Digital Strategy vs Digital Transformation: Are you Forgetting one?

by | Jun 29, 2021 | Business, IoT, Strategy

Digital Strategy vs Digital Transformation: Are you Forgetting one?

Digital Strategy vs Digital Transformation. The benefits of a successful digital transformation in manufacturing are near endless. It opens a lot of doors once you have a truly connected factory. If you look around, the entire world has been going through a digital transformation during the last couple of decades. For the most part throughout the world, the change is welcomed, everyone appreciates the benefits they receive. Digital transformation streamlines a lot of processes, saves time, creates easier communication, and makes many day-to-day activities much more convenient. We can order groceries to our doorstep with a few clicks on our phone, we can communicate with anyone in the world in real-time whenever we want, we can receive alerts on our phones when somebody walks up to our front door.

Why should anything be different within the manufacturing sector? Why do some companies completely reject digital transformation in manufacturing?

The vast majority of people would likely agree that digital transformation has made life easier, especially in the workplace. So why would some companies in the manufacturing sector, workplaces with lots of people and moving parts, choose not to move from Industry 3.0 with automation of machines but still many manual business processes and data trapped in machines, to Industry 4.0 and automating the business and driving decisions based on data and information? Well, it has a lot to do with strategy, digital strategy vs digital transformation. In this article we will cover why some companies reject digital transformation, and what you need to do to complete a successful digital transformation.

Why Some Manufacturing Companies Reject Digital Transformation

There have been a lot of failed digital transformation projects, some by very well-known companies such as GE and Ford. The reasons for failure all have one common theme, they lack some part of the overall strategy. When you are digitizing your company, the overall goal is not to include as much new technology as you can. The technology can help you get there, but it’s a tool to help you, not the complete solution. With that being said, here are some reasons that some companies fail, or choose to reject digital transformation-

  • Unclear Goals
  • Single Project
  • Projects Aren’t Agile
  • Wrong Technology
  • Resistance Within the Company
  • No Culture Change
  • Focusing on the Technology Challenge, not the Business Challenge

Unclear Goals

It’s not beneficial to digitize your company just for the sake of digitizing. Many companies fail the digitization process because they fail to set clear goals and expectations. They might have been going through a digital transformation because they thought that was the next step and the future of manufacturing. While this is true, it is important to innovate with new technology to keep a competitive edge, companies need to define clear goals and make sure that everything they are doing is helping them achieve those goals.

Single Project

Digital Transformations are not a single, one-time event. As said above, there are a lot of moving parts in a manufacturing company and many people to work with when making the transition. Change takes time. Rome wasn’t built in a day, and neither was the Digital Transformation at GE or Ford or even for Bob’s Precision Metals shop, for that matter.

Projects Aren’t Agile

When implementing Digital Transformation projects, as already stated, it will take time to change a whole company and to change the hearts and minds of the people at that manufacturing company. Therefore, change in the company must be incremental, one project at a time.

Wrong Technology

All too often companies will see the flashy sales brochures of companies that provide the silver bullet products…the product that will take care of the whole digital transformation. “Just buy our whole stack of products that integrate together seamlessly and your issues will be taken care of.” That is a proprietary approach to a solution. Rest assured there’ll be a very hefty price tag for that full stack of products as well.

This is one example of the wrong choices that are made in digital transformations around technology. We use 4 rules or tenets to figure out what technology to use (Report by Exception, Edge Driven, Light Weight, and Open Technology). The resulting solution ends up being highly scalable and flexible, at less than half the cost of proprietary solutions.

Resistance within the Company

Everyone needs to be on the same page. The whole company needs to be on board with the process, it’s important that employees buy into the ideas presented. For a successful digital transformation, employees need to have the right mindset and adapt to the new way of manufacturing within the company. If there is a division within the company, it complicates the project. This becomes particularly important when we are working with the leadership team of a company to plan and execute the digital transformation. Even at the top levels of an organization, we’ll find resistance. We’ll often have a conversation with the people in the C-suite, the board, or others to recommend the resistors be swapped out for other people to ensure the digital transformation will succeed.

