You may have heard that digital transformation will change
the nature business. Well, you can at
least count on it changing the nature of the workforce. Digital transformation is being referred to as
the fourth industrial revolution. Each
time our society went through an industrial revolution, it created a massive
change in the makeup of the workforce and the skills and abilities needed.
Industrial Revolutions
The first industrial revolution occurred in the late 1700’s
and early 1800’s. It was driven by the
introduction of steam power. Prior to
this time, the vast majority of the workforce was slave labor or serf labor
performing low-skill manual tasks. Thanks
to the first industrial revolution, the steam engine provided the brute force power needed by the
early industrial companies. Massive
numbers of jobs disappeared and societal upheaval, such as the Luddite riots,
occurred.
The second industrial revolution started in the late 1800’s
and went through the early 1900’s. It
was driven by the introduction of the mass production assembly line. In this revolution, the workforce became adept
at one task or activity. This led to dramatically
lower product cost while improving quality.
The economy boomed and the workforce transformed from mostly agrarian
workers to mostly factory workers and a vibrant middle class.
The third industrial revolution was the advent of electronics
and computers in both products and processes.
Business success now leveraged complexity that was enabled by the
computer systems. Individuals in the
workforce had to develop digital skills applicable to their functional role. People required specialized training and
technical certificates. To get a job, you needed a degree. Often the workers became isolated as they
operated the computer system or equipment in use at their workstation – whether
it was on a factory floor or more commonly in an office cubicle. This led to the rise of the subject matter
expert. At the same time, many decisions
about products and processes were forced higher into the organization where managers
had the experience, oversight and understanding of the complex systems. The workforce became a host of isolated specialists
and a person’s career growth was based upon their functional knowledge, not
their tenure with their employer.
Industry 4.0
Now we have the fourth industrial revolution. This is driven by the introduction of smart
devices and artificial intelligence.
This requires the connectivity and processing capacity to create ready
access to real-time data throughout the business processes. Real-time knowledge and information changes
how people interact and the scope of their work. The availability of data and the application
of smart devices often frees both customers and the workforce to interact
virtually on a 24/7 basis with respect to each unique order or account. We used to say in the organization that
knowledge and data were power. In Industry 3.0, subject matter experts and
managers held power by closely controlling the flow of information. Decisions were forced to the highest levels
in the organization. Thanks to the
Industry 4.0 revolution, the knowledge and data are available to almost anyone,
and both customers and employees expect instant decisions.
As in the other revolutions, we are starting to see a
massive shift occurring in the workforce.
Many of the routine administrative processing jobs, the paper pushers
and gatekeepers, have vanished. Even
some of the highly skilled positions that relied on specialized knowledge and
abilities are being automated and replaced with smart devices. If we look at the organizational chart of an
Industry 4.0 company, it no longer looks like the pyramid of old with
entry-level workers and process operators at the bottom of the pyramid who over
time can become subject matter experts, front-line managers, and finally senior
managers of the organization. Now the
organization chart looks more like a pentagon.
Many of the entry-level and process positions are replaced with digital
assets, and even some of the subject matter experts are now automated systems
and algorithms running the business processes.
Workforce Transformation
This transformation of the workforce has significant impact
for education, training, hiring, and careers.
The career path in Industry 4.0 is very different from the path to
success that has been promoted by our education system and many HR
departments. Let’s briefly consider the
role and responsibilities of each of these workforce levels in Industry 4.0 and
then the educational and career implications.
The number of process operators and entry level positions
within an Industry 4.0 company are sharply reduced as compared to an Industry
3.0 company. Much of this work is done
by digital assets. The paper pushers and
gate keeper roles have disappeared.
Based upon the ROI for creating or acquiring a digital asset, entry
level positions are also disappearing.
Just consider the retail environment, for example. Many stores now have
self-checkout and often customers order online without interacting with a
salesperson. The base of the pyramid has
already shrunk, and it will continue to shrink as the capability of digital
assets grows.
The role of the Subject Matter Experts (SME) is still needed,
but it is changing. In Industry 4.0 they
are often on the front line of the business processes and have been empowered
to make day-to-day decisions. Their authority
has increased, and they are normally expected to be problem solvers and real-time
solution providers. They can do this
since they have immediate access to all relevant data and can connect with other
SMEs, both inside and outside the organization, to determine the best
decision. In an Industry 4.0 company, digital
assets handle the routine process management work that SME’s have done in the
past. The Industry 4.0 SME takes on the
special cases and provides the unique value-added solution for these. This means the skill set and responsibility
have expanded. The SMEs still need the
appropriate subject matter expertise.
But in addition, they need access to cross-functional process data and understand
how to interpret this real-time data.
They also need the inter-personal expertise and decision-making skills
that are vital to successful process management and problem-solving decisions.
