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A New World of Work - Join the Conversation

  2. 2. Over the last 200 years, we have been steadily replacing muscles with machines. As the arc of technological progress unfolds, the industrial or “blue-collar” worker in the factory or warehouse continues to be a casualty of increasing automation. In recent years, minds are also starting to be replaced by machines. With advances in digital technologies like Artificial Intelligence, the fourth wave of industrialization (or Industry 4.0) hits closer to home for the broader workforce beyond the factory. As machines replace humans doing “white-collar” work, is it now time to sound the alarm for the information worker? Often missing in the digital transformation conversation is the human side of change: What do humans do best? Can we find the right balance with technology in defining the future of work? For Industry 4.0 to represent a new way of work, we must acknowledge our 200-year legacy first before we can change its trajectory. In this eBook, we’ll look at these challenges, examine the core ideas and set the stage for a discussion about the future of the industrial worker. Mechanization (since 1800s) Electrification (since 1900s) Automation (since 1970s) Digitalization (since 1980s) Industry 1.0 Industry 2.0 Industry 3.0 Industry 4.0 First we started replacing muscles with machines … …and now we are replacing minds with (software) machines. ~200 years 2 The 200-year legacy that shapes today’s industrial worker SETTING THE STAGE
  3. 3. The game of Jenga – with a twist – is a good metaphor to capture the complexity of business transformation. In addition to removing blocks without toppling the structure, which is the basic rule of the game, we added some new rules: Some blocks are to be left untouched while new blocks must be introduced. Similarly, evolving to a new world of work is about changing the organization without putting the business at risk: ▲ Retiring outdated ideas: Can we recognize the obsolete ideas that hold us back? This is the hardest change to overcome as many old ideas are often deeply entrenched in organizational structure and interlocked with other aspects of the business. ▲ Building upon good ideas: Many great companies were built on the foundation of good ideas and sound principles – how do we keep and build on them? ▲ Exploring new ideas: Finally, new and even radical concepts need to be explored – how do we explore, experiment, validate and adopt them into the new structure? In keeping with the above metaphor, this document is organized into three sections, each with a few ideas for the reader to browse through as “food for thought” ahead of the conversation. Our goal with this eBook is to get to an achievable first step: Share, debate and gain consensus on these ideas, principles and concepts as a discussion group. 3 A framework for assessing ideas FACILITATING THE CONVERSATION Outdated ideas: Retire them! New ideas: Explore them! Good ideas: Build on them!
  4. 4. Sree Hameed MSc Global Marketing Manager AVEVA Connect with Sree on LinkedIn Ed Koch MSc CEng FIMechE Founder & Managing Director ValuPoint Limited Connect with Ed on LinkedIn 4 ▲ Senior supply chain executive with global expertise in supply chain value improvement, lean operations, and manufacturing organisation design ▲ 20+ years in global operations and lean improvement in CPG industries, having either run operations or led transformations in Africa, Europe, Latin America, USA, Australia and China ▲ In 2016, following the largest acquisition in UK history, led the integration of AB InBev and SABMiller’s Supply Excellence Programs ▲ Spearheaded a global operational excellence program to improve performance across 80+ sites and deliver $500m in P&L benefits ▲ In 2014 led an internal R&D program into the “Future of Work” ▲ MSc in Lean Operations Management | BSc in Mechanical Engineering Chartered Engineer & Fellow of the Institution of Mechanical Engineers (UK) ▲ Senior marketing executive with global expertise in new technology adoption ▲ 20+ years of experience helping companies transform their business using a variety of technology enablers in the areas of Supply Chain Management, Product Lifecycle Management, Production Automation, Manufacturing Operations, and Operational Risk Management. ▲ Obsessive about understanding change from a customer-centric perspective ▲ Passionate advocate for value creation through empowering workers on the frontlines of execution ▲ Advisor to the Center of Supply Networks at the University of Texas at Dallas and the Digital Accelerator Program at Southern Methodist University ▲ MSc in Information Systems | BBA in Marketing Your facilitators for this conversation RESEARCH LEADERS & AUTHORS
