8 Things Manufacturers Wished They Knew Before Starting on a Digital Transformation
Manufacturers are historically early adopters of technology. They are driving Industry 4.0 and the Internet of Things (IoT). With so many companies involved in that many projects, there are sure to be mistakes made along the way. Here are eight things manufacturers wish they knew before they embarked on their manufacturing digital transformation.
Will app drive digital transformation?
“Well, the app we launched last quarter was a big success. Guess our digital transformation is complete,” said no manufacturer completing a successful digital transformation ever.
Just because you launch a connected product or create and offer an app for one of your products, you have not undergone a digital transformation.
It means you launched a connected product or app.
Fossil Watch thought they were on a digital transformation in 2013 when they announced the release of the SPOT Watch. The product did not reach the market until January of 2104. Fossil manufactured many thousands of the watch that came enabled with MSN service. The SPOT retailed for $129, and for an additional $59 per year, the MSN network would use FM radio to deliver little snippets of weather, news, stock prices, and sports to the watch. Except for access to FM airwaves outside was tricky, and the MSN network had no user base. The device was ugly as well.
If a digital transformation is a product or an app, it is doomed to failure before you start. In December 2019, Fossil Group announced their New World Fossil 2.0 initiative. This time around, the focus is on improving operational efficiencies and investing in digital and consumer-facing activities.
It’s Not About the Product
As the Fossil story proves, digital transformation is not about a new product or a digital add-on to an old product. It is about rethinking how a digital transformation better positions you to meet the needs of your customers.
And the focus is on flexibility to adapt to changing markets, changing customer demands, and leveraging new channels as they develop.
It’s not product thinking, it’s design thinking.
Start with your customer base to determine what they want and need and then build from there. Then prototype, test, and iterate until you have it right.
During the COVID-19 pandemic, manufacturers already engaged in B2B eCommerce had an advantage over competitors relying on off-line sales. These companies leveraged their digital assets to continue to meet buyer needs in a world where face-to-face interactions ended, and a work-at-home world became the norm.
Setting Clear Objectives versus Chasing Buzzwords
Jumping on the digital transformation bandwagon is a bad idea if you do it for all the wrong reasons. Someone in the C-suite reads an article, and suddenly digital transformation is the new buzzword in the company, but no one knows what it means.
A digital strategy is a means of achieving business goals and future-proofing the organization. So do not start down this road until you take a look at your current terrain. Then set clear objectives and create the roadmap that moves the business forward.
Data Overload
The term information overload was coined in 1964 by Bertram Gross, a professor of political science. He used it to describe the situation where input exceeds processing capacity. And this was well before the digital revolution was well underway.
It is easy for decision-makers in manufacturing companies to experience data overload. Gathering and creating data is easier than ever. But the task of determining the information you need isn’t as simple.
Data for the sake of data is a waste of computing power. Useful data is actionable. It must form decisions.
As you map the digital transformation, take pains to pinpoint the data humans need to create an intelligent enterprise. Don’t lose sight of the basics such as customer acquisition cost and average lifetime value in your quest for the ultimate business intelligence dashboard.
Employee Pushback
A global study by Pegasystems found that company culture plays a large role in the success of a digital transformation.
Company leaders may enthusiastically embrace the transformation efforts, but only 10% of general staff know how to contribute. That leaves 90% on the sidelines or worse, thwarting your efforts.
Onboard employees to the transformation idea and process early on to reduce pushback.
People resist changes associated with technology because they don’t understand the changes. Or they may fear the changes will render them obsolete.
Assure employees that a digital transformation is a journey, and no one will be left behind. Make sure everyone understands the big picture. Employees should have an appreciation of how the project will improve business processes. Start training initiatives early enough that employees using new systems will see them as accessible and not barriers to their professional success.
Don’t Bite Off More Than You Can Chew
No company can successfully undertake a digital transformation of the entire organization at one time. Transformation efforts may touch on all facets of business, but not all sectors transform at once.
When it comes to digital transformation success, the MVP (minimum viable product) is the MVP (most valuable player) in the process.
When you take the MVP approach, you create a minimum viable product in just a few months then you begin testing and gathering feedback. Based on the feedback, you make changes and then test again. This iteration process reduces anxiety and relieves some of the uncertainty. It also improves the quality of the end-product while generating employee buy-in. Other benefits of the MVP process include:
- Smaller commitment of time and money during development
- Minimal financial and development risks
- Validates digital transformation goals (or not)
- Smoothes adoption of new digital processes
Partners are Essential
Few manufacturing companies have the resources to undertake a digital transformation on their own. Don’t believe this is something you will do in-house.
Early in the transformation planning, engage technology and consulting partners to solidify your objectives and identify the technology necessary to meet your goals.
The Takeaway
When you understand the nature of true digital transformation, employ design thinking to maintain customer focus, set clear objectives, identify the data that meets business needs, get employees on board, and pick partners that will help you with your MVP you can avoid some of the most common manufacturing digital transformation regrets.
