How to Digitize your business

In an article published a few days ago, I tried to explain what Digitization really is. I spoke about Cyberspace – the virtual space inside the Internet – and defined Digitization as the paradigm whereby, instead of computer systems coming into the human world, humans move their activities into Cyberspace.

As mentioned in that article, moving our activities into Cyberspace means to rethink everything about a business – offerings, relationship with Customers, organization, work environment – to take advantage of the exciting characteristics of Cyberspace and all the possibilities that it offers, i.e.:

1- There is no distance

2- The ‘building’ materials are software and data

3- Growth is exponential

4- Digital Tech is extremely accessible

In this article, I want to present some ideas that will help you come to terms with what it means to do business in Cyberspace and how far you need to go to rethink your business for Cyberspace.

Remember that everything about the classical, 20th century corporation, is based on a model developed by Alfred P. Sloan of General Motors in the 1920’s – a time when computers did not exist. All elements of corporate bureaucracy – approval mechanisms, escalation processes, HR processes and programs, etc. – they all come from a way of thinking that precedes computer systems. Humans have never – until the second decade of the new millennium – thought about operating in Cyberspace; they have always thought about operating in the external, physical world of ‘brick and mortar’.

Rethinking your [brick and mortar] business for Cyberspace takes radical open mindedness and the courage to step far outside one’s zone of comfort. If this article and if the journey to Digitization doesn’t cause you major discomfort, you’re doing something wrong.

Change causes discomfort. A Paradigm Shift causes massive discomfort.

Manufacturing

This is one of my favourite areas to discuss options and means to digitize ways of doing things. Manufacturing is seen as a prime brick and mortar thing so it’s not easy to think of how to transpose it to Cyberspace but it can be done quite well because of today’s technology.

In most manufacturing organizations, manufacturing activity is already present in data – at least through an ERP and in many cases, through an MES or control systems.

But a great deal of data also exists, in granular and precise detail, within the manufacturing equipment itself. Either through the underlining control systems and/or through sensors along the production lines, there are (a or can be) sensors that measure all kinds of things about what’s happening on the manufacturing floor.

Administrative data in ERP’s and MES’s and data flows coming from sensors and control systems, together, are a gold mine of information describing what’s happening in manufacturing.

Few humans can do something really useful with all this data. So, what you do is you plug your equipment trains and all this data about manufacturing events, through an Industrial Internet of Things (IIoT) platform (e.g., GE, IBM) with a data lake where these high volumes of data can be ‘dumped’.

Behind that data lake, there’s going to be an AI ‘engine’ that is going to learn from the data and identify situations where the process is disrupted – stoppages, down time, quality events, low productivity, reduced throughput, etc. – and thus will be able to help in a number of ways: pinpoint bottlenecks and points of failure; predict when or whether deviations are going to occur; identify when operators will be less productive; etc.

But we don’t have to stop there. There is a form of data that is often forgotten: video. You can install cameras throughout the Plant and let the video go to the IIoT platform. There, image recognition software can dissect the images and turn them into useful data – who was in the manufacturing suite, what did he or she do, each movement, each button pressed or valve open or – well, anything! And then, AI can associate that data to other data it already has and connect dots, like specific individuals, quality incidents, products being made, weather data and on and on.

What else can we do? Well, we can throw away the classical production scheduling methods and let AI produce the schedule by optimizing a bunch of things – machine utilization, physical flow of materials throughout the shop floor, availability of materials, inventory, etc.

Something else we can do that many companies have done: we can create a digital twin of the entire manufacturing Plant – imagine that![There are now devices that make it easy and inexpensive to generate digital twins from physical objects] And what could we do with that?

Well… think about it: the physical Plant, the ‘brick and mortar’ stuff – equipment, parts, bins, racks, tools – all that is now in Cyberspace. Computer systems now can use that layout do simulate changes in the manufacturing process; support engineers can troubleshoot a problem without going to the Plant; through mixed reality devices like Hololens 2, you can guide and train operators by superimposing a digital twin over what the employee is actually doing – like turning a wrench, or picking a part from a parts bin. Mercedes Benz, for instance, uses digital twins to automate operations by driving the actual machines from Cyberspace.

But it’s not enough to have manufacturing processes and equipment in Cyberspace – humans have to go there too! Remember one of the central points about Cyberspace – distance doesn’t exist. People can be anywhere and even in multiple places at the same time because space is all the same. People who are physically in different parts of the physical world can get together and work as a team, as if they were in the same place. They can also service Plants in many parts of the world because those have been digitized too! Imagine having the best experts around the world, together, supporting many facilities around the world – the leveraging power!

When paper disappears and work is done in Cyberspace, you need to rethink how people are organized. As I mentioned earlier – what most organizations do to arrange the workplace efficiently dates from the early 20th century and is conditioned by the limitations of physical reality.

My recommendation is that when you digitize, the best way to get people organized to leverage all the degrees of freedom of the cyber universe, is the Agile model. Don’t even hesitate! Digitization implies Agile – period!

The Agile model of Tribes and Squads and Chapters as Spotify does it, frees the human mind from the hard edges and bureaucracy of the functional hierarchy. It provides for tremendous flexibility to organize teams – and reorganize them, to create them and dismantle them and reshape them. In some advanced Agile models, the Teams themselves reshape and recombine naturally, in reaction to the dynamics and the flow of Business. In the volatile era of Covid, this combination of Digital and Agile is the killer competitor of today.

Financial Services

This is a sector that is a natural fit for Cyberspace since Financial Services are made of information. A Financial Service-Product is made of data, through and through.

If the Functional Hierarchy dates from the 1920’s, Banking is 4,000 years old. Banks are a paradox: a business that is so information intensive and yet it is so brick-and-mortar centric, so conservative and so limited by physical reality.

And then came Blockchain technology and Cryptocurrencies. FinTechs or Alternative Banks have emerged from the necessity and the capability to get out of the heavy and outdated banking networks, leap over all the dead wood and make the transmission of financial transactions direct, disintermediated and hyper simple. The rest is or will be history very soon.

Have you noticed how Cryptocurrencies suddenly went main stream? Major players in retail and consumer products and services are accepting crypto as payment. Governments are sponsoring crypto. Bitcoin is a major main stream investment.

Before long, Bitcoin and other Cryptocurrencies will replace old world currencies like the Dollar and the Euro. It will happen very quickly because it’s growing exponentially. Like Tesla and EV’s, the classical incumbents didn’t take Crypto and FinTech seriously until they became visible. By then, it’s too late, folks! You can no longer catch up. It’s not just the technology, it’s people – the culture of your organizations, the entrenched beliefs and habits, multiplied by the scale of these traditional institutions. Like traditional car makers, these Banks are going to collapse because providing Financial Services in Cyberspace isn’t just feasible – it’s accessible to smaller, nimble, more flexible cyber-competitors.

Today, FinTechs still interact with traditional Banks because currency is still part of the physical world. But in not too long, the entire economy will run on cyber currencies in Cyberspace and the need for brick-and-mortar Banks will simply disappear.

Don’t believe me? Here’s what Jamie Dimon, the CEO of JPMorgan Chase said about FinTechs: “Absolutely, we should be scared s—less about that”.

At the onset of this article, I told you that, if Digitization doesn’t cause you discomfort, you’re not doing it right. Do you understand now what I mean?

Ok, I’ll stop here. But tell you what: go back and watch the video about the Digital Ecosystem that I posted a few weeks ago and you’ll see it makes lots of sense – now that you’ve read this article. 😊

And remember: extinction sometimes is a choice…

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