Richard Foster of Yale University says that in 10 years 40% of the world’s top firms will be gone and the average life of a top firm was 67 years in 1930 and is now 15 years. Things are changing – the world’s largest taxi firm Uber now owns no taxis, the largest hotel chain Airbnb owns no hotels, the largest phone network Skype has no phone infrastructure, the largest media network Facebook creates no content, the largest software vendors Apple and Google have no apps of their own, and so on. Netflix, the biggest movie company, has no cinemas, SocietyOne, one of the world’s fastest-growing banks, has no money, and Alibaba Group, one of the world’s biggest retailers, has no stock.
What will the future of engineering companies look like as the “iron” in products shrinks and sensors, microchips and software increase? Is engineering still metalworking? Are we going to cart products and components around the world, or are we going to sell digital drawings, data models and programs? The factory of the future will have two main components:
A design and development network in which innovation will take place directly with customers.Modular and mobile micro-factories that will be located very close to the end customers in order to quickly deliver customised products and services.
However, I see a predilection in many engineering firms for investing in “buildings with chimneys and iron,” rather than exploring and using the technologies of the future. It’s not even enough to go to Industry 4.0 conferences. Professor Andreas Syska says of Industry or Revolution 4.0 that it is a ship of fools on a voyage without a destination or a compass. And everyone wants to be on board. All of them? Fortunately, no. There are companies where common sense still prevails over ideology, empty advertising slogans and politics. Industrial revolutions were natural transformations of society that did not come about because someone launched them as an advertising campaign at an exhibition or conference. Industry 4.0 (an initiative of German automation companies – notably Bosch and Siemens) is more advertising, politics and ideology than industrial revolution. There is no need to waste time attending conferences and reading books on Industry 4.0, you need to combine system integration of new technologies with common sense.
Robots are no longer big “gozillas in cages.” They can safely interact with humans, increase their speed, accuracy, fine motor skills, are easy to program, recognize objects, extend their lifespan, and lower their cost. When one needs electricity, one does not have to buy a power plant. Why do companies invest such huge amounts of money in information systems and their maintenance when they can buy only the information and analysis they need at a fraction of the price at any given time? In many enterprises, they say that mobile apps and clouds are suspiciously simple and cheap, so they prefer to invest in complex and expensive systems that don’t work. Or they make excuses about information security and yet have their control systems in production completely leaky. Today, Apple and Google sell millions of interesting apps that kids can do better with than their parents. It would be interesting to let children under 15 into factories sometime and let them look at the old-fashioned systems with which their fathers and mothers manage processes (a combination of an expensive and dysfunctional information system with excel, paper forms, emails and telephones).
Production and logistics systems today are trying to be “smart.” They are fast, real-time adaptive and fault-tolerant. They collect big data, learn and communicate through augmented reality. Don’t laugh – the owner of www.kvety.sk recently told us that he sells AI-assisted bouquets all over the world and will have augmented reality deployed within half a year. I’ve seen production where a trolley drove a wheelchair or a warehouse worker’s data glasses – it’s just an intermediate step to replacing a human with a robot.
Even such traditional areas as machine and plant maintenance are being penetrated by on-line real-time data processing, sensors, digital documentation, augmented reality, artificial intelligence and predictive and anticipatory systems, 3D printing of spare parts, body shop, etc.
Interestingly, many of the discussions about the future of business are about technology – e.g. cooperative robots, intelligent manufacturing and logistics systems, artificial intelligence, blockchain, additive manufacturing, augmented and virtual reality, etc. We live in an online world, in real time, and we are aided by artificial intelligence in making quick decisions and serving the customer. Systems are more complex internally and simpler externally (operation, communication), removing unnecessary intermediate links that delay and cause unnecessary costs. New forms of communication and cooperation between humans and machines are emerging.
However, the key factor for competitiveness is not technology but people, re-organisation of the company, connecting people, developing their talent and motivation and cooperation. New technologies will only be effective in new business models and organisation – networks, sharing, modularity, collaboration, trust, freedom and accountability. We will have to think about new forms of organising society and companies. Work is gradually ceasing to be a source of making money; national wealth is increasingly produced by machines rather than people. How will this wealth be distributed? Will the machines pay social contributions and taxes as Bill Gates suggested?
When industry and society are dominated by computers and machines, the value of human beings, empathy, creativity and human labour will be much higher than it is today. Technology is not our goal, but a means to improve people’s quality of life – we will need new metrics to measure business. Do you think your co-workers get excited about the concepts of labour productivity or EBIT? Do you think there are people who regret not working harder and exceeding corporate benchmarks before they die?
Can you think of any other metrics to measure a successful business than we have today? For example:
Financial – contributions and taxes to the company, investment in projects to help othersPercentage of co-workers who do what they enjoy, find meaning in it, achieve good results in it and earn a sufficient incomeQuality of family life of entrepreneurs and co-entrepreneurs, number of children born, family stability, time spent with family (elimination of weekdays and overtime)Number of people, People we have helped to find meaning and their own path in life (pupils, students, aspiring entrepreneurs, people at the crossroads, people on the margins)Helping others (money, time, donations, projects)Contribution to the environment and society (restoring nature, revitalizing land, clean technologies and products, being a decent company to customers, co-workers and partners)Contribution to the environment and society (restoring nature, revitalizing land, clean technologies and products, being a decent company to customers, co-workers and partners)Number of people we have helped to find meaning and their own path in life
More important than understanding new technologies will be understanding the other person, not succumbing to individualism, egoism and the erosion of the values on which human society is based – family, solidarity and mutual aid.
There are three firms in each enterprise – past, present and future. The first two are usually quite well defined and managers spend most of their time on them. The firm’s future is being addressed by almost no one.
In this experimental firm, we should be looking for answers to these types of questions:
How will exponential technologies change our business?How will digitalisation and smart solutions affect our business, innovation and manufacturing?How will we organise production and sales with further pressures on customisation, speed and cost?How will we need to organise and manage the business to attract Generation Y and Z talent?What do we know about the possibilities of Artificial Intelligence (AI), Blockchain, Big Data, Clouds, Smart Systems, Augmented Reality (AR), and exponential energy and manufacturing and their impact on our business?
The old world is leaving and the new world is coming. In the old world, there were long-term forecasts and plans, marketing surveys and analyses, projects where bosses asked when it would be done. Today we know that it is impossible to predict the future and define long-term plans, it is useless to study customer behaviour and present it half a year later, our innovation projects will never be finished.
Schools prepare and approve curriculum plans that are already out of date by the time they are approved; the strategic project is changed as soon as the project letter has been completed. Innovation projects never end and only move between phases, which are getting shorter and shorter.
We live in a vibrant and interactive on-line world. We examine customers in real time, just as we monitor processes in the enterprise. What is true today is no longer true tomorrow. You can’t plan for certain. Just take one or two steps, evaluate, replan, or change. Everything is constantly changing and will never be finished, something is disappearing and something new is coming into the world.
Ján Košturiak