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Three challenges facing managers

Production and management
The fourth industrial revolution and the changes it requires of companies place considerable demands on management.

Industry 4.0 demands a lot of company managers. While daily production is in full swing, the management must make a number of decisions which can potentially change the company’s strategy and organization, explains Associate Professor Christine Ipsen, who heads the research team ‘Implementation and Performance Management’ at DTU Management Engineering. She points to three particular challenges which a company’s management must address if they are to make the most of digitization

Choice of strategy

When managers have to choose a new digitization strategy, they must, among other things, decide on whether to utilize digitization in the product, or whether digitization should be process or production-oriented. Does the company need to use robots for example, and automate certain processes? Or can digitization of the product procure data for the company, which can then offer new services?
To choose the right strategy, the management must understand its customer needs and the changes taking place in the market. This is vital in order to make the right decision and develop the right business model.

Organizational changes

No matter which digitization strategy a company chooses, it will lead to certain organizational changes. This could be in the form of new working processes, where employees work alongside robots, which calls for a change of behaviour and new competences. It might also mean new interdisciplinary collaboration between employees in R&D and production, who have so far been working separately, and where they now need to learn how to communicate and cooperate with each other.

"Industry 4.0 demands a lot of company managers. While daily production is in full swing, the management must make a number of decisions which can potentially change the company’s strategy and organization."

It might also involve the establishment of new functions and competences within, for example, software development, which needs integrating with existing functions. Digitization offers access to more data and knowhow about the company’s activities, performance, and behaviour, and it also provides a basis for more informed and faster decision-making which was previously based on employee knowledge and experience.

The increased use of data in products, processes, and decision-making requires both an acceptance of data and results as well as the competences which are needed to interpret the data, and that there is someone in the company who can translate the data into something which managers and their colleagues can act on. The manager should therefore consider whether the company has the right competences, or whether it is necessary to bolster the workforce with new experts and employees.

Focus on implementation

The implementation of the digital strategy poses a huge challenge, and leads to changes at many levels in an organization.

Based on the obvious desire to improve productivity and efficiency while maintaining a high level of job satisfaction, the question is how to ensure the best possible implementation of new digital services, products, and/or processes. One challenge is to draw up a plan for how to apply the strategy to existing operations to avoid a situation where it ends up as a small pilot project consigned to the sidelines. It is one thing to decide on a vision and the project plan, but it is quite another to persuade employees to accept new working processes and tasks, and to consider whether they have the right competences, interests, and resources.

This calls for all-round focus, where engineers and managers need to understand the implications of implementing new digitization strategies and their impact on working processes, the organization, people, and their behaviour.