Digital transformation in manufacturing presents challenges. Culture is key: are you attuned for digital migration and its opportunities?

By Glenn Leask, CEO, CCi

Think of culture as a seed. How it grows depends upon how it is nurtured. And, once it’s taken root and spread, it requires care to cultivate and optimize yield.

Your organization may have this precise challenge.

Manufacturing’s revitalized value paradigm 

Manufacturing is transforming. Digital operating systems (DOS) can generate enormous productivity gains and leverage competitive advantages. However, for a DOS implementation to be successful, it has to be rooted in Lean methodology – which, at its core, has a strong focus on building capability at all levels of the organisation to ultimately eliminate problems and improve processes.  

The implementation of lean, in essence, changes the way work is done and creates “thinking people” which can fundamentally change a company’s culture.

So, while your DOS implementation will certainly have a strong technology component, digital transformation is not just about the use of new digital applications. To truly unlock the benefits of a DOS and integrated supply chain you have to transform your strategy and adopt new ways of thinking.   

The digital divide

Digital technologies are a powerful enabler. But they can also trigger divisions among co-workers and departments., a cultural shift. Digital skills, or the lack thereof, may separate operating units, divisions, or individuals within the overall workforce.

This is a substantial business risk, especially as economies, markets, organizations and supply chains emerge from the pandemic, In the same way that companies cannot have two cultures, one physically remote and the other driving the manufacturing operations in situ, so digital capability cannot be segmented. A digitally-rooted enterprise is, by definition, unified in its vision, and operates in synch.

Is leadership lacking?

The word “lead” has links to the Indo-European root laidjan (“to travel”). In the Digital Age – now shifting into the Imagination Age – this is apt for describing the role of a leader. Discoveries, new frontiers: business leaders today are required to be enablers of change, and to guide the organization through the digital gateway.

As organizations digitize business processes, leaders have to adopt a new leadership style focused on supporting – and collaborating with – front-line teams to encourage engagement and problem solving.

But the pace of technological capability is outstripping leaders’ and managers’ ability to envisage how to capitalize. It’s also accelerating beyond workers’ capacity to fully apply the technology tools available to them.

This represents a fundamental challenge to a manufacturer’s competitiveness, ROI, and future-proofing. 

The disentangling thread of engagement

Manufacturing faces a crisis predating the pandemic. Productivity per employee-hour has been falling in almost all geographies, as skills shortages and mismatches have pervaded the sector for more than a decade.

More significantly, only a small minority of workforces across the globe are engaged – measured at an extreme level of 15% a few years ago, and at just 25% in the US manufacturing industry in the recent past. 

These are markers of mismanagement – of a disengaged leadership. A culture metamorphosis is needed, and as manufacturers transition to DOS, the dual opportunity presents itself. Indeed, holistic, integrated digital transformation requires a capable, receptive and digitally attuned workforce. (For a fuller discussion of the advantages of an orchestrated digital transformation in manufacturing, download the white paper Digital operating systems: The next generation of production systems.)

What key considerations should guide cultural change in a time of digital metamorphosis?

The pitfalls of a race

Instilling the appropriate beliefs and behaviours takes time. How much time depends on how entrenched or damaging the existing, inappropriate behaviours may be. Planning is key: understand the degree of change needed, and the depth of issues involved. Roadmap the organization’s technology investments in alignment with skills development. Unless there are overriding reasons to fast-track one division or operational ambit, synchronize the rollouts throughout the company.

Digital forerunners can achieve as much as 50% better margins than digital laggards within their industry. But understand the first-mover advantage principle in its specific application to the company’s industry and sphere of operations. A race is often frenetic; it may be more advantageous to phase change smoothly to ensure minimal disruption to existing operations, and an orchestrated build upon solid foundations.

The longer-term winners will be those organizations which co-opt culture as a touchstone for digital transformation, and engage employees in a journey toward new capabilities.

New and improved engagement

Detailed evidence supports the link between an engaged workforce and productivity measures. More recent analyses underpin the role of motivation: an inspired team can deliver over twice the productivity of one that is engaged.

This presents an enormous opportunity for leaders. 

Talent strategies take on ever-increasing importance. Recruit based on attitude and ethos as a match to the organization’s culture; train and upskill – constantly – to cultivate a growth mindset within the workforce at large. And the company’s vision and purpose is a beacon: make sure it sends the right signals.

Practical measures toward a high-performance culture

Understand that digital transformation is not change management. Technology will continue to escalate capability and disrupt business models. It’s more important to embrace a culture of continuous change than to implement a change management process which attempts to buffer the future. Manufacturers, in a very real sense, will now be in a permanent state of transformation.

Communicate – meaningfully. A successful transformation requires prompt, transparent and ongoing communication. Reassurance is the wrong goal. Rather, people appreciate clear, honest, and authentic messaging. Communication may be the crux of culture. Keep at it.

Give autonomy and expect accountability. Good manufacturing managers understand the need to forge opportunities for input and creativity – effectively, to massage manufacturing processes to optimize human autonomy within the man-and-machine workplace. And clear, agreed upon goals, with defined accountability, is a mechanism to engage. 

Deliver on the ‘people first’ mantra. Employees in manufacturing understand that they are part of a production process. But when people feel part of a team, that their contribution counts, they are more likely to be productive and to problem-solve. Leaders who encourage potential will be rewarded with a motivated nightshift, and are more likely to generate that spark of ingenuity that saves millions or significantly enhances a process or product. Culture is a two-way street: employees who experience support will be more receptive to the organizational change. 

Lead and engage. A transformation often starts with leadership behavior changes. By demonstrating a commitment to the new way of working, and by accepting responsibility in a coaching role, a leader casts an inspirational shadow.

Transformation is a journey, culture is an attitude

A transformational challenge for leaders is to make culture – an apparent intangible – tangible.

Think, again, about how a seed grows: the spark to break through the soil; then onwards and upwards, with purpose; if it accesses adequate energy, it’s unbound.

Does your company have the right energy? As a leader, do you instil an adaptive, growth mindset?

glenn leask cci
Glenn Leask

About the Author
Glenn Leask is a founding partner and CEO of Competitive Capabilities International (CCi), a global management consulting firm that helps leading manufacturing and supply chain organisations achieve world-class performance through best practice and work process improvement. Glenn’s areas of expertise include developing manufacturing and supply chain strategies and implementing World Class Operations, TPM, Six Sigma and Lean. Glenn holds degrees in Mechanical Engineering and Industrial Engineering as well as a Master of Business Administration.