  5. 5. Designing a New World of Work Starts with Retiring Outdated Ideas
  6. 6. Finding sustainable solutions requires a systems-based approach where the central premise is to solve problems in a way they don’t keep coming back. In other words, instead of treating symptoms, you focus on the root causes and strive to understand how everything is interconnected. Unfortunately, the way humans solve problems has a fundamental flaw, as captured by the quote from Peter Senge’s book. The tendency to focus on the parts is also referred to as reductionism, which stands in contrast to holism, both being core principles of systems thinking. 6 The fundamental challenge of ‘divide and conquer’ RETIRING OUTDATED IDEAS: MINDSET From a very early age, we are taught to break apart problems, to fragment the world. This apparently makes complex tasks and subjects more manageable, but we pay a hidden, enormous price. We can no longer see the consequences of our actions; we lose our intrinsic sense of connection to a larger whole. When we then try to "see the big picture”, we try to reassemble the fragments in our minds … the task is futile – similar to trying to reassemble the fragments of a broken mirror to see a true reflection. Thus, after a while we give up trying to see the whole altogether. Peter Senge, Author The Fifth Discipline: The Art & Practice of the Learning Organization, 1990
  7. 7. Should all employees have a holistic view of the business? Or only some? How do you find the right balance in the organization?Let’s discuss: Read more: • Explainer Video: Reductionism vs. Holism , Complexity Labs • Adam Henshall: Taylorism and The History of Processes: 6 Key Thinkers You Should Know
  8. 8. One hundred years ago, industrial engineering pioneer Frederick Winslow Taylor helped Henry Ford create the first mass-production line. Taylor’s methodology for efficiency was to break down every action, job, or task into small and simple segments to: ▪ Minimize skill requirements and job learning time ▪ Separate execution of work (doing) from work-planning (thinking) Taylorism was right for its time. Back then, there was no information technology, just people and paper. Achieving scale and speed – while ensuring some level of control – required fragmenting processes. However, this reductionist approach came with profound and lasting consequences: ▪ The production line was designed for speed but sorely lacked agility. ▪ Frontline workers acted only as doers. Thinkers (management) were locked into a mindset focused strictly on lowering labor costs. A hundred years later, much of Taylor’s legacy continues to remain as the basis for organizational structure in large businesses. CXOs CXOs Enterprise 1 Enterprise 2 Enterprise 3 Value Chain CXOs Frontline workers operating in silos Doers Thinkers 8 Flow of product Taylorism is based on a reductionist view RETIRING OUTDATED IDEAS: PROCESS
  9. 9. Let’s discuss: Read more: If Frederick Taylor had the benefit of information technology and an empowered workforce culture, would he have designed the production line - or considered his approach to management – differently? • The Principles of Scientific Management, Frederick Winslow Taylor, 1911 • The Economist: Digital Taylorism, September 2015 • Deming’s 14 Points for Management, American Society for Quality
  10. 10. The illustration here attempts to depict how older IT architectures perpetuated fragmentation. (One reason was most likely the result of limited computing power that was unable to overcome the reductionist view.) Nevertheless, much effort has gone into integrating the silos of legacy information systems of the past two decades: ‒ Overcoming silos between functions and/or enterprises often manifests as supply chain initiatives that focus on tearing down the vertical walls. ‒ Silos between layers of reporting often include initiatives to flatten the organization that focus on tearing down the horizontal walls. In contrast, newer (post-Internet) systems architectures, using advances in computing power and connectivity at declining cost, enable us to manage information from anywhere, by anyone, at anytime, based on: ‒ Network-based models that enable transparency across value chain constituents (enabled by technologies like blockchain.) ‒ Real-time data that is increasingly “pushing intelligence towards the edge” through machine-to-machine interactions Unfortunately, while we are far less constrained by technology’s limitations in the present, our mindset often appears to be stuck in the past. Business-to-Business-to-Consumer Level 4 ERP, Supply Chain Level 3 Operations Level 1-2 Automation “Vertical fragmentation” Walls within the hierarchy “Horizontal fragmentation” Walls between functions / enterprises 10 Older IT architectures have perpetuated Taylorism RETIRING OUTDATED IDEAS: SILO INFORMATION ARCHITECTURES Enterprise architecture Value chain architecture
