An interview with Prof. Dr. Daniel Palm, director of the Steinbeis Transfer Center Industrie 4.0 and digitalization and the Steinbeis Transfer Platform Industry 4.0
Digital transformation provides companies with completely new possibilities to add value, but it also spells significant changes in the working environment. This makes it all the more important for firms – and for their success in the long term – that employees are prepared for the change in circumstances. This is something Prof. Dr. Daniel Palm understands from his own experience as director of Industrie 4.0 and digitalization, the Steinbeis Transfer Center, and associate director of the Steinbeis Industry 4.0 Transfer Platform. Palm explains to TRANSFER how roadmaps are created for transforming value creation and business models. He also talks about the importance of “seeking pain points.” When working on client projects, the Reutlingen University logistics expert also places emphasis on the aspect of sustainable change within companies.
Hello Professor Palm. For companies, digital transformation is not just an opportunity, it also entails risk. What’s the best way to succeed when implementing it?
The first thing digital transformation entails for a lot of people is a huge personal change in their working environment. That’s not unlike any other change process. Staff need to be brought on board, involved in the reorganization process, and trained. Otherwise, there’s a strong possibility that things will go wrong. We were once brought in by a service provider that had digitalized its paper-based processing systems. The only immediate change was that instead of using paper, they now had a digital filing system. In essence, this is the sort of measure that should accelerate processes and improve things. But the outcome we were presented with was like this: Productivity had gone down, employee satisfaction had shot down the scale, and sickness-related absenteeism had gone up. What had happened? Staff hadn’t been given proper training on using the new system, it wasn’t user-friendly, and they felt stressed by the never-ending stream of new processes because they no longer had the old piles of paper as a point of reference. The unfamiliar situation and uninterrupted work on computers was causing lots of people to tense up and they got back pains. Managers had no tools or guidelines for dealing with the situation. Yet digital solutions are supposed to help people and should not, as Prof. Andreas Syska once described it – with a hint of provocation – turbocharge the hamster wheel.
One thing you do for customers is create transformation roadmaps for value creation and business models. How does that work?
We take two approaches. One is the top-down approach, where you take a strategic view of the company and link the strategy to the degree of digital penetration at the business. This builds a bridge between business models and overarching measures. To do this, we organize workshops with managers. But it’s often more important to use a bottom-up approach, which we also call “seeking pain points.” With this, we go through value creation processes with staff and at every stage we ask how we could use digital technology to make processes faster, more simple, more efficient, or better. Based on these potential areas of improvement, we derive measures, which we then evaluate and implement in small projects. It’s important that successes can be seen quickly and trigger a domino effect in the company. To make things sustainable, we do need management, but the successes of digitalization have to come from the employees and be for the employees. They’ll implement improvements and will be highly motivated if they can avoid doing things twice and prevent uncoordinated overlaps, interruptions caused by different types of media, slack, or the irritation of having to look for things.
The technological advancements brought about by the internet of things has resulted in new kinds of collaboration and with this, the emergence of new business processes. How can business process management help companies shape this development effectively, and how important is sustainability in this?
We also use the classic methods of business process management for digitalization and combine these with an understanding of the capabilities and limitations of Industry 4.0 or internet of things technology. It’s important to understand the time and effort involved in introducing these things, the possibilities, but also the difficulties with certain technologies. Successful and sustainable development within a company also revolves around the classic methods of process management and continual improvement. To do this, we train process managers, who function as experts in certain methods and multipliers within the company.
The demands placed on a company’s production networks are changing continuously at the moment – either due to the introduction of new technologies and new products, or due to moves into new markets, or due to changes in the nature of competition. What can companies do to deal with these rapid changes?
The pace of change in the business environment does indeed seem overwhelming at the moment, even if lots of companies have done pretty good business in recent years without adapting. We often hear people saying they’re too busy to look into digital business models or digital transformation. The old business models and processes still work, just like they used to. But you keep falling further and further behind. Research organizations and digital innovators have already stopped looking into Industry 4.0. They’ve moved on to biological transformation and artificial intelligence. But if you don’t do your homework with digital transformation, you won’t succeed with artificial intelligence. So the gap will keep getting bigger and bigger, and at some point you’ll find yourself in a situation that threatens your competitiveness. Then my only piece of advice would be to get started! Start small, but get started! There are a lot of funding options for small and medium-sized companies and they make it easier to get out of the starting blocks. The Industry 4.0 alliance in Baden-Wuerttemberg offers funding for Industry 4.0 scouting options; the state of Baden-Wuerttemberg offers innovation vouchers. Both are excellent instruments for making the first steps. Baden-Wuerttemberg has its Industry 4.0 Transfer Platform that was set up by the universities of Aalen, Reutlingen, and Esslingen in collaboration with the Steinbeis Foundation, funded by the Baden-Wuerttemberg Ministry of Economic Affairs, Labour, and Housing. It’s glad to provide advice and help companies with these matters, and it will even work with you on more complex tasks relating to digital transformation.
Prof. Dr. Daniel Palm (author)
Steinbeis Transfer Center Industrie 4.0 and digitalization (Stuttgart)