India’s demographic dividend depends on Industry 4.0

It is true that the massive new datasets created by linking business assets and processes across companies’ entire value chains contain valuable patterns and insights—ones that can only be seen by the human eye when it’s aided by powerful new data-analytics tools. But the instincts and sound judgment required to act on these insights remains the preserve of human decision makers. We are a long way from the C-suite handing responsibility for a critical decision over to a machine.

And it’s not just in the boardroom where humans still hold sway. Business-critical information—such as the latest KPI data—may now be directly uploaded from manufacturing-line sensors to the control room, but observations by operators on the factory floor still fill in crucial gaps. Process engineers can now use advanced analytics-based process-optimization models to make sense of all that data, but the results are then handed back to those same human operators in the form of optimal machine settings. Production teams will still debrief shift performance even if they now use digital whiteboards.

In our last blog post, we said that one of the bonuses of this fourth industrial revolution is the substantial, immediate bottom-line impact that can be achieved with minimal upfront capital outlay. But protecting that dividend and building on it over subsequent years will require a significant operational investment in human capabilities. This means upskilling workers through on-the-job training for new roles—or more rewarding versions of their current ones—as well as hiring specialists for roles that didn’t exist even five years ago.

India is set to reap a demographic dividend over the next 20 years as 300 million people enter the workforce. Better educated and aspirational, these digital natives are expecting rewarding jobs in advanced industries of the type that only Industry 4.0 can provide. But quantity does not necessarily equal quality. Companies need to be aware that by definition, the best talent will remain in short supply. This makes it imperative to adopt programs that attract skilled workers before they are snapped up by competitors.

But hiring talent is only the beginning: retaining talent is often at least as big a challenge. One way to attack the retention problem is to continue to invest in people’s training, and in clear pathways that enable the best and brightest to advance into more senior or specialized roles. Not only will this help keep valued employees from leaving for better opportunities elsewhere, but in a highly competitive skills market, there is no better or cheaper place to recruit than from within. And by helping staff evolve their skills even more quickly than the digital environment changes around them, companies will be well placed to stay ahead in a dynamic technical and competitive landscape.

Retaining workers will also depend on transforming organization structures to support the new digital culture: Industry 4.0 talent will not report to Industry 3.0 managers for long. This organizational change needs to be led from the top. However, the challenge facing corporate leaders is in understanding not just the concepts that are driving the operational transformation, but also how the concepts look and feel on the factory floor.

That’s where experiential learning can help. A digital capability center, for example, replicates an actual, digitally-enabled working environment that lets leaders learn in a way that’s far more realistic than a classroom, and far more effective in promoting retention (exhibit).

Hands-on learning is the best way to develop new skills and set new aspirations to execute a successful transformation.

Early on, the leaders cover lean management and the related continuous-improvement principles and techniques that are central to getting the most value out of Industry 4.0 technologies. Next, the executives use what they’ve learned to assess the operational layout, production methods, line management, and workplace culture of a model manufacturing line. By applying what they’ve been taught, the leaders learn to diagnose problems, identify the root causes, and propose possible solutions, all in a setting where they can experiment safely because they’re working on a model, not an actual factory. They can then test their ideas by reconfiguring work stations and overhauling processes, before quality-testing the output from their new, digitally empowered, Industry 4.0 production system.

The result? If they get it right, no more quality issues and significant productivity improvements. On a much more important level, they’ll also have enhanced credibility with their teams back in the factory as they lead them through the Industry 4.0 transformation.

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