No Culture Change

Falling in line with the last reason for failure, culture change is also very important. Digital Strategy is just as important as digital transformation, if not more important. Make sure that everyone knows why the company is making a change, and how it will be beneficial. This is where everyone from the CEO down should know the Digital Strategy and have a part in executing it. Then, as the digital transformation process is well on its way, if employees are doing the same things they were doing before the digital transformation, and not utilizing the tools they have, or understand reasoning, the project will ultimately fail.

Focusing on the Technology Challenge, not the Business Challenge

A lot of companies get wrapped up in solving the technology challenge. Once they get started on their digital transformation they become more focused on the technology they can add, rather than the problem that technology is actually solving. They keep adding more technology, more tracking, and more sensors but forget the reasoning for any of the technology being there in the first place. Define your goals, and let that drive your actions to make changes that will actually yield good results.

These are all leading causes for a failed digital transformation, and it may scare some companies away. The entire world is becoming digitized, it’s getting to the point where it is a requirement for any modern-day organization. So what can you do to ensure that you have a successful digital transformation?

How you can Avoid Failure, and Complete a Successful Digital Transformation

The risk of not digitizing your company outweighs the risk of failure. It’s crucial for companies that want to remain competitive to adapt to the new ways of manufacturing. So, here is what you need to do to complete a successful digital transformation-

  1. Have a Clear Digital Strategy

  2. Start Small, Think Big, Get Wins

  3. Establish a Proactive, Data-Driven Company Culture

  4. Always Focus on the Business Challenge

  5. Be Agile

  6. Open Technology

  • Have a Clear Digital Strategy

Establish clear goals, clear expectations, and stick to them. When you compare your initial digital strategy vs digital transformation, the project should reflect that initial plan. Spend the time to make a good plan, and make sure you keep that plan in the front of your mind. Determine what you really need, what problems digitizing can help you solve, and make sure all of your actions fall in line with your digital strategy.

  • Start Small, Think Big, Get Wins

You don’t need to do everything at once, Start small. When connecting to machines on the plant floor, start with a pilot project. Connect to just one or two machines, gather data, find what works, what didn’t help, and go from there. Once you have established the value and found out what you need to be tracking, then you can scale the project. This way you are staying on task and making it much easier to follow your initial digital strategy. Make adjustments periodically instead of making tons of changes all at once, and not knowing what really made a difference, what did nothing, and even what made production worse.

  • Establish a Proactive, Data-Driven Company Culture

Everybody within the company needs to be on board with the transformation, furthermore, you need to establish a proactive mindset among the company. The digital transformation will bring lots of new data and new opportunities to improve operational efficiency. It’s very important to enable your employees and machine operators to make data-driven decisions and act on those decisions. A unified and proactive company culture can be what makes or breaks the digital transformation, as well as the overall future success of the company.

  • Always Focus on the Business Challenge

Earlier I mentioned how companies can get wrapped up in the technology challenge, this can be fatal for a digital transformation project. The technology itself is not going to improve operational efficiency, customer relationships, lead times, or anything. However, you can leverage technology as a tool to help you improve your company in all of these areas. Always remember, solve the business challenge first, and use technology as the tool that helps you get there. Keep this in mind to help you stay on track, and not add meaningless systems to your project that do not actually help solve the business challenge.

  • Be Agile

Projects need to be agile. The hope is that all projects can be back-to-back to keep the momentum and excitement going. Drive valuable results and keep a good pace. Small, incremental, but still consistent projects will ensure that people do not get overwhelmed but also stay on task continuously.

  • Open Technology

Don’t get stuck in a proprietary solution. For a successful, scalable, and flexible solution the technology must be open. This keeps the door open to connect to new systems in the future. It will provide a solution that works today, and one that won’t hold you back, keeping your hands tied in the future. Keep in mind these four rules when choosing technology-

  • Open Architecture
  • Report by Exception
  • Edge Driven 
  • Lightweight

Digital Strategy vs Digital Transformation: Conclusion

Digital transformation is essential for manufacturing success now and in the future. Many companies have failed in the past because they get off track, lose focus, and do not structure the project correctly. Worse yet, companies that choose to ignore the benefits of a digital transformation won’t be able to compete in the future. It’s becoming more apparent each day that digitizing your manufacturing company is a must, but you have to do it right. Establish a strong digital strategy. Use accurate digital data and information to drive decision-making, quickly, and in real-time, and you can put yourself in prime position for a successful digital transformation.

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