NEXT POINT ZERO - Chapter 3: Getting ahead and staying ahead
Luca Sorgiacomo
5.0 Technologies for growth | Digital Transformation Expert | Founder @ Progress Lab
NOTE TO THE READER: This is a book chapter draft. Feel free to comment and propose ideas to improve and continue it.
It’s all about your speed to value
Already in the first chapter I’ve stated multiple times that Industry 5.0 can be a strategic advantage that can make you become a leader in your sector, beat the competition and even enable small businesses to establish themselves in the market and compete with big players. I won’t delay details any further and tell you why right now.
It all comes down to one simple reason.
Speed to value.
People in the manufacturing world like you will be familiar with the term “Lead Time”. The detailed definition may vary depending on specific schools of thought and accounting methods, but it’s always some form of “the time it takes to produce/deliver an order”. Everybody knows that lead times are crucial: both the company lead times and its suppliers’; the shorter they are, the more capable the company can be in responding to demand and adapt to unforeseen events, which makes them more competitive in the market and eventually sell more.
That’s one form of speed to value, that is, how quickly you can transform an opportunity (the order) into a concrete benefit for the customer and thus for the company (order delivered / order invoiced / payment collected).
Lead Time is a well known metric, but it’s just the beginning. Now let me ask you a few questions (“you” can mean your department/company).
If your company is anything like the ones I’ve seen, at least two of the above tasks tend to create headaches pretty often. In each of them you will find a complex set of actions requiring coordination of multiple people from different departments and the making of several decisions with sometimes uncertain impact. And it’s hard. Every time.
The result is that only the most pressing issues are dealt with, with less urgent but potentially more beneficial activities getting delayed because it feels that now “there’s just no time for this”. This important decisions and actions then pile up and end up forgotten or get done only when they escalate into an urgent matter, that is, when a customer calls in to complain or a process breaks down.
This pattern is a very common one. All but few very well organized companies struggle with this issue.
Now can you imagine how your company and your life could change if those coordination tasks could be carried out in half the time? What if a sales person could just have a good-enough estimate of delivery times at the click of a button? What if after a change in your production plan everybody was aligned automatically and with certainty? What if every department and the customer could know at a glance the exact status of an order? What if data was always readily available and helped making decisions on the spot?
The specific end result of this apparent fairy tale may mean something different in each company, but there’s a common thread: the increased speed of action in these day to day tasks allows for more time to focus on most important matters like quality of outcomes, R&D, market development and other strategic, long-term initiatives.
There’s a quote from a book I love which says: “By small and simple things are great things brought to pass; and small means in many instances doth confound the wise” [1]. Paraphrasing, it means that big results can be achieved via small changes that can have a significant impact, in a way that can often surprise even experienced professionals.
For example, did you know you can improve your company cash flow quickly and effectively by reducing setup times? Lean practitioners know this well, since it’s been done many times over and it’s one of the most strategic impacts of a sound lean strategy. So no, don’t think lean is just an operational thing. Removing waste in your company will directly impact your balance sheet in multiple positive ways?[2].
In the same way, if you focus on the things that hold back your?low level coordination processes?from flowing smoothly and quickly, you can obtain a significant improvement in you company response speed. But let me explain what I mean by low level coordination processes.
It’s likely that in your company there are activities that are given for granted, which take hours over hours every week. Things like:
I bet that there are plenty of people already complaining about how long some meetings take, or how much time they have to spend searching or waiting for information. These are what I call low level coordination processes (LLCP). By focusing on LLCPs, key repetitive activities can be streamlined and reduced to a mere handful of minutes with a relatively low investment in smart digitalization and few small organizational adjustments. By doing so, you get two huge benefits:
But this is not a book about time management or efficient meetings or post-it notes on whiteboards, so what does all this have to do with Industry5.0? Let me try to open your eyes to an important fact: all these activities are essentially one single domain:?information management. Gathering information, analyzing information, interpreting information, generating information, sharing information. And information management is in turn based on?data.?As we said earlier, Industry5.0 can be seen as a human-centerd, data-driven, technology-enabled value creation approach, data-driven being the focus in this case. I’ll say more about how data underpins most company activities later in chapter XXX, but the general idea is that by focusing on data, a function or business can create a sort of digital twin of itself [3], so that everybody can interact dynamically with key processes in a quick and robust way, keeping things from falling through the cracks, and actually being empowered by the informations system, rather than being constrained by it.
