Executives and government agency leaders are positive about Industry 4.0, but they do not consider their organisations ready
Prague, 31 January 2018 – Senior company managers and government agency leaders from around the world do not believe their organisations are able to influence and harness the opportunities offered by Industry 4.0, according to a worldwide research report by Deloitte entitled “The Fourth Industrial Revolution is Here—Are You Ready?”
Industry 4.0 is characterised by the marriage of analogue and digital technologies, such as elements of analytics, artificial intelligence, cognitive computing and the internet of things (IoT). Deloitte surveyed a total of 1,600 managers across 19 countries. In addition, it conducted in-person interviews with several of them to explore their readiness to leverage Industry 4.0 to benefit customers, employees, expert communities and other key stakeholder groups.
“We developed this research to better understand how executives are navigating the pervasive shift and to uncover areas where they can more effectively influence how the Fourth Industrial Revolution impacts their organisations and society,” says Deloitte CEO Punit Renjen.
The questions focused on four key dimensions: social impact, strategy, talent/workforce, and technology. The survey results indicate that while executives understand the changes Industry 4.0 will bring, they are less certain what they should do to benefit from those changes. The survey uncovered some degree of contradiction in each of the four dimensions observed:
Optimism versus ownership – While executives see a more stable future with less inequality, they are less confident about the roles they or their organisations can play in influencing society in an Industry 4.0 era.
- An overwhelming (87%) majority believe the Fourth Industrial Revolution will lead to more social and economic equality and stability, and two out of three say business will have much more influence than governments and other entities in shaping this future.
- However, less than a quarter believe their own organisations can influence key societal factors such as education, sustainability and social mobility.
Static versus dynamic – Executives acknowledge they may not be ready to harness the changes associated with Industry 4.0, but these reservations have not compelled them to alter their strategies.
- Only one-third are highly confident they steward for their organisations during this time of change. Just 14% are highly confident that their organisations are ready to fully harness the potential of the changes associated with Industry 4.0.
- Many executives are sticking with a traditional focus on domains of strategic development (i.e. developing products and increasing productivity) instead of shifting their focus towards developing talent and driving competitive disruption that could spur innovation and create value.
Evolution versus revolution – Executives are not confident they have the right talent to be successful in Industry 4.0. However, they feel they are doing all they can to build a suitable workforce, despite talent development ranking low on their list of priorities.
- Only a quarter of respondents are highly confident they have the right workforce composition and the skill sets needed for the future.
- Interestingly, 86% say they are doing everything they can to create a workforce suitable for Industry 4.0. Yet, responses indicate that HR topics remain a low priority, other than aiming to increase worker efficiency.
- Companies that have placed Industry 4.0 talent implications high on their priority list are exploring the potential for changes that would allow people to play to their strengths while leveraging technology for innovation, development of alternative work environments, and new approaches to learning and development.
Challenged versus prepared – Executives understand they need to invest in technology to drive new business models. However, they have a hard time making the business case for investing in Industry 4.0 opportunities, especially because they lack internal strategic support and they focus particularly on short-term goals.
- Executives acknowledge that their current investments in technology are strongly influenced by the desire to create new business models which they believe will have the biggest impacts on their organisations.
- However, very few of them say they are able to make a strong business case for investing in the technologies that define the Fourth Industrial Revolution. They cite a lack of internal support, a lack of collaboration with external partners, and a focus on the short term.
“The research results can be generalised for most businesses in the Czech market. The topic of Industry 4.0 is not just the gradual strengthening of production automation, but also a change of perspective on the company as a whole. Our experience from this country shows that many businesses will not be able to do without significantly changing their corporate culture, which would not punish for failure but primarily support cooperation, a change in the way of thinking and the willingness to try new solutions,” says Jiří Pavlík, Deloitte’s expert on the management and implementation of strategic changes.
“Managers should find the courage to enter uncharted territories and aside from short-term economic profit highlight also the company’s readiness for long-term success in a competitive market environment. Many of them will have to find the courage to step out of their comfort zone, accept certain risks and assume responsibility for them,” Pavlík adds.
Forbes Insights, in conjunction with Deloitte Global, conducted a global survey of 1,603 CXOs to better understand their perspectives on Industry 4.0. All respondents were from organisations with annual revenue greater than US$1 billion, with average revenue of US$7.4 billion. The CXOs lead organisations in Australia, Brazil, Canada, China, Denmark, Finland, France, Germany, Iceland, India, Japan, Mexico, Netherlands, Norway, South Africa, Spain, Sweden, United Kingdom and the United States. Respondents represent 10 industries, with no industry constituting more than 12 percent of the total sample. The survey was conducted in August 2017.