Automating Muscles and Minds to Shape the Future of Industrial Work

1. A NEW WORLD
OF WORK
AUTOMATING MUSCLES & MINDS
TO SHAPE THE FUTURE OF
INDUSTRIAL WORK
An invitation to join the conversation

2. Over the last 200 years, we have been steadily replacing muscles with
machines. As the arc of technological progress unfolds, the industrial or
“blue-collar” worker in the factory or warehouse continues to be a
casualty of increasing automation.
In recent years, minds are also starting to be replaced by machines.
With advances in digital technologies like Artificial Intelligence, the fourth
wave of industrialization (or Industry 4.0) hits closer to home for the
broader workforce beyond the factory. As machines replace humans doing
“white-collar” work, is it now time to sound the alarm for the information
worker?
Often missing in the digital transformation conversation is the human side
of change: What do humans do best? Can we find the right balance
with technology in defining the future of work?
For Industry 4.0 to represent a new way of work, we must acknowledge
our 200-year legacy first before we can change its trajectory. In this
eBook, we’ll look at these challenges, examine the core ideas and set the
stage for a discussion about the future of the industrial worker.
Mechanization
(since 1800s)
Electrification
(since 1900s)
Automation
(since 1970s)
Digitalization
(since 1980s)
Industry
1.0
Industry
2.0
Industry
3.0
Industry
4.0
First we started replacing
muscles with machines …
…and now we are replacing
minds with (software) machines.
~200 years
2
The 200-year legacy that shapes today’s industrial worker
SETTING THE STAGE

3. The game of Jenga – with a twist – is a good metaphor to capture the
complexity of business transformation. In addition to removing blocks
without toppling the structure, which is the basic rule of the game, we
added some new rules: Some blocks are to be left untouched while new
blocks must be introduced. Similarly, evolving to a new world of work is
about changing the organization without putting the business at risk:
▲ Retiring outdated ideas: Can we recognize the obsolete ideas that
hold us back? This is the hardest change to overcome as many old
ideas are often deeply entrenched in organizational structure and
interlocked with other aspects of the business.
▲ Building upon good ideas: Many great companies were built on the
foundation of good ideas and sound principles – how do we keep and
build on them?
▲ Exploring new ideas: Finally, new and even radical concepts need to
be explored – how do we explore, experiment, validate and adopt
them into the new structure?
In keeping with the above metaphor, this document is organized into
three sections, each with a few ideas for the reader to browse through as
“food for thought” ahead of the conversation. Our goal with this eBook is
to get to an achievable first step: Share, debate and gain consensus on
these ideas, principles and concepts as a discussion group.
3
A framework for assessing ideas
FACILITATING THE CONVERSATION
Outdated ideas:
Retire them!
New ideas:
Explore them!
Good ideas:
Build on them!

4. Sree Hameed MSc
Global Marketing Manager
AVEVA
Connect with Sree on LinkedIn
Ed Koch MSc CEng FIMechE
Founder & Managing Director
ValuPoint Limited
Connect with Ed on LinkedIn
4
▲ Senior supply chain executive with global expertise in supply chain value
improvement, lean operations, and manufacturing organisation design
▲ 20+ years in global operations and lean improvement in CPG industries, having
either run operations or led transformations in Africa, Europe, Latin America, USA,
Australia and China
▲ In 2016, following the largest acquisition in UK history, led the integration of AB
InBev and SABMiller’s Supply Excellence Programs
▲ Spearheaded a global operational excellence program to improve performance
across 80+ sites and deliver $500m in P&L benefits
▲ In 2014 led an internal R&D program into the “Future of Work”
▲ MSc in Lean Operations Management | BSc in Mechanical Engineering
Chartered Engineer & Fellow of the Institution of Mechanical Engineers (UK)
▲ Senior marketing executive with global expertise in new technology adoption
▲ 20+ years of experience helping companies transform their business using a
variety of technology enablers in the areas of Supply Chain Management, Product
Lifecycle Management, Production Automation, Manufacturing Operations, and
Operational Risk Management.
▲ Obsessive about understanding change from a customer-centric perspective
▲ Passionate advocate for value creation through empowering workers on the
frontlines of execution
▲ Advisor to the Center of Supply Networks at the University of Texas at Dallas and
the Digital Accelerator Program at Southern Methodist University
▲ MSc in Information Systems | BBA in Marketing
Your facilitators for this conversation
RESEARCH LEADERS & AUTHORS

