Constant, disruptive change is the new normal for organizations. Future success will be determined by their ability to transform not just once, but continuously. We call this “digital sustainability,” and we built a data-driven index to analyze what digitally sustainable organizations do differently. In this series, we share key findings from the research, including the leadership and organizational capabilities needed to thrive in the digital world.
The last industrial revolution, not unlike the current one, centered on using technological tools to increase efficiency and productivity. Plants were organized and streamlined. Leaders were empowered. Methodologies were transformed. The spirit of the last transformation was to free up time for people to create more value. But now, as technology disrupts every business everywhere, experts say manufacturing firms are stuck between a rock and a hard place.
“The Industrials industry is having trouble capturing the human factor in transformation,” says Yannick Binvel, president of Korn Ferry’s Global Industrial Market practice. “The operational people are very good at understanding what technology can do, but not very good at what the impact of technology is going to be on the organization, its culture, and leadership.”
A study commissioned by Korn Ferry and conducted by Oxford Analytica and The Korn Ferry Institute on digital sustainability, or the capacity of organizations to continually transform to respond to digital change, found that the Industrials industry scored fourth out of the five industries researched. Overall, Industrial’s digital sustainability score totaled 32 out of 100 was 10 points better than the last place Consumer industry but 10 points lower than the third place Life Sciences & Healthcare sector. (Financials and Technology, the other two sectors, ranked first and second in the Index with scores of 73 and 44 out of 100, respectively.)
The global study ranked 362 organizations across five industries and 14 countries on five dimensions— Agility, Connectivity, Openness & Transparency, Empowerment & Alignment, and Discipline & Focus— and assigned a score out of 100 that reflects overall digital sustainability and performance in each dimension. The Industrials sector struggles with four of the five dimensions and ranked near the bottom in each: Discipline & Focus (fourth), Empowerment & Alignment (fourth), Agility (third), and Connectivity (third).
Industrial organizations are very good at leveraging technology to increase capacity and productivity (the whole faster, better, cheaper ideal). But the industry, experts say, isn’t particularly good at collaboration, rapid decision-making, and the other intangibles that change culture. The difference between the two is the difference between an organization that views artificial intelligence as a productivity tool that will require a smaller workforce and one that utilizes the technology to create time for people to work on more impactful products and services.
The pressure on the industry is only going to ratchet up as the adoption of Internet of Things, automation, driverless cars, and 3-D printing accelerate and become widespread and manufacturers seek new ways of scaling production and efficiency. Firms that are closer to the consumer and are more agile and adaptable to evolving market demands will have a competitive advantage in capturing better information to improve the quality of products and services for their customers. Those that are further away from their customers will suffer.
“Industrial organizations have done very well with connecting systems and networks together,” Binvel says. “They need to do better at connecting people.”