This is not an idealistic vision, but is based on hard evidence: McKinsey has found out back in 2018 that out of eighty three different actions, the one that had the strongest correlation with the success of digitalization projects was implementing tools to make information more available to the whole organization [4].
But let’s go back to the concept of speed to value. I hope you can start to see how, with data and information being readily available when and where is most needed, several processes could see a significant improvement:
Can you see how this is not just about some abstract measure of efficiency?
Ultimately, increasing the?speed?of your processes means easier work, more growth and more money, which will make all involved—employees, managers and shareholders—happier.
Achieving a higher state of energy
The pendulum analogy
Imagine a pendulum. A big one, with a hard 10kg (~22lb) weight the size of a basketball pinned to a roof 10 meters (~33ft) high via a strong steel thread. It’s standing still in its center, at the hight of your chest. Now move it a span to the side and it will start a two spans long, slow swing. The pendulum will do its work. If you leave it alone, it will keep swinging for quite some time. If you stand in its way, you would likely just feel a small bump, and the weight would stop without too much difficulty.
Now repeat the mental experiment, but this time move the weight 10 steps away from its place of equilibrium. It will take some effort and planning, possibly tooling, because as you walk you will have to lift the weight around two meters above your chest. After you do, as you let it go, it will swing much longer and faster, and you probably would not enjoy trying to stop it with your hands.
Without going too much into the physics of it, the reason why the pendulum swings faster is because you transferred more energy to it via your work of lifting it at a greater height. That work is “stored” in the form of?potential?(gravitational) energy of the weight, that, when released, is transformed into?kinetic?(movement) energy_._ The higher you lift a weight, the higher its potential energy, the higher its kinetic energy when released.
Why this experiment? This is a reminder that, whatever system we design, you get what you put in. Technology is no magic wand. When it comes to processes involving multiple people, no tool nor piece of software can be effective out of the box. I will repeat this. Any intervention on an activity or process where multiple people are involved, there is no such thing as plug-and-play: no physical equipment or digital product will get you the result desired without putting your mind and hands into the information flows and organizational roles impacted, and especially into the low level coordination activities (LLCs) that are in place.
This is especially true because, going back to the analogy,?how?you lift the weight matters a lot. There are specific?constraints?that must be considered. In the pendulum it’s the thread that keeps the weight fixed to the roof. If you lift the weight without keeping the thread fully stretched, when you release it, it will bounce and will not follow a smooth swing, resulting in chaotic movement which will stop sooner, and there’s also the risk that the thread will break. I’m sure that during the mental experiment you instinctively kept the thread stretched because you know how a pendulum works. But when it comes to complex processes it is much harder to know all its ins and outs.
Companies often find this out the hard way, when things are rolled out and they do not work as expected, or they do work, but they break something in some other process. Typically this is due to the fact that there are many things that people give for granted, especially those pieces of information that come from or go to other departments.
For an example, you can think of an occasion when one office decided to change?their own?standard in a way that seemed to improve their internal activities, only to discover that you or your people were relying on the previous standard to carry out?your?critical tasks, or viceversa. Usually this leads to rework, either assigning somebody to “translating” information from one standard to the other, or rolling back the process to the previous standard. In both cases?this is a huge waste, on one side in terms of time and effort, and on the other of motivation: in fact, the worst effect of such events is that people lose hope in the effectiveness of change initiatives, creating rigidity and a gradually slipping the company into a culture of cynicism and conflict between departments. I hope you agree with me that it would be much better to avoid any of these negative side effects.
Don’t get me wrong, innovation projects cannot be risk-free. The greater the impact you expect, the higher the need for fine tuning and regular checks over the following months and years. However, you?can?and?should?make all reasonable efforts to avoid or at least reduce risks before roll-out. You should also set up expectations in advance for everybody so that adjustments are seen as physiological stepping stones to success rather than roadblocks or even failures.
These risks often hide in the seams between different activities, roles and departments. For this reasons, to be successful, each project will require patient discovery of LLCs and the testing of organizational assumptions. Chapter XXX will dive deeper into this. For now, the analogy of the pendulum should bring you home two concepts: first, if you want impact, you must put effort in advance; second, know and keep in mind the constraints in order to make sure the effort translates into impact effectively.