5. Designing a New World of Work
Starts with Retiring Outdated Ideas

6. Finding sustainable solutions requires a systems-based approach where the
central premise is to solve problems in a way they don’t keep coming back. In
other words, instead of treating symptoms, you focus on the root causes and
strive to understand how everything is interconnected.
Unfortunately, the way humans solve problems has a fundamental flaw, as
captured by the quote from Peter Senge’s book. The tendency to focus on the
parts is also referred to as reductionism, which stands in contrast to holism, both
being core principles of systems thinking.
6
The fundamental challenge of ‘divide and conquer’
RETIRING OUTDATED IDEAS: MINDSET
From a very early age, we are taught to break apart problems,
to fragment the world.
This apparently makes complex tasks and subjects more
manageable, but we pay a hidden, enormous price. We can
no longer see the consequences of our actions; we lose our
intrinsic sense of connection to a larger whole.
When we then try to "see the big picture”, we try to
reassemble the fragments in our minds … the task is futile –
similar to trying to reassemble the fragments of a broken mirror
to see a true reflection.
Thus, after a while we give up trying to see the whole
altogether.
Peter Senge, Author
The Fifth Discipline: The Art & Practice of the Learning Organization, 1990

7. Should all employees have a holistic view of the business? Or only
some? How do you find the right balance in the organization?Let’s discuss:
Read more: • Explainer Video: Reductionism vs. Holism , Complexity Labs
• Adam Henshall: Taylorism and The History of Processes: 6 Key Thinkers You Should Know

8. One hundred years ago, industrial engineering pioneer Frederick Winslow
Taylor helped Henry Ford create the first mass-production line. Taylor’s
methodology for efficiency was to break down every action, job, or task
into small and simple segments to:
▪ Minimize skill requirements and job learning time
▪ Separate execution of work (doing) from work-planning (thinking)
Taylorism was right for its time. Back then, there was no information
technology, just people and paper. Achieving scale and speed – while
ensuring some level of control – required fragmenting processes. However,
this reductionist approach came with profound and lasting consequences:
▪ The production line was designed for speed but sorely lacked agility.
▪ Frontline workers acted only as doers. Thinkers (management) were
locked into a mindset focused strictly on lowering labor costs.
A hundred years later, much of Taylor’s legacy continues to remain as
the basis for organizational structure in large businesses.
CXOs CXOs
Enterprise
1
Enterprise
2
Enterprise
3
Value Chain
CXOs
Frontline workers
operating in silos
Doers
Thinkers
8
Flow of product
Taylorism is based on a reductionist view
RETIRING OUTDATED IDEAS: PROCESS

9. Let’s discuss:
Read more:
If Frederick Taylor had the benefit of information technology
and an empowered workforce culture, would he have designed
the production line - or considered his approach to
management – differently?
• The Principles of Scientific Management, Frederick Winslow Taylor, 1911
• The Economist: Digital Taylorism, September 2015
• Deming’s 14 Points for Management, American Society for Quality

10. The illustration here attempts to depict how older IT architectures
perpetuated fragmentation. (One reason was most likely the result of
limited computing power that was unable to overcome the reductionist
view.) Nevertheless, much effort has gone into integrating the silos of
legacy information systems of the past two decades:
‒ Overcoming silos between functions and/or enterprises often
manifests as supply chain initiatives that focus on tearing down the
vertical walls.
‒ Silos between layers of reporting often include initiatives to flatten
the organization that focus on tearing down the horizontal walls.
In contrast, newer (post-Internet) systems architectures, using advances in
computing power and connectivity at declining cost, enable us to manage
information from anywhere, by anyone, at anytime, based on:
‒ Network-based models that enable transparency across value chain
constituents (enabled by technologies like blockchain.)
‒ Real-time data that is increasingly “pushing intelligence towards the
edge” through machine-to-machine interactions
Unfortunately, while we are far less constrained by technology’s limitations
in the present, our mindset often appears to be stuck in the past.
Business-to-Business-to-Consumer
Level 4
ERP, Supply Chain
Level 3
Operations
Level 1-2
Automation
“Vertical fragmentation”
Walls within the hierarchy
“Horizontal fragmentation”
Walls between functions / enterprises
10
Older IT architectures have perpetuated Taylorism
RETIRING OUTDATED IDEAS: SILO INFORMATION ARCHITECTURES
Enterprise
architecture
Value chain
architecture

