Industry 4.0: The challenges of digitalization

Digital change can no longer be stopped – and yet it doesn’t happen on its own. Accordingly, companies must act to successfully master the digital transformation in their company. This is the only way they can benefit from the positive effects of digitalization in the long term.

Table of Content

The digital transformation at a glance

Our working world is constantly changing. The most important processes at the moment include globalization, demographic developments – and digitalization.

Above all, digitalization is intended to shorten companies’ value chains and improve business processes. Increasing automation, intelligent software tools and analysis tools are shaping a new world of work: Industry 4.0.

The most important results of digitization:

  • Work is changing

  • Strong pressure to adapt arises

  • Qualification and competence requirements are being raised

  • Further training is becoming even more important

Opportunities of digitalization

  • Increased productivity: Digitalization at work ensures that employees can work even more effectively and productively – and have more time for the really important tasks.

  • New products and services: The successful digitalization of work enables companies to tap into new sales areas, gain new target groups and launch new products on the market.

  • Transparent processes: Thanks to digitalization, control sequences and process flows can be presented even more transparently and openly.

  • Simplify processes: The more networked the working world, the simpler the flow of various processes becomes.

  • More flexibility: Home office and remote work – digitalized workplaces allow more flexibility for employees – and ensure greater satisfaction.

  • More interesting tasks: If simple and repetitive tasks are automated, there is more room for the creative, complex problems. The result: more interesting, more challenging work processes.

Automation and job security

According to a study from the USA, around 47% of Americans currently work in a job that could be automated in the future. (Frey and Osborne, 2013) Developments in Germany are similar. But does this really mean that one in two people will soon lose their job to machines?

Probably not. This is because not every job can be reliably automated. In fact, the machine can only take on certain tasks.

So whether a job can really be completely automated depends on the importance of the tasks that the machine can take on.

An analysis of the automation potential in Germany (Bonin, Gregory and Zierahn, 2015) uses this approach to calculate that only 12% of occupations can be fully automated.

And even this figure only reflects the potential for automation – and these are often overestimated or do not find their way into companies at all. A large increase in unemployment due to digitalization is therefore not to be expected.

How will work change in the future?

Current studies do not show a massive increase in unemployment, but a clear change in the employment sector itself.

Physically demanding tasks are becoming less, but the mental challenges are increasing – work is becoming more varied and complex. In the future, interdisciplinary and interdisciplinary know-how, social skills and creativity will be in demand.

At the same time, this development also means a higher mental workload because many tasks have to be completed at the same time.

The challenges of digitalization

If you want to digitize your company, you will be confronted with many different paths and approaches. However, the most important thing is not to fall into blind actionism, but to select measures and tools with foresight and in consultation with all stakeholders.

Data protection and cybersecurity

Sensitive customer data plays a role in every company. It is therefore all the more important that this data is adequately protected against data theft and cyber attacks.

If this does not work, the company is not only in breach of the relevant data protection guidelines – severe fines can be the result, not to mention the loss of customer trust.

With increasing digitalization, you should therefore also invest in sufficient cyber protection measures and establish appropriate regulations for handling sensitive data. Training programs for your employees are also often crucial when it comes to preventing data leaks.

Training and further education

Employees are the most important factor in digitalization. After all, the digital transformation can only succeed if your employees WANT to support the change on the one hand, but are also appropriately trained on the other.

Unfortunately, the belief still persists that new systems automatically establish themselves in the company as soon as they are available. This is wrong. What is needed are active measures that involve the team members in the change and provide them with the necessary tools.

Important digital skills and specialist knowledge can be taught well as part of further training. In this way, employees can be trained in the use of new software, tools and processes – and thus take the most important step towards digitalization.

Restructuring the work

Thanks to automation in particular, work processes are becoming increasingly efficient. Nevertheless, this restructuring of work also requires time and guidance.

The work of the employees concerned changes and opens up new areas of responsibility, while old ones are eliminated. This causes some employees to worry about their own jobs or simply become frustrated.

The manager’s task now is to provide security and accompany the change.

Further developing and using IT systems

Existing systems must either be further developed or, if necessary, completely replaced as part of digitization. Content management systems in particular are now becoming the decisive interfaces.

Existing databases and systems can then be connected directly to the CMS. It may also be necessary to digitize documents that were previously used physically – and to find ways to create new documents digitally.