Work and the path of least resistance
Usually doing what is hard up front allows for lower resistance later.
If you think of a stream flowing down a mountain you don’t picture a straight path. Water will follow an irregular course defined by ridges and falls and obstacles in the ground. It will turn, divide and reunite, always following what is called the?path of least resistance,?that is, in any given point, water will flow in the direction that requires less energy.
You know for example that water will never flow up. That is true for that very same reason: as we’ve seen with the pendulum, because of gravity, going up requires an external input of energy, while going down will happen naturally thanks to gravity, so it requires less energy. In a more nuanced way, if you have a slope inclined five degrees toward east and ten degrees toward south, water will take a direction more toward south and less toward east.
[ Insert visual explanation of the path of least resistance ]
People tend to behave in the same way. Given a goal, they will try to reach it following the path that requires the least amount of effort. This is not because people are lazy. It’s a law of nature and it’s also a sensible principle: why putting more work than necessary to achieve a result? That would be waste.
Another interesting analogy is that the flowing water in turn shapes the ground “engraving” its path on it through the process of erosion. Same again for people: in time, they settle on specific ways of working, methods, policies and tools of coordination, which become harder an harder to change the longer they remain in use. One difference is that mountain streams are usually clearly visibile, while many of the pieces of our day to day work are more like underground channels: most people in the company don’t know about them, except those that live them regularly.
But we’ll get to this point later. In any case the rule of least resistance remains valid. People will follow the path to their goals that feels easiest to follow. I wrote?feel?on purpose, because often people are not aware of the implications of doing something in one way or another and may feel a path is easier not realizing it will require rework or otherwise harm them later in forms they don’t expect. They are focused on their own task and the problems they have to solve in their responsibility. This is not wrong in principle. Their duty is to achieve the goals they are assigned with the resources and in the time given to them. What lies outside of this is not within their explicit duty; while systemic awareness and concern is desirable, most of the times it should not be expected.
On the other hand, we’ve seen that low level coordination activities (LLCs) can have a meaningful impact in the overall speed to value of the company processes. So whose duty is it to make sure they flow as smoothly as possibile? If you’re a manager at any level, this responsibility is yours. At least within your sphere of influence, it’s up to you figuring out what good looks like and translating that vision into tasks, responsibilities and policies, but in most business contexts defining and communicating the direction does not guarantee that people will follow it. If you want to increase compliance, you should be providing tools and information that make following?that specific path?the one that is easiest to follow, and let your people free to do their best work within the framework that you provide.
In this sense, there are various elements that define the path of least resistance in a work environment, like the following, listed in no specific order:
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How to manage all these elements is a topic I think too wide to be be condensed in a single framework, and each is the subject of many other authoritative books [5]. Here we’re focusing on the tools and resources that Industry5.0 can provide to create an infrastructure that makes it easier for the people in the organization to give their best and do so efficiently, so that the organization can move better and faster in the market.
Creating an infrastructure for enduring success
We’ve seen that Industry 5.0 can be a driver to increase the speed at which your business can operate and adapt, and through this improvement win customers and market share.
The pendulum analogy and the concept of the path of least resistance give some starting insights about how to realize this vision. First, technology is not magic. It won’t work just by running it. We need to put human effort into designing and implementing a new system so that it has enough energy to generate the impact desired, and we must do so considering system constraints if we do not want that energy to be dispersed and eventually fail to translate into lasting results. Second, work system in time become constraints that can direct people in one way or the other, and, in a measure, prevent them from changing course: you can make people go in another direction, but they will not do so sustainably, until the desired path becomes also the easiest to follow.
You can leverage these two concepts to analyze, design, implement and maintain an infrastructure that best suits your organizations and goals. The word “infrastructure” is not by chance: in fact you will have greater probability of success if you think of a new work system as a highway that allows any car to get faster to a destination, rather than just a faster car model. In fact, a faster car will hardly be effective if the road is full of holes and bumps and requires going through dirt or even off-road tracks. Can you imagine a Formula 1 car racing in a rally? It won’t end well for the car and would probably not win at all.