11. Let’s discuss:
Read more:
How much are you burdened by older systems that act as an
inhibitor to your digital transformation objectives? What about
people and mindset – are you able to overcome the “IT-OT divide”
which reflects silo thinking in IT and Engineering organizations?
• Harald Smith: Data democratization: finally living up to the name , InfoWorld, Jan 2018
• McKinsey Quarterly: Speed and Scale -- Unlocking Digital Value in Customer Journeys

12. Attitudes about industrial workers have evolved but remain a complex
subject. Social and economic values are often slow to change:
‒ Laws preventing child labor in the US were not passed until 1938.
‒ Most frontline workers are still expected to be “doers,” not “thinkers.”
‒ While safety is prioritized and clearly valued in the industry, most
workplace cultures aren’t motivated to aspire beyond this.
‒ Management may treat their people as assets but in reality,
established accounting practices require that you treat them as
expenses.
‒ Compensation models are based on hourly labor (muscle work) with
little to no incentives for improving the process (mind work)
How do we value people in the industrial context? We have well-
established accounting principles and standards for assessing the value of
physical assets, yet there is a significant gap in applying the same rigor
and discipline to the human assets.
Is it reasonable to expect the market to provide skilled workers when
decades of cost-cutting have decimated corporate training or
apprenticeship programs? And replaced by a recruiting mindset that
shuns inexperienced workers?
http://dilbert.com/strip/1993-03-03
1920
Contribution of
industrial worker
Contribution of
industrial worker
~100 years 2020 +
Of the 3.5 million manufacturing jobs that
will be created in the US from 2015 to 2025,
2 million will go unfilled due to the skills gap.
– Study by Deloitte & The Manufacturing Institute
http://dilbert.com/strip/1993-03-03
12
Frontline industrial workers are seen as ‘doers’, not ‘thinkers’
RETIRING OUTDATED IDEAS: VALUING PEOPLE

13. Let’s discuss:
Read more:
What is the prevailing mindset in your industry for the workforce?
Do you believe attitudes must change to attract the next generation
workforce to your workplace? What are the skills challenges they
will face? How are you expected to close the skills gap?
• Manufacturing's big challenge: Finding skilled and interested workers, Chicago Tribune, Dec 2016

14. Designing a New World of Work
Builds Upon Proven Good Ideas

15. “When you hire two hands, you get a brain free.”
The Toyota Production System (as developed by Taiichi Ohno) is renowned
for reducing waste from work processes. But when the philosophy was
brought over to the west as Lean Manufacturing, the people element was
largely ignored.
Interestingly, both Frederick Taylor and Taiichi Ohno valued frontline
workers. Both pioneers saw the shop floor as a place of learning, where
experimentation was an accepted means to solve problems. But only
Toyota fully embraced the philosophy into the corporate DNA from the
start, and continues to put this into practice.
“Our automation ratio today is no higher than it was 15 years ago,”
Wil James, president of Toyota Motor Manufacturing in Kentucky.
And that ratio was low to begin with: For at least the last 10 years,
robots have been responsible for less than 8% of the work on
Toyota’s global assembly lines. “Machines are good for repetitive
things,” James continued, “but they can’t improve their own
efficiency or the quality of their work. Only people can.” He added
that Toyota has conducted internal studies comparing the time it
took people and machines to assemble a car; over and over,
human labor won.
The factory is ground zero for Toyota’s core belief system about people.
This distinction indicates how they view their future industrial workforce.
First we build people.
Then we build cars.
Fujio Cho
Former Chairman, Toyota Motor Corporation
15
Toyota: Putting People First – Then Automation
BUILDING ON GOOD IDEAS: PEOPLE

