Industry 4.0 is here now

The industrial revolution 4.0 is not tomorrow’s challenge to be handled once we have figured out what to do about disruption and digitalisation. It is not just the fourth industrial revolution and the integration between the digital world and the physical production. Nor is it just the concept of real-time production and product development using Big Data, Internet of Things and automation to name a few of the elements of the new scheme of things.

Industry 4.0 is the market conditions which we all operate under today. The questions is just whether the executives are ready?

Existing business models are inadequate

The existing business models are not optimal for a market dominated by new principles. Even traditional behemoths such as A.P. Moeller-Maersk have seen which way the wind is blowing and have set a straight course for the new times with their appointment of one of the world’s leading global and tech-savvy profiles Jim Hagemann Snabe as their new chairman of the board. The question is whether the rest of the Danish business world are able to keep up?

And in that connection, we also have to ask ourselves this question: Have management consultants in general been too hesitant and cautious in taking a stand on the opportunities and threats offered by Industry 4.0 to our clients (and our own organisations)? When our clients’ business models are becoming obsolete, it also means that an increasing number of the solutions and approaches to the issues we have helped our clients with in the past are also in danger of becoming obsolete as well.

There is no question that there is a golden opportunity for the consultancies which are capable of offering advisory services to executives in the Danish business world on navigating Industry 4.0. As a management consultancy, this does not mean that you necessarily have to have all the answers and technical skills, but that you are able to prioritise and include partners from entirely new sectors and industries than previously. We owe it to our clients to be able to offer them agile solutions which are Industry 4.0 proof.

Consultants also have a responsibility

The market is to an increasing extent demanding innovation and agility, but not many CEOs have the guts (and support) to transform the entire organisation into an Industry 4.0 version. And we dare to claim on behalf of our industry that not many consultancies dare to make that recommendation. It is perfectly understandable that both executives and consultants are risk averse in this respect. A transformation of the entire organisation’s business model will be a huge undertaking full of risks, which even the most detailed issue management plan will not be able to identify. But all experience shows that a late response to changed market conditions equals certain death.

So clients have to respond, and we have to be able to offer them solutions which do not necessarily turn the entire business upside down. As consultants, we owe it to our clients to constantly challenge ourselves into thinking in terms of new directions in the solutions and advisory services we offer our clients to make them get ahead. Even if it means telling executives that they lack the right competences to lead their company into the new era. A difficult message which will not necessarily earn you the favour of the executive who hired you.

As management consultants, we often cooperate closely with executives in defining company strategies, and as a close advisor, this is where you owe your clients to challenge status quo. The trick is not to sell comprehensive, expensive transformation projects but to be able to see where the problem really is. Could the existing business perhaps be optimised to be competitive in the long term, or will this require a transformation of parts or the entire business model?

Do you still have a raison d’être?

Our experience tells us that more companies than you would expect should begin by taking an outside-in look at themselves and see whether they still have a raison d’être before beginning a comprehensive transformation project. You should therefore as an executive begin by asking yourself the following question:

Does your business still have a raison d’être?

Is your business’ original basis of existence still relevant, or is it in fact building the future based on the past? Many business models have room for improvement, but if your business is based on e.g. manufacturing typewriters or selling newspapers, you may have to turn your entire business model upside down to be able to survive in Industry 4.0.

The same is very much the case for the consultants who advise the companies on these issues. We have to continuously evaluate our own services and solutions to ensure they remain agile and innovative. We have to be the frontrunners of Industry 4.0 to be able to advise our clients and enable them to not only survive in the new business climate but to thrive in it.

No more old wine on new bottles

We hear from several of our clients, also among the major companies, that they have previously experienced being presented with yesterday’s solutions as the answer to tomorrow’s challenges. As a consultancy in today’s market, you have to take an outside-in look and assess whether your business has the necessary competences internally to be able to provide 4.0-proof services and solutions. If this is not the case, you should do the same as your clients and look for new partnerships across sectors to be able to realise the potential in Industry 4.0. Consulting anno 2017 should be seen as an innovative process leading the way ahead. We should be frontrunners of Industry 4 and light the path for our clients. Our clients want new solutions, and it is always good business to be able to offer your clients what they want. This is one thing that has not changed.

Originally published in Børsen Ledelse.