  11. 11. Let’s discuss: Read more: How much are you burdened by older systems that act as an inhibitor to your digital transformation objectives? What about people and mindset – are you able to overcome the “IT-OT divide” which reflects silo thinking in IT and Engineering organizations? • Harald Smith: Data democratization: finally living up to the name , InfoWorld, Jan 2018 • McKinsey Quarterly: Speed and Scale -- Unlocking Digital Value in Customer Journeys
  12. 12. Attitudes about industrial workers have evolved but remain a complex subject. Social and economic values are often slow to change: ‒ Laws preventing child labor in the US were not passed until 1938. ‒ Most frontline workers are still expected to be “doers,” not “thinkers.” ‒ While safety is prioritized and clearly valued in the industry, most workplace cultures aren’t motivated to aspire beyond this. ‒ Management may treat their people as assets but in reality, established accounting practices require that you treat them as expenses. ‒ Compensation models are based on hourly labor (muscle work) with little to no incentives for improving the process (mind work) How do we value people in the industrial context? We have well- established accounting principles and standards for assessing the value of physical assets, yet there is a significant gap in applying the same rigor and discipline to the human assets. Is it reasonable to expect the market to provide skilled workers when decades of cost-cutting have decimated corporate training or apprenticeship programs? And replaced by a recruiting mindset that shuns inexperienced workers? http://dilbert.com/strip/1993-03-03 1920 Contribution of industrial worker Contribution of industrial worker ~100 years 2020 + Of the 3.5 million manufacturing jobs that will be created in the US from 2015 to 2025, 2 million will go unfilled due to the skills gap. – Study by Deloitte & The Manufacturing Institute http://dilbert.com/strip/1993-03-03 12 Frontline industrial workers are seen as ‘doers’, not ‘thinkers’ RETIRING OUTDATED IDEAS: VALUING PEOPLE
  13. 13. Let’s discuss: Read more: What is the prevailing mindset in your industry for the workforce? Do you believe attitudes must change to attract the next generation workforce to your workplace? What are the skills challenges they will face? How are you expected to close the skills gap? • Manufacturing's big challenge: Finding skilled and interested workers, Chicago Tribune, Dec 2016
  14. 14. Designing a New World of Work Builds Upon Proven Good Ideas
  15. 15. “When you hire two hands, you get a brain free.” The Toyota Production System (as developed by Taiichi Ohno) is renowned for reducing waste from work processes. But when the philosophy was brought over to the west as Lean Manufacturing, the people element was largely ignored. Interestingly, both Frederick Taylor and Taiichi Ohno valued frontline workers. Both pioneers saw the shop floor as a place of learning, where experimentation was an accepted means to solve problems. But only Toyota fully embraced the philosophy into the corporate DNA from the start, and continues to put this into practice. “Our automation ratio today is no higher than it was 15 years ago,” Wil James, president of Toyota Motor Manufacturing in Kentucky. And that ratio was low to begin with: For at least the last 10 years, robots have been responsible for less than 8% of the work on Toyota’s global assembly lines. “Machines are good for repetitive things,” James continued, “but they can’t improve their own efficiency or the quality of their work. Only people can.” He added that Toyota has conducted internal studies comparing the time it took people and machines to assemble a car; over and over, human labor won. The factory is ground zero for Toyota’s core belief system about people. This distinction indicates how they view their future industrial workforce. First we build people. Then we build cars. Fujio Cho Former Chairman, Toyota Motor Corporation 15 Toyota: Putting People First – Then Automation BUILDING ON GOOD IDEAS: PEOPLE
