Robert Howe is an independent management consultant.


Industry 4.0 key to surviving the corona crisis

Leestijd: 3 minuten

While “may you live in interesting times” may be a curse of apocryphal Chinese origins, the COVID-19 pandemic is certainly not. Although the full economic consequences are far from clear, we can be sure there will be lasting, if not permanent changes to global trade. As we proceed from the onset of the crisis to recovery, we can also expect a massive shake-up of markets, dwarfing that of the 2008 crash. Fueled by bloated private equity funds, the resultant M&A feeding frenzy will rapidly differentiate weak businesses from the strong, slow businesses from the smart. In these extreme business conditions, leadership becomes about adapting, being agile and making judgment calls based on experience and belief.

Pre-crisis, industrial digitalization was an important subject on the strategic to-do list of many manufacturing companies. Increased productivity, lower production costs, faster time to market and the ability to quickly and profitably respond to changing consumer demands – the most-touted benefits of Industry 4.0 – were powerful arguments for its adoption. But equally, the very vagueness of the term Industry 4.0 obfuscated the apparent value of industrial digital transformation. Many business managers simply couldn’t make a connection between the benefits of Industry 4.0 and the operations of their organization.

To bridge this gap, many businesses attempted to base their approach to digitalization on a credible cost analysis of the return on technology investment. However, traditional ROI calculation methods based on speculative business cases don’t work well for investments in ‘soft’ propositions such as increased productivity or faster time to market. There is simply too much room for the inherent guesswork and opinion to be incessantly debated within an organization, leading to digital transformation becoming bogged down.

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