Processes are a company’s road infrastructure. Implementing Industry 5.0 will be like setting up an efficient network that your people can drive on freely, comfortably, avoiding traffic, allowing them to achieve their specific goals with the least effort possible.
If creating a road network seems like a daunting task, I can reassure you that the analogy is only to help you understand the potential benefits of it. In fact, while a road network is almost a once-and-for-all affair, with no chance to go back or adapt, Industry 5.0 is exactly the opposite: it will allow flexibility and adaptability, and in many cases the small changes that will become necessary in time will bear a cost that is negligible compared to the initial investment. Still, it will have the same beneficial effect of providing a long lasting infrastructure that people will find easy to exploit, and thus lead gradually to people following your desired path as their most natural choice. This will also be akin to lifting the pendulum weight pretty high, with the thread well stretched out, ready to transform its potential energy in long lasting impact.
I want to repeat the the impact of such a transformation can be long-lasting, specifically not only because behaviors in the company will change, but also because it will be hard to replicate the results just by looking from the outside. The competition will not be able to simply copy what you’ve done. They’ll have to go through the same process in their own context. No two transformations are alike. What a true transformation will achieve will become a competitive advantage for several years.
This high-energy state is your goal as the starting platform to increase your speed to value. And Industry 5.0 will be of great help in realizing it.
A story of multiple journeys
Before moving on to a more in depth discussion about how to reach that high-speed and high-energy state, I want to give you one last lens to make sense of the complexities of a transformation of this kind.
We’re not talking about a sprint. Transformation is more like a journey. And not even a straight forward one.
In a way, it’s like what happens in Hollywood productions and in literature. Many successful works often follow a pattern called “the hero’s two journeys” [6]. One journey is the main plot, e.g. hero winning against the villain. The second one is the story of the development of the hero’s character throughout the plot. It’s the skillful joint development of these two stories that underpins the best movies and novels.
In the plot of Industry 5.0 initiatives, things can get a bit more complex, as the number of the journeys increases to at least four.
The digital / technological journey
The first and most obvious journey is that of the technological transformation. The company starts with a specific set of technologies being used to achieve the company’s goals. As Industry 5.0 is a human-centric, tech-enabled, data-driven approach to value creation, it is implied that the end status of the technological toolbelt will be a different one. Maybe you’ll have new equipment, maybe two separate software systems will start communicating, maybe you’ll have new digital products installed or developed, maybe your products will become more intelligent. One way or the other, technology will certainly play a key part in the plot of the overall transformation.
The organizational journey
We’ve seen that technology alone in itself can bring only limited value and that the best can come only when it is coupled with processes and an organization that move differently and faster, thanks to that technology. The fact that a technological transformation will require changes also at the organizational level, unfortunately, is often overlooked. One should always take into account that some tasks and activities will be removed, some will be added, some will change. Sometimes to make the new process flow at its best it will be advisable to make adjustment not just in the activities to be carried out but also in roles and responsibilities, in some cases also in the organizational structure of part of the company. There is thus a deeper transformation behind the implementation of new technology. This is what most people fear, but is also probably the most powerful part, as the technological one will only?enable?the true change, and will not make it happen by itself.
Going back to the movie analogy, this is the inner transformation, the character development story. At the end of it the organization will be different, more mature and perfomant. To become such however, there’s no avoiding trials: the organization will gain its higher status of character only by overcoming them. And in this book we’ll address several possible trials and how to face each of them.
The Transformation journey
Going from start to end will not happen naturally, even if all the details of the plot have been laid out in advance (which is almost impossible, by the way). The initiative will need careful navigation, the managing of specs, deadlines, dependencies and stakeholders at all levels, from frontline workers to executives. This is what people usually call?project?or?change management.
I want to point out that project management and change management are not usually referred to as the same thing. Practitioners tend to specialize in one of the two domains, project management typically focusing on “hard” elements of a transformation, such as deadlines, quality, costs, resources, tasks, planning and control etc., while change management usually stresses more the “soft” side of initiatives such as managing the team, communication, dealing with conflicts and resistance, training and so on. In the context of an Industry 5.0 transformation however there’s no neat boundary and both are necessary in supporting it. So here we’re simply referring to all the skills and activities needed to bring successfully the company from point A to point B, which will require contributions from both worlds.