  16. 16. What is the prevailing workplace culture in your company? Is your digital transformation vision to minimize the role of the industrial worker? Or to augment their abilities? Let’s discuss: Read more: ▪ At Toyota, The Automation is Human-Powered, Fast Company article ▪ Toyota: First we build people before we build cars, Blog post by Henry Stewart ▪ Tesla vs. TPS: Seeking the Soul in the New Machine, IndustryWeek article
  17. 17. Man-made systems are incapable of improving themselves (yet). The human is central to continuous improvement. This idea is perfectly captured in one of the core beliefs of lean thinking: respect for people. W. Edwards Deming, the “father of the quality movement,” shared this sentiment. Deming insisted organizations must “drive out fear, so that everyone may work effectively for the company.” Key characteristics of lean are participation, trust and partnership. When you consider respect for people, you typically consider the employee. You must ensure a safe and healthy working environment and harness employee ingenuity, skills and knowledge. However, respect must first consider the customer by improving quality, service and value. Respect must also consider the company to foster growth, reduce cost, maintain the company’s assets and eliminate waste. All are core processes in lean. Finally, there is respect for the environment. Ultimately, it is people who shape values, which in turn shape the systems that institutionalize and improve upon those values. Go see. Ask why. Show respect. Fujio Cho Former Chairman, Toyota Motor Corporation 17 Empowering People to Discover, Collaborate and Change BUILDING ON GOOD IDEAS: PEOPLE + PROCESS
  18. 18. Let’s discuss: Read more: Mistakes are opportunities to learn. In what practical ways can we “drive out fear,” show respect and harness the power of our teams? ▪ Drive out Fear: Blog post by Michael Baudin ▪ Lean Hypocrisy: Blog post by Bob Emiliani ▪ Scholtes, PR, The Leaders Handbook: Guide to Inspiring Your People & Managing the Daily Workflow, Ch. 3
  19. 19. What has NOT changed: The concept of a closed-loop process which is fundamental to all manner of control theory and systems, such as: ▲ Feedback or Feed-forward control (since 1868) ▲ Plan-Do-Check-Act (Shewhart cycle made popular by Deming) ▲ Observe-Orient-Decide-Act (applied to military operations by John Boyd) What has changed: Advances in technology compress the cycle time of the control loop enabling organizations to improve faster. Traditional lean techniques of inspection at the source, visual management of processes, and shop floor problem solving can now be augmented with technology. For example, sensors can provide real time detection of product quality. Improvement can be accelerated with access to process data to make rapid changes through control systems during the “correct cycle” (Plan – Do). The time to learn (Act) can be augmented with digital standard operating procedures (SOPs) that contain images and video. Critically, these blended learning SOPs can be transmitted to all relevant people to accelerate learning. 19 Closing the loop; compressing time BUILDING ON GOOD IDEAS: PROCESS + TECHNOLOGY
  20. 20. Let’s discuss: Read more: What are the practical opportunities to leverage technology and lean principles in your industry or facility? How can these opportunities be implemented in a cost-effective way to fund your digital transformation journey? ▪ Bicheno & Holweg, The Lean Toolbox: the Essential Guide to Lean Transformation, PICSIE Books, 2009 ▪ Lean Hypocrisy: Blog post by Bob Emiliani
  21. 21. Designing a New World of Work Requires Exploring New Ideas
  22. 22. Understanding the future of work is fundamentally about how we see our relationship with technology. As with any relationship, we need to ask two basic questions: First, what does technology want? According to Kevin Kelly, who has written extensively on the subject of technology evolution and “what it wants,” the answer is simple: Technology is an extension of us. We (humans) created technology to serve us. Technology does not have a destiny or desires of its own and thus isn’t looking to take over humanity. The larger question is: What do humans want? Purpose makes human life meaningful. Work is how we fulfill our purpose in life. In this context, we have to ask, “What kind of work are humans better at doing?” The answer is straightforward: Humans excel at problem solving and adaptation. We’re wired to sense and respond to changing conditions. Humans can create, improvise, imagine, deal with ambiguity, interpret emotions, and even behave irrationally – if that serves our desires and purposes. 22 Understanding Our Relationship with Technology EXPLORING NEW IDEAS: MINDSET & CULTURE
