 Professional Services, Industry 4.0, Strategic Advisory Services, Leadership 4.0 Workshops,Industry 4.0 Seminars, Fourth Industrial Revolution Briefings
Many people think Industry 4.0 is something you can buy off the shelf
Interview with Prof Birgit Vogel-Heuser on Industry 4.0
The future of manufacturing belongs to Industry 4.0. Anyone not willing to accept it is seen as behind the times. But what exactly is Industry 4.0? Prof Birgit Vogel-Heuser of the Institute of Automation and Information Systems at the Technical University of Munich (TUM) explains what makes a definition so difficult and how companies can be a part of the new Industrial Revolution
Everyone’s talking about Industry 4.0, but many aren’t exactly sure what the term means. Is there a definition?
Vogel-Heuser: Yes, there are a number of definitions, but no single one which is generally accepted. Or definitions are kept so general that they really don’t mean anything. Industry 4.0 is actually a concept with many different facets. It’s just not possible to summarize them all in a single sentence.
What are the most common misunderstandings when it comes to Industry 4.0?
Vogel-Heuser: Many people think Industry 4.0 is something you can buy off the shelf. But that’s impossible. Trade fair booths will often advertise with a banner saying something like “We have an Industry 4.0 PC”. Utter nonsense. There’s no way a PC as such can be Industry 4.0, it’s just a device with software. And at training events I often hear things like, “Tell me how Industry 4.0 will work at my company.” There’s no such answer in general. Every company has to figure out for itself what parts of this plethora of Industry 4.0 components is interesting for the company, for its business and its customers.
Can you give us some examples?
Vogel-Heuser: A training session brought me into contact with a company where a lot of work is still done manually. There’s also a large core machine which often breaks down. Now the company has joined together with a competitor that also uses this type of machine. They’ve launched an Industry 4.0 project together with the machine manufacturer, with the objective of reducing breakdowns and identifying causes. In another case, a major company with many different departments needed to optimize communication and cooperation between the departments in order to improve engineering and data evaluation. This is why you can’t simply say: Tell me what I should do at my company. Here everyone has to think about their own weaknesses and strengths and what’s most beneficial for them.
So Industry 4.0 optimizes companies?
Vogel-Heuser: Yes, it is an optimization process. Ultimately we want our systems to work better so that we remain competitive or even improve our competitive abilities. This is where the various mechanisms of Industry 4.0 come in. For example, now I can network myself, since a good Internet connection is available almost everywhere. And this networking can take place not only within my own company, but also for example with the competition. Many companies are readily willing to share a certain amount of their data with some of their competitors, since this way they gain additional knowledge for example better results in data analysis to a broader data base. And more knowledge means I can work more productively.
How does this look in tangible terms?
Vogel-Heuser: For example, a manufacturer and a construction contractor can share data about construction machinery, about how often a given piece of equipment is used, which routes it travels or what error messages are generated. When I see the piece of equipment has failed, I can quickly find out where I can buy or borrow a replacement or a spare part. This may even be from a competitor, if I happen to know he doesn’t need his bulldozer right now. And I give him a little money for it, then we both profit from the situation. This is what’s really new, extending horizons beyond company boundaries.
You are working together with several other professors in the “MyJoghurt” project …
Vogel-Heuser: Professors can also be in a way competitors, when they research and teach at different universities. We want to show that we too can join together to build something and learn together, even without additional funding. Each individual has his or her strengths and runs different lab plants, and when we join together, the result is an Industry 4.0 system. And that’s exactly how it worked, we jointly developed models and wrote software together.
The MyJoghurt plant demonstrates another aspect of Industry 4.0: The intelligent product. How does that work?
Vogel-Heuser: Well, in a manner of speaking we have a yogurt jar that knows how it wants to be filled. Let’s say you want mango and strawberries. First you have to find out if that can be produced, i.e. are all the ingredients available and can these fruits be processed at the plant in the first place. Then the jars start to move and get what they need: In a sense they’re in contact with the machinery. The idea itself is rather old – but now it can be actually put into practice.
For many people the term Industry 4.0 means completely automated production where no additional human support is needed …
Vogel-Heuser: We’re not working towards factories that are entirely devoid of humans. There are certain things machines can do better than humans, for example lifting heavy things and performing monotonous activities such as evaluating data. We want to be rid of these simple but time-consuming tasks, the many little things that keep us from doing what we actually want to do. And Industry 4.0 can make an important contribution. There are still other things humans can do better than machines, such as reacting to critical and unexpected situations. In Industry 4.0 machines are also intended to support humans in doing their work.
How would that look?
Vogel-Heuser: The question is: How can I train less-qualified employees so that they can for example operate a given machine. The important thing is to break complex tasks down into simple steps and to avoid overwhelming the people involved. It’s possible to interpret their reactions, for example with glasses that monitor the line of sight. If someone is looking around without knowing what to do, the fact can be detected and an attempt can be made to find out what the person hasn’t understood. This information can in turn be used to reprogram and improve the interface and the software.
Technical University of Munich (TUM) is one of Europe’s leading research universities, with more than 500 professors, around 10,000 academic and non-academic staff, and 40,000 students. Its focus areas are the engineering sciences, natural sciences, life sciences and medicine, combined combined with economic and social sciences. TUM acts as an entrepreneurial university that promotes talents and creates value for society. In that it profits from having strong partners in science and industry. It is represented worldwide with a campus in Singapore as well as offices in Beijing, Brussels, Cairo, Mumbai, San Francisco, and São Paulo. Nobel Prize winners and inventors such as Rudolf Diesel, Carl von Linde, and Rudolf Mößbauer have done research at TUM. In 2006 and 2012 it won recognition as a German “Excellence University.” In international rankings, TUM regularly places among the best universities in Germany.