Strategy upholds an organization’s mission, vision, and core values with a plan and operating steps to achieve success. Historically, strategies were long-term, often five or more years long. In Industry 4.0, long-term has a new meaning – three years or less. Strategy development and execution must be nimble. In today’s business environment, the operational components made up of people and technology are continuously dynamic and, therefore, both long-and short-term strategies must be modified as needed based on new information.

Business agility in Industry 4.0 is defined internally and externally as:

Mobile technologies are widely recognized as a dominant force in the birth and development of Industry 4.0. In business, mobile solutions have proven highly successful in increasing productivity and engagement and reducing time demands from historically time intensive tasks for both employees and customers. Mobile technologies have dramatically increased the amount of data created every second all around the world and mobile has surpassed digital as the main way to access the internet (Source: Comscore). According to Fierce Mobile IT, 71% of employees spend over two hours a week accessing company information on mobile devices. In addition, almost 13 million text messages are sent every MINUTE of every day (Source: Domo). Nimble organizations must utilize platforms that enable them to make data-driven impactful business decisions in real-time that support their strategic goals.

Strategies in Industry 4.0 cannot be developed in a vacuum. They must be developed by cross-functional teams that includes leadership, management, and employees at various levels. The cross-functional and multi-level nature of these teams are critical to analyze the vast amount of data from different perspectives and provide reality checks on the resources (time, money, people, technology, and other resources) actually needed to accomplish goals. The diversity of the team also drives creation of innovative solutions that overcome organizational challenges. Having employees involved at various levels increases buy-in and engagement and fosters a culture of employee empowerment.

There is no “perfect” strategy. With new competitors entering markets daily; the increase in costs of recruiting and retaining talent, security, technology; and the regular complete disruption of industries by technology advancements, organizations face a constant barrage of new data. The information gleaned from the data creates the ability for organizations to focus on experience first and adapt their strategies quickly. Experience first is one of the few sustainable competitive advantages. Gartner’s 2017 Customer Experience in Marketing Survey reports that “67% of companies feel they compete on mostly or completely on the basis of customer experience, and 81% expect to do so in two years.”

Competitive advantages based on price or enhanced production can be easily replicated. Innovation in this revolution is seen in a temporal competitive advantage. A temporal competitive advantage is the window that exists when a company identifies a market, and then goes to market with speed and decisiveness until the opportunity is exhausted. Apple’s iPhone is a prime example of a technological innovation backed by experience first that created a competitive advantage. This differential advantage allows for significant revenue, dominant market shares, raving brand advocates, and outstanding profit margins. Non-adopters and slow adopters of experience first will lose competitive advantage regardless of how advanced their innovations are.

On the journey to developing a competitive advantage, establishment of strategic performance measures that align with the organization’s mission, vision, and strategic goals is critical in order for leadership and management to shift the culture towards results orientation and measure success. These strategic performance measures must be clearly communicated across the organization to ensure all employees understand what success looks like. The greater the understanding, the quicker organizations can learn which strategies are producing the desired results and adapt those that are not.

Strategic performance measures build on traditional key performance indicators (KPIs) to promote the desired outcomes and results. For example, traditional KPIs might include net revenue, revenue growth, and return on net assets – all lagging indicators and all financial metrics. Strategic performance measures build on these to include the “why” behind the importance of these lagging indicators and add in leading indicators, such as number of unique website visitors, number of products/services delivered on-time, customer satisfaction, and customer loyalty. Strategic performance measures are also consistently tracked and proactively reviewed regularly – monthly or even more frequently. Changes to strategies, if necessary, are made and closely monitored. Both results and modifications to strategies are distributed throughout the organization.

In order to measure the return on investment in any strategy, each one must have an associated budget. However, in Industry 4,0, these budgets are not dictated by the Accounting Department or based on a percentage of the amount of resources that were spent in the previous fiscal year. They are driven by the strategic performance measures established and are therefore adapted based on the value created by the results of each strategy.

Just like with experience first, as technology continues to expand so does the expectation of transparency. Employees’ satisfaction and engagement at their workplace now correlates significantly with their feeling of transparency in their interactions with management and leadership. Employees want to work for leaders that openly share their organization’s “why”, their goals for the future, and the organization’s successes and failures. In today’s business environment, customers also demand that organizations build trust with them prior to gaining their loyalty. When organizations have a history of transparency in interactions, customers are more likely to be forgiving if something challenging was to occur.

Just like strategies can’t be developed in a vacuum, an individual’s performance metrics cannot be solely based on individual performance. Collaboration is vital in Industry 4.0 and organization and team success must be components when evaluating an individual’s performance. The criteria for evaluation must also include tangible and intangible metrics that drive behaviors that are aligned with the organization’s strategic goals. However, these metrics must be objective and transparent to foster the best performance from all employees.

Organizations that develop strategies that uphold their mission, vision, and core values and then execute them in an adaptive and collaborative manner with an attribute of agility are, by definition, operating in Industry 4.0. Embrace this exciting new way to drive innovation and production in your organization to excel in Industry 4.0.

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Kelly Mattarocci

13501 Ranch Road 12, Ste. 103
Wimberley, TX 78676
+1 512.554.8707

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