  23. 23. Let’s discuss: Read more: How does your business strategy envision the future industrial worker? Do your frontline workers see your company’s purpose and mission as inclusive of their expectations? Does your vision for technology minimize, eliminate or enhance their role and contribution? • Daniel Susskind: 3 Myths about the Future of Work • Kevin Kelly: How AI can bring on a Second Industrial Revolution • McKinsey Global Institute: AI, automation, and the future of work: Ten things to solve for • Friedrich A. Hayek: The Counter Revolution in Science
  24. 24. If we build on the assumption that humans are well suited for problem solving and adaptation can we then redesign the organization to enable the same? The framework depicted on this page is a starting point for this discussion. The future industrial worker has the potential to add value at three levels: ▪ Situational problem-solving focuses on short-term disruptions and deviations to plan where the goal is to get the operation “back on track” or recover quickly. ▪ Systemic problem-solving focuses on the medium-term where the goal is to improve the operation and address root causes so problems don’t reappear. ▪ Strategic problem-solving focuses on the long-term where the goal is to change or realign operations when business conditions have changed. (Note that the three levels of problem-solving do NOT correspond to levels in a management hierarchy that separate strategic and tactical activities.) In contrast to the divide-and-conquer approach of Taylorism, let’s envision the future industrial worker as someone with a holistic view of the business, focused on the right scope of problem-solving activities to create sustainable value, is compensated accordingly, and undistracted by a need to climb the organization ladder to protect their future. Situational Problem-Solving Systemic Problem-Solving Strategic Problem-Solving Scope & Complexity of Problem-Solving Duration of Problem-Solving “Run the business” “Improve the business” “Change the business” Real-time / Minutes Days Weeks 24 Redesigning the organizational structure for problem-solving EXPLORING NEW IDEAS: PROCESS
  25. 25. Let’s discuss: Read more: How many layers of management do you currently have in your organization? Would each of those layers still be necessary if the management hierarchy was reorganized along the three levels of problem-solving? Is Lean Thinking still relevant for the digital organization? • Galbraith’s Organisational Design Model: http://www.jaygalbraith.com/images/pdfs/StarModel.pdf • McKinsey Global Institute: Organizing for the future • McKinsey Global Institute: The organization that renews itself: Lasting value from lean management
  26. 26. Once we agree the human asset should be focused on problem-solving, we can explore how to best apply enabling technology. From an operations perspective, enabling technology should focus on compressing the closed-loop process, both within and between the three levels of problem solving. Digital transformation strategies often fall short because the emphasis tends to be on the value of analytics (know) instead of compressing time within the closed-loop process (see-know-act). In 1999, Bill Gates was the first to speak to the concept of a digital nervous system to improve the sense-and-response capabilities of the business. The concept of a digital nervous system brings together disparate initiatives and stakeholders under a shared vision to better understand: ▲ How to achieve cyber-physical / IT-OT integration ▲ Why think of responsiveness in terms of situational, systemic, strategic agility ▲ Where the disconnects (value leaks) are within the closed-loop process ▲ How to distribute intelligence between edge functions vs. central functions The nervous system analogy is also consistent with Kevin Kelly’s view that technology is an extension of the human. Therefore our own biology serves as the blueprint of the digital architecture we are pursuing. “The winners will be ones who develop a world-class digital nervous system so that information can easily flow through their companies for maximum and constant learning. …To think, act, react, and adapt. Bill Gates Business @ the Speed of Thought, 1999 SEE KNOW ACT DIGITAL PHYSICAL respond sense 26 Go beyond digitalization – build out the digital nervous system! EXPLORING NEW IDEAS: TECHNOLOGY