16. What is the prevailing workplace culture in your company? Is
your digital transformation vision to minimize the role of the
industrial worker? Or to augment their abilities?
Let’s discuss:
Read more: ▪ At Toyota, The Automation is Human-Powered, Fast Company article
▪ Toyota: First we build people before we build cars, Blog post by Henry Stewart
▪ Tesla vs. TPS: Seeking the Soul in the New Machine, IndustryWeek article

17. Man-made systems are incapable of improving themselves (yet). The
human is central to continuous improvement. This idea is perfectly
captured in one of the core beliefs of lean thinking: respect for people.
W. Edwards Deming, the “father of the quality movement,” shared this
sentiment. Deming insisted organizations must “drive out fear, so that
everyone may work effectively for the company.” Key characteristics of lean
are participation, trust and partnership.
When you consider respect for people, you typically consider the
employee. You must ensure a safe and healthy working environment and
harness employee ingenuity, skills and knowledge.
However, respect must first consider the customer by improving quality,
service and value.
Respect must also consider the company to foster growth, reduce cost,
maintain the company’s assets and eliminate waste. All are core processes
in lean.
Finally, there is respect for the environment.
Ultimately, it is people who shape values, which in turn shape the systems
that institutionalize and improve upon those values.
Go see.
Ask why.
Show respect.
Fujio Cho
Former Chairman, Toyota Motor Corporation
17
Empowering People to Discover, Collaborate and Change
BUILDING ON GOOD IDEAS: PEOPLE + PROCESS

18. Let’s discuss:
Read more:
Mistakes are opportunities to learn. In what practical ways can we
“drive out fear,” show respect and harness the power of our teams?
▪ Drive out Fear: Blog post by Michael Baudin
▪ Lean Hypocrisy: Blog post by Bob Emiliani
▪ Scholtes, PR, The Leaders Handbook: Guide to Inspiring Your People & Managing the Daily Workflow, Ch. 3

19. What has NOT changed: The concept of a closed-loop process which is
fundamental to all manner of control theory and systems, such as:
▲ Feedback or Feed-forward control (since 1868)
▲ Plan-Do-Check-Act (Shewhart cycle made popular by Deming)
▲ Observe-Orient-Decide-Act (applied to military operations by John
Boyd)
What has changed: Advances in technology compress the cycle time of
the control loop enabling organizations to improve faster.
Traditional lean techniques of inspection at the source, visual management
of processes, and shop floor problem solving can now be augmented with
technology. For example, sensors can provide real time detection of
product quality. Improvement can be accelerated with access to process
data to make rapid changes through control systems during the “correct
cycle” (Plan – Do).
The time to learn (Act) can be augmented with digital standard operating
procedures (SOPs) that contain images and video. Critically, these blended
learning SOPs can be transmitted to all relevant people to accelerate
learning.
19
Closing the loop; compressing time
BUILDING ON GOOD IDEAS: PROCESS + TECHNOLOGY

20. Let’s discuss:
Read more:
What are the practical opportunities to leverage technology
and lean principles in your industry or facility? How can these
opportunities be implemented in a cost-effective way to fund
your digital transformation journey?
▪ Bicheno & Holweg, The Lean Toolbox: the Essential Guide to Lean Transformation, PICSIE Books, 2009
▪ Lean Hypocrisy: Blog post by Bob Emiliani

21. Designing a New World of Work
Requires Exploring New Ideas

22. Understanding the future of work is fundamentally about how we see our
relationship with technology. As with any relationship, we need to ask two
basic questions:
First, what does technology want?
According to Kevin Kelly, who has written extensively on the subject of
technology evolution and “what it wants,” the answer is simple:
Technology is an extension of us. We (humans) created technology to
serve us. Technology does not have a destiny or desires of its own and
thus isn’t looking to take over humanity.
The larger question is: What do humans want?
Purpose makes human life meaningful. Work is how we fulfill our purpose
in life. In this context, we have to ask, “What kind of work are humans
better at doing?”
The answer is straightforward: Humans excel at problem solving and
adaptation. We’re wired to sense and respond to changing conditions.
Humans can create, improvise, imagine, deal with ambiguity, interpret
emotions, and even behave irrationally – if that serves our desires and
purposes.
22
Understanding Our Relationship with Technology
EXPLORING NEW IDEAS: MINDSET & CULTURE

