Graham Burchell

“Why not make the work easier and more interesting so that people do not have to sweat? The Toyota style is not to create results by working hard. It is a system that says there is no limit to people’s creativity. People don’t go to Toyota to ‘work’ they go there to ‘think'”

That quotation comes from Taiichi Ohno, the Japanese industrial engineer and businessman considered to be the father of the Toyota Production System, which inspired Lean Manufacturing in the U.S. He made a very interesting and valid point about employee creativity and motivation for work. The sentiments in his statement, which dates back to the 1970s, are never more true than today and particularly so for employees in UK manufacturing businesses. We’ll come on to the people part of that statement shortly, but first a paragraph or two about UK manufacturing more generally which, as we all know, has had to endure extremely challenging conditions. But don’t worry. It’s not all bad news…

IT’S NOT JUST ABOUT THE TECHNOLOGY – Take a People First Approach

If you have time to keep abreast of the wall of content produced by strategy and technology consultancies about the operational improvements increasingly available to portfolio investments, you will no doubt be aware that most of us have put out our thoughts and recommendations around the myriad of modern and evolving digital initiatives to improve production processes as part of an evolving Industry 4.0. That technology universe now includes; AI, IoT, Cloud, RPA, CAD, CAM, ACAM, AR, VR, BDA, and a host of other abbreviations and acronyms, as well as Blockchain, digital twins and predictive maintenance promising improvements, both for production and sales processes and sometimes to assist wider business operations.

As a brief reminder, the graphic below illustrates where we’ve come from in terms of the application of technology to advance businesses’ production and operating processes, in what is really a short period of time. We can debate the dates and which technology sits where but hopefully it illustrates where we are today and provides an inkling of how much further production and business processes can yet develop in terms of operational efficiency and sophistication. Today, the growing arsenal of Industry 4.0 technologies is enabling first mover and ambitious companies to benefit from interconnectivity advantages across supply, production and sales chains that were largely unavailable with most Industry 3.0 opportunities. This also brings its own challenges when it comes to keeping operational employees up-to-speed with the new innovations and modern processes that the potential of Industry 4.0 brings with it.

TECHNOLOGIES OF THE FOUR INDUSTRIAL WAVES

Not so many consultancies address the impact those technologies might have upon your investments’ human capital. Portfolio companies’ employees are a critical element, but sadly too often neglected, when considering technology-based improvements. The impact upon employees, management and business culture can be significant and catastrophically destructive if not taken into account at the outset and considered throughout any digital implementation that is part of any programme of value creation.

Digital transformation can help free up employees time. By removing repetitive, or increasingly unnecessary tasks, you have the potential to make employees’ day-to-day work more interesting. It also makes for a more compelling argument for them to stay with your portfolio businesses. Another quote hits the nail on the head. Christine Thatcher, VP of Human Resources at TW Metals stated:

“The more we retain our people, the less time we need to commit to recruiting new people.”

That is so true. The ONS reported over 1.1 million UK job vacancies as of February 2023, almost double the historic average of around 684,000. They also reported wage levels reached a historic high in April 2023. It’s increasingly apparent that experienced employees need to be valued and nurtured. It is certainly the case that some new investments require a rationalisation of the workforce, but if there is real opportunity for growth and you require people to help you realise those plans, then informing, training and providing your existing employees is usually a far less costly way of achieving that than hiring anew. Employees that feel excluded from an IT implementation, poorly engaged and frustrated through lack of training, can rapidly be looking towards the exit door. Consequently, a lack of attention as to how digital transformation projects might impact the employees within your portfolio can rapidly turn into an expensive HR disaster zone. It need not be this way. A few simple and straightforward actions can avoid unnecessarily wasted time and expense and present affected employees with more opportunity to do more interesting and value-creating work.

Some of the following may seem obvious but it is remarkable how often IT projects “fail”, to greater or lesser extents, because of the lack of attention paid to those employees either directly involved in implementation, or the ultimate users of the digitally enhanced production processes and business operations. Here is a summary of what you should be considering ahead of, during and subsequent to implementation.

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