Today’s rapidly changing environment of Industry 4.0 makes it difficult for companies to develop effective business strategies. Our client service professionals see this on a daily basis working with clients who are grappling with the myriad of new technologies available and understanding the opportunities they bring, but also the complexity of utilizing them to their full potential, and the sheer number of choices. They want to understand how they can cut through the chaos and set a clear course for their company or organization in this new era.
A new report from Deloitte, which is based on a survey of more than 2,000 C-suite executives across 19 countries, addresses some of these concerns and demonstrates the tools used by some of today’s most effective leaders.
Improving decision-making processes
Although leaders appear to feel empowered to explore the possibilities of Industry 4.0, they remain challenged to translate the possible into tangible business strategies. When asked to state the top challenges their organizations face in adapting their strategies in response to Industry 4.0, a third of leaders said lack of leadership vision.
Yet the challenges leaders face in developing effective Industry 4.0 strategies are not limited to vision and technology. Many organizations are simply not implementing effective strategy-development processes. For example, only 29 percent of executives say their organizations have clearly defined decision-making processes. This may be because only one in five CXOs strongly agree that strategic decisions are made after input from diverse and inclusive sets of stakeholders. Even fewer leaders fully agree their organizations use data-driven insights when making decisions.
In today’s business landscape, I believe you need to incorporate both to make effective decisions. By engaging with a diverse group of stakeholders, a leader can gain knowledge and insight that they might not already have. The key is the balance of seeking the information needed, and then feeling confident to make a decision. Similarly, it is essential to incorporate strong data analysis into decision making. Understanding how to break down the data in each circumstance can be complex, but utilizing data to is essential to building a successful strategy.
One-third of leaders in this year’s study ranked organizational or geographical silos among their top-three challenges in setting an Industry 4.0 strategy. Sixty percent also reported that their organizations’ Industry 4.0 knowledge was concentrated in a few individuals or groups.
One way that companies are successfully adapting their approaches to developing and implementing effective Industry 4.0 strategies is by eliminating organizational silos. Collaboration or cross-functional teaming, both internally and externally, is necessary for organizations to generate knowledge and innovate. Organizational silos restrict collaboration as well as limit communication, knowledge sharing and innovation.
Leaders from organizations struggling with silos acknowledge the negative impact on their companies. Those in siloed organizations were more likely to say they don’t know what skill sets their workforces will need for the future (41 percent versus 35 percent of other leaders). And executives whose organizations struggle with silos were less likely to say their technology investments have achieved or exceeded their intended business outcomes.
Implementing a more holistic approach to decision-making processes and eliminating silos will help leaders take advantage of the potential growth inherent in Industry 4.0. Business leaders need to be willing and able to innovate and explore new business prospects. The CXOs we surveyed seemed to embrace this approach. More than two-thirds (69 percent) believe they have permission to fail and learn from their mistakes in the context of innovation. This approach will work best when knowledge is shared across an organization and all relevant stakeholders are involved in decision-making.