23. Let’s discuss:
Read more:
How does your business strategy envision the future industrial
worker? Do your frontline workers see your company’s purpose
and mission as inclusive of their expectations? Does your vision
for technology minimize, eliminate or enhance their role and
contribution?
• Daniel Susskind: 3 Myths about the Future of Work
• Kevin Kelly: How AI can bring on a Second Industrial Revolution
• McKinsey Global Institute: AI, automation, and the future of work: Ten things to solve for
• Friedrich A. Hayek: The Counter Revolution in Science

24. If we build on the assumption that humans are well suited for problem
solving and adaptation can we then redesign the organization to enable
the same? The framework depicted on this page is a starting point for this
discussion. The future industrial worker has the potential to add value at
three levels:
▪ Situational problem-solving focuses on short-term disruptions and
deviations to plan where the goal is to get the operation “back on
track” or recover quickly.
▪ Systemic problem-solving focuses on the medium-term where the
goal is to improve the operation and address root causes so problems
don’t reappear.
▪ Strategic problem-solving focuses on the long-term where the goal
is to change or realign operations when business conditions have
changed.
(Note that the three levels of problem-solving do NOT correspond to
levels in a management hierarchy that separate strategic and tactical
activities.)
In contrast to the divide-and-conquer approach of Taylorism, let’s envision
the future industrial worker as someone with a holistic view of the
business, focused on the right scope of problem-solving activities to
create sustainable value, is compensated accordingly, and undistracted by
a need to climb the organization ladder to protect their future.
Situational
Problem-Solving
Systemic
Problem-Solving
Strategic
Problem-Solving
Scope & Complexity
of Problem-Solving
Duration of
Problem-Solving
“Run the business”
“Improve the business”
“Change the business”
Real-time / Minutes Days Weeks
24
Redesigning the organizational structure for problem-solving
EXPLORING NEW IDEAS: PROCESS

25. Let’s discuss:
Read more:
How many layers of management do you currently have in your
organization? Would each of those layers still be necessary if
the management hierarchy was reorganized along the three
levels of problem-solving?
Is Lean Thinking still relevant for the digital organization?
• Galbraith’s Organisational Design Model: http://www.jaygalbraith.com/images/pdfs/StarModel.pdf
• McKinsey Global Institute: Organizing for the future
• McKinsey Global Institute: The organization that renews itself: Lasting value from lean management

26. Once we agree the human asset should be focused on problem-solving, we
can explore how to best apply enabling technology.
From an operations perspective, enabling technology should focus on
compressing the closed-loop process, both within and between the three
levels of problem solving. Digital transformation strategies often fall short
because the emphasis tends to be on the value of analytics (know) instead
of compressing time within the closed-loop process (see-know-act).
In 1999, Bill Gates was the first to speak to the concept of a digital
nervous system to improve the sense-and-response capabilities of the
business. The concept of a digital nervous system brings together
disparate initiatives and stakeholders under a shared vision to better
understand:
▲ How to achieve cyber-physical / IT-OT integration
▲ Why think of responsiveness in terms of situational, systemic, strategic
agility
▲ Where the disconnects (value leaks) are within the closed-loop process
▲ How to distribute intelligence between edge functions vs. central
functions
The nervous system analogy is also consistent with Kevin Kelly’s view that
technology is an extension of the human. Therefore our own biology serves
as the blueprint of the digital architecture we are pursuing.
“The winners will be ones who develop a world-class digital
nervous system so that information can easily flow through
their companies for maximum and constant learning.
…To think, act, react, and adapt.
Bill Gates
Business @ the Speed of Thought, 1999
SEE
KNOW
ACT
DIGITAL
PHYSICAL
respond
sense
26
Go beyond digitalization – build out the digital nervous system!
EXPLORING NEW IDEAS: TECHNOLOGY