  27. 27. Let’s discuss: Read more: What is the state of the digital nervous system for your business? How would you rate its capabilities in terms of enabling the three types of agility? • McKinsey Global Institute: The Internet of Things: Mapping the Value Beyond the Hype • Stanford Graduate School of Business: How Digital Nervous Systems Can Raise Your Organizational IQ
  28. 28. As machines take over tasks inside a closed-loop process such as automated data collection (see), pattern recognition (know), and process orchestration (act), to remain relevant, some argue that the value contribution of the human asset must shift towards specialized expertise. Just as automation replaced muscle with specialized machines, which in turn, required special skills to operate and maintain them, AI and analytics will require specialized expertise and skills to build models and maintain them. This trend is partly driven by technology requirements in manufacturing and partly by the labor market. In order to differentiate oneself from the pool of candidates one must build depth or mastery in specific skill areas. (The disconnect between youth unemployment vs. job vacancies for specialized skills in particular sectors or roles is evidence of this.) In the near term, it appears that the expert becomes the critical building block of organizations, whilst the generalist is increasingly at risk. But then again, this problem has its roots in the age-old reductionism vs. holism debate. SEE KNOW ACT 28 Talent: The Rise of the Expert and Decline of the Generalist EXPLORING NEW IDEAS: PEOPLE + TECHNOLOGY
  29. 29. Let’s discuss: Read more: How can organizations address the complex skills requirements of their people and ensure that problem solving at all levels is embedded as a critical enabler for both innovation and lean? How do you create an environment for humans and machines to work side-by-side? • TED Talk: Anthony Goldbloom The jobs we’ll lose to machines – and the ones we won’t • Siemens: When Humans and Robots Work Side-By-Side • Mary Cummings: Operator interaction with centralized versus Decentralized UAV Architectures • Mary Cummings: Man versus Machine or Man + Machine?
  30. 30. Growing hyper connectivity of people and jobs means that talented people around the world can potentially access the rapidly developing global talent markets and innovations can be developed and distributed with ease. - Lynda Gratton, 2014. In the past, the expert had to go to the problem, but now technology makes it possible to take the problem to the expert. Workers on the frontlines are no longer confined to any particular location as advances like augmented reality enable workers to “go see, ask why, and show respect.” It’s increasingly possible to manage any process from anywhere—as evidenced in the renewable power industry. Manufacturers place experts in direct support of operations, which has profound implications for teams. Teams have transient members and are not necessarily co-located. Numerous platforms now enable teams to work together—including Upwork, Guru, and crowdsourcing platforms such as InnoCentive. Platforms such as these source specialized skills. As the organization structure gets flatter, the traditional path of climbing the functional “ladder” will evolve to a career “lattice” structure where job rotations will offer new challenges and opportunities to develop further problem-solving skills and gain a holistic understanding of the business system. 30 Connectivity Redefines the Workplace EXPLORING NEW IDEAS: PROCESS + TECHNOLOGY
  31. 31. Let’s discuss: Read more: Do you see future career paths within your organization evolving from ladder structures (that promote up the functional silo) towards lattice structures (that rotate across functional silos to gain a holistic perspective of the business)? How do you see your organization leverage virtual teams (as business shift their focus from an enterprise perspective to an ecosystem perspective)? • Lynda Gratton: How Corporations Succeed by Solving the World’s Toughest Problems, McGraw-Hill, 2014 • Hot Spots Movement, Creativity in the Digital Age - Focus on Your Inner Messi, not Your Inner Siri • 8 tips for virtual collaboration, from TED’s tech team
  32. 32. 32 We’d love to hear your ideas and perspectives LET’S COLLABORATE! Sree Hameed sree.hameed@aveva.com Ed Koch ed@valupoint.co.uk As we stated in the introduction, our goal with this eBook is to get to an achievable first step: Start the conversation, debate the ideas and gain consensus on how to best chart a course towards a new world of work. Connect with us via LinkedIn or drop us an email – and let’s begin a dialog. YOU