This is typically an insider story: a part of the plot that only people involved in directly managing the transformation itself will be fully aware of. But it’s an important part, which should be assigned and overseen explicitly. If not, the success of the project is at stake, and even if it will get to the end you can be 100% sure you’ll have delays, cost increases and quality issues.
Your professional journey
In movies only certain characters are given attention. In the real world, every single person involved is a life on its own, with experiences and hopes and fears and trials and goals that are theirs and theirs only.
You are one of them. Whatever your role in the plot, you will also have the chance to come out of this journey changed. The success of this initiative can be a driver for your own professional success if you manage it properly and take it as an opportunity to learn and upskill yourself by being an active part, regardless of your status.
If you’re an executive, being actively involved will give greater fuel to the initiative and increase the chances of success. I know you’re busy, but remember the strategic opportunity that lies in this. Don’t stop at high level reports and try to participate in practical discussions when you get the chance. You will not only increase the motivation and sense of urgency of the team, but you will also learn a lot about your organization. As you will find out in the following chapters the discussions linked to implementing data flows can uncover treasures of knowledge about how your clock ticks and where it can improve. It will be like an x-ray of your processes. Don’t miss this chance and you will come out as a more knowledgeable and involved leader, and will better able to lead your team toward new opportunities in the future.
If you’re a manager or an employee, this is a great chance for you. Few people take the initiative to be active part in a transformation, and those that do typically become the go-to person later on for their expertise. You can leverage this newly found relevance to help your way up within the company or even to get a better job. In one way or another, your experience in a transformation will become a compelling story to tell and and a valuable asset to achieve your professional aspirations.
Finally, you should also be aware that beyond your own storyline the transformation tells a whole other story for the other people involved. Knowing they, too, see things from the point of view of their own personal journey, will help you find synergies between all the different plots and successfully achieve the human-centered side of the transformation.
Furthering Economic and Social Progress
Last but not least, you should not underestimate the ripples that a successful transformation can have outside of the company. The local economy in general benefits from the success of any specific business in it. Successful transformations make people grow, and their families too. Successful transformations will have case studies written on it, inspiring other companies and future generations.
Our suffering world needs so many more professionals that know how to innovate by placing people at the center, by knowing how to gather and interpret data to overcome sterile discussions based on opinion alone, and by navigating with skill all the obstacles that can come up when dealing with significant change in an organization. Your experience will build up important knowledge capital that will be useful, whether directly or indirectly, to improve not just your company, but also society in general.
This may not be your immediate goal, and it’s fine. You already have so much on your plate and certainly cannot consider the whole world when working for your team. But these ripples need not happen now, and you don’t need to think about them directly: it’s very likely they will happen naturally as a byproduct of your success, especially if you keep focusing on the principles of being human-centered and data-driven.
In summary, each transformation, from small process changes to company turnarounds, can be read on many different levels. It’s hard to coordinate explicitly all of them, especially if you don’t have a team working directly on managing the transformation journey. If you don’t, just do your best. Being aware that these exists will still help you immensely in achieving the desired happy ending to your story.
The infinite game
What happens when the pendulum is swinging at its full power as you managed to increase your speed to value? Is your transformation over?
From a certain point of view, yes. One journey is over and it’s time to reap the benefits for a season. Enjoy the view as you see new customers coming in and your revenue and profits increase.
But remember the story from the music distribution business in chapter 1: it will not be long before something new will come and shake your market. A new and faster competitor, an alternative product, a change in distribution channel, new regulations and quality requirements, a pandemic, a war, a climate crisis, you name it. The end of a journey does not mean a new one will not be necessary at some point. In fact you can be sure it will. Know that things will change big, and you’d better be ready to overhaul everything again at some point.
On the other hand, having placed people at the center, having used technology to enable greater speed, and being driven by data, each new journey will come easier, as each time you run a marathon prepares you for the next.
What’s more, as we’ll see in part 3, in between a marathon and the next you’ll have plenty of opportunities to hone your performance through smaller and regular trainings that will further prepare and solidify your strength and resilience.
Just be ready to start again, and exploit your experience in increasing your speed to value and creating new ways to generate it, and you’ll be well suited to win in the infinite game that is the market competition.
Now let’s dive into the details and see what an Industry 5.0 transformation means in practice.