27. Let’s discuss:
Read more:
What is the state of the digital nervous system for your
business? How would you rate its capabilities in terms of
enabling the three types of agility?
• McKinsey Global Institute: The Internet of Things: Mapping the Value Beyond the Hype
• Stanford Graduate School of Business: How Digital Nervous Systems Can Raise Your Organizational IQ

28. As machines take over tasks inside a closed-loop process such as
automated data collection (see), pattern recognition (know), and process
orchestration (act), to remain relevant, some argue that the value
contribution of the human asset must shift towards specialized expertise.
Just as automation replaced muscle with specialized machines, which
in turn, required special skills to operate and maintain them, AI and
analytics will require specialized expertise and skills to build models
and maintain them.
This trend is partly driven by technology requirements in manufacturing
and partly by the labor market. In order to differentiate oneself from the
pool of candidates one must build depth or mastery in specific skill areas.
(The disconnect between youth unemployment vs. job vacancies for
specialized skills in particular sectors or roles is evidence of this.)
In the near term, it appears that the expert becomes the critical building
block of organizations, whilst the generalist is increasingly at risk. But then
again, this problem has its roots in the age-old reductionism vs. holism
debate.
SEE
KNOW
ACT
28
Talent: The Rise of the Expert and Decline of the Generalist
EXPLORING NEW IDEAS: PEOPLE + TECHNOLOGY

29. Let’s discuss:
Read more:
How can organizations address the complex skills requirements of
their people and ensure that problem solving at all levels is
embedded as a critical enabler for both innovation and lean?
How do you create an environment for humans and machines to
work side-by-side?
• TED Talk: Anthony Goldbloom The jobs we’ll lose to machines – and the ones we won’t
• Siemens: When Humans and Robots Work Side-By-Side
• Mary Cummings: Operator interaction with centralized versus Decentralized UAV Architectures
• Mary Cummings: Man versus Machine or Man + Machine?

30. Growing hyper connectivity of people and jobs means that talented people
around the world can potentially access the rapidly developing global talent
markets and innovations can be developed and distributed with ease.
- Lynda Gratton, 2014.
In the past, the expert had to go to the problem, but now technology
makes it possible to take the problem to the expert. Workers on the
frontlines are no longer confined to any particular location as advances like
augmented reality enable workers to “go see, ask why, and show respect.”
It’s increasingly possible to manage any process from anywhere—as
evidenced in the renewable power industry.
Manufacturers place experts in direct support of operations, which has
profound implications for teams. Teams have transient members and are
not necessarily co-located.
Numerous platforms now enable teams to work together—including
Upwork, Guru, and crowdsourcing platforms such as InnoCentive.
Platforms such as these source specialized skills.
As the organization structure gets flatter, the traditional path of climbing
the functional “ladder” will evolve to a career “lattice” structure where
job rotations will offer new challenges and opportunities to develop
further problem-solving skills and gain a holistic understanding of the
business system.
30
Connectivity Redefines the Workplace
EXPLORING NEW IDEAS: PROCESS + TECHNOLOGY

31. Let’s discuss:
Read more:
Do you see future career paths within your organization
evolving from ladder structures (that promote up the functional
silo) towards lattice structures (that rotate across functional
silos to gain a holistic perspective of the business)?
How do you see your organization leverage virtual teams (as
business shift their focus from an enterprise perspective to an
ecosystem perspective)?
• Lynda Gratton: How Corporations Succeed by Solving the World’s Toughest Problems, McGraw-Hill, 2014
• Hot Spots Movement, Creativity in the Digital Age - Focus on Your Inner Messi, not Your Inner Siri
• 8 tips for virtual collaboration, from TED’s tech team

32. 32
We’d love to hear your ideas and perspectives
LET’S COLLABORATE!
Sree Hameed
sree.hameed@aveva.com
Ed Koch
ed@valupoint.co.uk
As we stated in the introduction, our goal with this eBook is to get to an
achievable first step: Start the conversation, debate the ideas and gain
consensus on how to best chart a course towards a new world of work.
Connect with us via LinkedIn or drop us an email – and let’s begin a dialog.
YOU