Industry 4.0

Henrik von Scheel

Best known as the architect behind the European digital agenda and 4th Industrial Revolution global themes today. His work triggers global themes, influences GDP growth, resets policies, and shapes the performance of the fastest growing Fortune 100 companies.

Named by Financial Times as one of the leading authority and business thinkers on strategy and competitiveness. Henrik is one of the most influential board members in Google, World Economic Forum, Expo 2020 Ambassador, US Energy Committee 2030 and Industry 4.0 Economic Council, to name a few.

The wizard behind the biggest global themes of our century discusses the crossroad that Ukraine faces. 

What perspectives does Industry 4.0 open for the business, economy and society? Is Ukraine ready for the pervasive implementation of technologies? These are the issues of Kyiv International Economic Forum 2019 program. One of the KIEF's most anticipated speakers, Henrik von Scheel answers Destinations questions.

– What exactly is the Fourth Industrial Revolution?

The 4th industrial revolution brings the fusion of the digital, the physical and the virtual world, and is the biggest structural change of the past 250 years. In its scale, scope, and complexity, the transformation will be unlike anything humankind has ever experienced before. It is disrupting every industry and economy in every country. And it fundamentally alters the way we live, work, consume, trade, invest, and how we relate to one another.

This new paradigm marries advanced production and operations techniques with smart digital technologies to create a digital enterprise that will not only be interconnected and autonomous but can communicate, analyze, and use data to drive further intelligent actions back in the physical world. It represents the way in which smart and connected technologies can become embedded within organizations, people, and assets, and is marked by the emergence of capabilities such as robotics, analytics, Artificial Intelligence and cognitive technologies, nanotechnology, quantum computing, wearables, the Internet of Things, additive manufacturing, and advanced materials.

– What impact does Industry 4.0 actually have in today’s world and in Ukraine?

Disruption is not a new phenomenon. It is the accelerating frequency of disruption that poses a new challenge. The only thing that is constant is change but the speed of technological change is rising exponentially.

First of all, Industry 4.0 comes in three waves of disruption (of which you can see some in Figure below).

Each wave unlocks the paradigm shift of the next wave and so on. And there are certain technological requisites that unlock and enable newer technologies at later stages. Currently, we have entered the 2nd wave of the 4th Industrial Revolution, whose main characteristic is that it radically changes the manufacturing industry. It alters the way in which every company in Ukraine is going to operate as well as the relationship between suppliers, customers and other third parties. There are going to be many more interactions between all those parties. One of the most relevant advantages is going to be the amount of data that is being generated, and that can be used to adapt to changes rapidly, or even to anticipate these changes. The connected ecosystem that is being built, has many benefits and taking advantage of these is going to generate a competitive edge.

– The speed and the scale of change are increasing. What opportunities does this open for business?

The fourth industrial revolution is defining the new boundaries of prosperity, the future of the workplace, and the policies that will lay the foundation for how companies compete and trade in the future. In fact, there are 17 distinct pillars of technology that are working simultaneously to bring together the digital, physical, and virtual worlds. Each of these 17 pillars delivers unparalleled opportunities for growth and productivity, resetting the competitive landscape in a scale never seen before with smart products and new service models. It also creates the next generation of operational excellence, smart automation, connectivity and alignment across all of the value chain. In a world that is being disrupted faster than ever, the question is not whether you will join in, but how.

– Is there any gap between Industry 4.0 in Ukraine and developing countries?

This is like comparing apples and pears. Anyway, if you really want to compare apples and pears, then the answer is “yes”. But the reality is different. Both the G7, G20 and developing countries have completely different maturity levels, and different drivers for growth productivity and competitiveness.

– Can Ukraine leapfrog its future productivity and growth with the Industry 4.0?

This is a rare opportunity for Ukraine to leapfrog. In fact, it is a major crossroad and it will define the future of growth, prosperity, productivity and how Ukraine competes. It is important to understand that the Ukraine 4.0 has to be carefully designed - it cannot just be copied. It requires that the Ukrainian government, financial institutes and business world work together in a closed-door room to design it.

– What are the main drivers for Ukrainian сompanies to adopt Industry 4.0?

Actually, each industry has different drivers, but nevertheless they all have the following common three stages of adoption:

»Increase Operational Excellence (Stage 1): All organizations who want to stay in business have to perform and deliver. Hence they all focus on Operational Excellence, i.e. productivity, lower risk, quality, cost cutting, effectiveness and efficiency. 70% of all organizations are based on non-core activities like Human Resources, Finance, Procurement etc. This is the area where Industry 4.0 enables higher levels of performance to stay relevant in terms of integration and automation through IoT, Artificial Intelligence, Cloud, Advanced Analytics etc.

»Improve Growth (Stage 2): The essence of growth is that you are better than your competitors. In most organizations the core competitive competencies constitute about 15% of an organization. This is the area where Industry 4.0 is applied in Smart Supply Chain Management, Smart Products, Integrated Ecosystems (upstream / downstream), Smart Automation, Smart Contracts (using Blockchain), etc…

»Increase Competitiveness (Stage 3): In the current age of disruption, it is necessary to rethink what your core differentiation is. Differentiation is what you do, every day, through repeatable activities to serve your customers better than the competitors. This is the true competitive advantage. Many talk about it, but few actually do it. This is a rare and difficult discipline to master. It takes months to develop and refine and constitutes only 5% of an organization. But this is the area where early adopters apply Industry 4.0 to develop the next market, service, product or business model such as Bioinformatics, Nanotechnology, or Quantum Technology to name a few.

– Is not adopting the Industry 4.0 paradigm already a problem for companies?

Yes, it is. If you are not adopting the changes, it basically disrupts your operations, business model, partnerships and your ability to stay relevant. And one of the main changes faced during adoption of Industry 4.0 is bridging the gap between strategy, design and delivery.



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