The frontline manager role also changes in an Industry 4.0
company. They are not as involved in
day-to-day decision-making. That is done by SMEs. But the speed of change, both technical and
organizational, is rapid in Industry 4.0 companies. So, the frontline managers are coaches, trainers,
and change agent leaders that help their people gain and maintain the evolving skill
set needed to do their job. These
positions are not based upon seniority, but rather on the leadership and
facilitation skills of the individual.
These individuals must be leaders of change who are constantly hiring
and training the workforce to equip them to perform the evolving business
processes.
The role and scope of senior managers in Industry 4.0 is
similar to that of managers in Industry 3.0 companies. They are responsible for strategic direction,
resource allocation, and monitoring the execution of all aspects of the
business. However, although the role and
scope are similar, the means by which they do this and the pace of their
decision-making is radically different.
They do not sit at the top of the pyramid and wait for filtered and
sanitized data to work its way up.
Instead, they have instant access to real-time data of product and
process performance throughout the business.
While this provides improved insight and understanding, it is also can
be an enabler for micro-management. To
be effective, these individuals must delegate the authority for real-time
decision-making and then focus their decisions on strategy, asset allocation,
and personnel development. They shouldn’t
try to make all the decisions, instead they should point the direction, enable
the teams of SMEs, and help frontline managers cope with mid-course
corrections. And there will be the need
for many mid-course corrections because the business environment is constantly
changing. Five years plans, annual
strategy meetings, and quarterly reporting is much too slow for Industry
4.0. But chaotic and continuous
redirection and micro-management will exhaust and frustrate the organization. These individuals must be outstanding leaders
to guide and direct their organizations.
Industry 4.0 Personnel Development
Finally, let’s consider a few implications for education,
training, hiring, and careers within an Industry 4.0 organization. First with respect to education, everyone
needs basic skills for using technology.
And, of course, they need the ability to communicate well and understand
basic concepts about the world and the people they interact with. These are the traditional academic
disciplines of reading, writing, math, science, history, and sociology. The individual will also need foundational
knowledge in their selected discipline.
But a key here is that they have foundation knowledge that they can rely
on as they adapt to the ever-changing environment in which they establish their
area of functional expertise. The
education should encourage the student to explore new ideas and concepts using
these as appropriate to make decisions and solve problems.
While education is important for foundational understanding,
the rapidly changing business environment and technologies will require
continuous training for subject matter experts.
The subject matter expertise rapidly becomes stale. An Industry 4.0 company must create a strong
training program that helps the subject matter experts remain experts. In addition, the training and development system
should lead the new hires into positions of subject matter expertise. This will often require developing their
interpersonal and problem-solving skills.
This means the learning management system for an organization will
become a strategic asset and a critical portion of the organizational infrastructure. This is the most significant value-added
activity of the HR department.
In the Industry 4.0 environment, products and processes are
constantly adapting. Some of the
individuals in the organization may choose to adapt to the change by following
the technology or process to a different company rather than changing their
skill set and remaining with their current company. Added to this, the need for companies to
quickly scale up and scale back as their fortunes ebb and flow in the digital
economy leads to high degree of employee turnover and the use of temporary
employees. In fact, many people in the
workforce want and expect to change jobs frequently – they are part of the “gig
economy.” The front-line managers will
be in a constant mode of recruiting hiring and assimilating new employees –
some temporary and some permanent. The
organization will be constantly filling the pipeline with candidates and
rebuilding their workforce.
One of the most significant changes from a workforce
perspective is the impact that Industry 4.0 has on promotions and careers. Promotions are not based upon seniority. They are based upon subject matter expertise. To move from the entry level position to a
Subject Matter Expert within a company will be based upon technical knowledge
and problem-solving skills. Leadership
and team management skills are required to move from the SME role to front-line
manager. The opportunity for promotion
within a company is associated with the changes in the company and the growth of
the individual, not the retirement of someone’s supervisor.
Organizational charts
are fluid. Positions will be created and
disappear again, perhaps within a matter of months. The old maxim that each individual is
responsible for their own career is more true than ever before. The individual’s ability and desire to adapt
to change, and their personal leadership skills determine their career
path. HR organizations must also be
nimble to create urgently needed positions and eliminate suddenly obsolete
ones. The HR organization should be
prepared to explain and guide individuals through this sea change in workforce
management.
What I have described is the likely result of a company
embracing Industry 4.0. But we must also
recognize that change is difficult. The
previous industrial revolutions took decades before the majority of companies
had adopted the new practices. We are
about 10 years into this revolution. So,
if your company is not on-board yet, there is still time to catch up. But don’t delay too long. As more companies embrace the Industry 4.0 business
model, your old workforce and people management practices will soon be viewed
as an oddity and anachronism.