Internal conflicts and resistance

Long-established companies in particular are often sluggish. The changes brought about by digitalization are often met with resistance within the workforce.

Behind this rejection is often a fear of change – or simply satisfaction with the current situation. Managers must take this uncertainty away from their employees – and emphasize the opportunities of this change.

For this to work, an open and transparent dialog is needed. Employees need to be involved and trained in how to use the new technologies.

Integration of existing systems

In almost every company, the legacy systems already in use also have to be integrated into the new technology – one of the biggest hurdles to seamless digitalization.

The problem is that older systems often lack the necessary flexibility to adapt to new systems. At the same time, it is rarely possible to replace the old system immediately.

To ensure that the integration runs as smoothly as possible, you should pay attention to three points:

  1. Be aware of the strengths and weaknesses of the old system.

  2. Select the new systems so that they match the old system perfectly.

  3. Design an integration strategy that is as detailed as possible.

Flexibility and fast implementation

Our world is changing almost daily. In order to remain competitive in this changing environment, companies must react flexibly and agilely.

Rigid hierarchies, lengthy decision-making processes and resistance to change make this difficult.

A first step towards more flexibility: give your teams the opportunity to make smaller decisions quickly and independently. This not only increases motivation, but also creates space for more innovation and efficiency.

High investment costs

Another very big challenge: the sometimes enormously high investment costs when it comes to introducing new, modern systems.

Companies need to strike a balance between the need to invest and a clear return on investment.

Performance indicators and regular evaluation of the measures taken can help to ensure this in the best possible way. This allows you to check the return on investment of the strategies and make adjustments if necessary.

Developing a digital strategy

The goal of many companies is primarily to increase efficiency through digitalization. And even if this is a valuable goal, it is worth taking a broader view.

After all, process optimization is not the only component of successful digitalization.

The other fields of action for digitalization include

  • Internal processes: Increase efficiency

  • Digital services: Inspire customers

  • Marketing & sales: Creating a uniform approach and acquisition

  • Digital products: Generating growth

Adapt organization and processes

Long-established companies in particular find it difficult to change business processes and workflows. Yet this is often essential in the context of digitalization – because new methods will become necessary again and again in the course of the transformation process.

Design Thinking, Test and Learn and Lean Startup play a major role in developing these methods.

Even if the success of new processes can hardly or never be predicted: Digitalization requires courage.

Change management

Successful changes stand and fall with good change management. Customers, employees and stakeholders should and want to be involved in the company’s transformation.

The task of managers is therefore to accompany the change, motivate and encourage. After all, the “change” will only be successfully completed if the new systems really do have a positive impact on customers and the company.

Agile management

Our world is a VUCA world (volatile, uncertain, complex and ambiguous) – rigid leadership no longer has a place here. Instead, agile managers are needed who do not want to plan projects end-to-end and can respond flexibly to changes.

The first steps towards agile management are, for example

  • Prioritizing strategic initiatives

  • Allocate budgets to initiatives instead of departments

  • Do not expect “finished” results

Adapt corporate communication

With increasing digitalization, the demands on corporate communication are also changing. High-quality content, appealing design and the best possible service are essential today.

It is therefore essential to maintain the online presence in order to offer already connected customers the best possible experience. The more digital touchpoints the company has with the customer, the better.

It is therefore important to expand and maintain the company’s digital presence – online is the most important communication channel these days.

Contact for the digital transformation

Digital change does not usually affect just one area of a company. Rather, it affects many different departments. This is another reason why it is important that a central contact person is available for all employees.

They must have the appropriate skills and coordination capabilities – and be both assertive and empathetic.

At the same time, he needs the ability to implement decisions quickly and easily.

Tips for implementing the digital transformation

Identify the current status:

  • What about the company’s internal processes?

  • What does the current technical infrastructure look like?

  • Which processes in the company are decisive?

  • Who should be responsible for implementation?

Set goals:

  • What goal should be pursued and why?

  • Which areas of the company and processes are affected?

  • Which interfaces and stakeholders need to be taken into account?

  • Which standards must be taken into account?

Check resources:

  • Technical infrastructure

  • Know-How

  • Financial resources

Plan initial measures and establish them step by step

It can also help to enable employees to become intrapreneurs, i.e. to support team members who think in a particularly entrepreneurial way and thus want to move the company forward.

triangility: Using the opportunities of digitalization for yourself

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