The industrial landscape is undergoing a transformation driven by digitalisation. Industrial Transformation enables businesses to become more sustainable, agile, and competitive. By leveraging data, analytics, and automation, companies optimise energy efficiency, reduce emissions, and improve their environmental footprint. It also enhances adaptability to changing customer demands and market conditions, allowing businesses to respond quickly to supply chain disruptions and technological advancements. However, this shift is not just about technology – it is about leadership as well.
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Key Elements of Industrial Transformation
At its core, industrial digital transformation integrates connected products, advanced software, and digital services. This integration is essential for breaking down silos and unlocking synergies. Traditionally, manufacturers, software providers, and service firms operated separately, but today they are forming interconnected ecosystems.
For example, platforms that blend products, software, and services create virtual marketplaces fostering transparency and collaboration. This integration optimizes processes, reduces costs, and improves decision-making. By connecting systems, businesses can streamline operations, enhance agility, and create new business models that drive value through data-driven solutions and connectivity.
The Role of Connected Products in Industrial Transformation
Connected products, increasingly powered by the Internet of Things (IoT), serve as a cornerstone of industrial transformation. These products, embedded with sensors, enable real-time communication with other systems and platforms, enhancing functionality and providing valuable insights for predictive maintenance and optimization.
For instance, industrial equipment with IoT sensors can predict maintenance needs, minimizing downtime. Smart HVAC systems can adapt to users’ preferences and environmental conditions, maximizing efficiency. Furthermore, data from these connected products can be monetized through value-added services, creating new revenue streams.
Advanced Software and Digital Services Driving Industrial Transformation
While connected products lay the foundation, advanced software and digital services drive transformation further. Digital twins, for instance, create virtual replicas of physical assets, allowing companies to test changes, optimize operations, and predict future scenarios without disrupting real-world activities.
In factories, digital twins enable manufacturers to experiment with layouts before implementation, improving flexibility, resource utilization, and productivity. Siemens’ digital native factory in Nanjing, China, exemplifies this approach, achieving a 20% increase in productivity and a 40% improvement in space efficiency.
An Outcome-Based Approach to Industrial Transformation
Beyond software and digital services, digitalization is shifting industries toward outcome-based asset and energy management. AI and integrated data play a key role in delivering predictable results, such as reduced downtime and energy savings. Instead of simply selling software, companies now provide risk-managed, outcome-oriented services.
AI analyses operational data, assesses risks, and enables enriched data integration, linking various systems for enhanced predictive insights. Industry-specific AI models and automated simulation tools are transforming engineering processes, enabling faster, standardized production with less dependence on skilled labour. The end goal is fully autonomous operations—factories that provide substantial productivity improvements while creating attractive upskilling opportunities for human oversight, which remains essential.
Leadership in Industrial Transformation
Technology is critical, but leadership is the key driver of successful transformation. Leaders who understand both technology and business strategy are essential for navigating this shift. Transformation leaders must prioritize initiatives that align with company goals and focus on investments that deliver tangible value. While new technologies are enticing, successful leaders prioritize long-term returns on investment.
A recent survey by Heidrick & Struggles found that industrial leaders are optimistic about transformation efforts, with most recognising the need for the right leadership team and skills. However, challenges persist – 40% of leaders express concern over leadership pipelines, and 83% see risks in recruitment and retention. A lack of leaders with expertise in both technology and business remain a significant hurdle.
To address these challenges, companies must broaden their hiring approach. While industry knowledge is valuable, welcoming fresh perspectives and leadership styles from other sectors brings new insights and innovative strategies. Experienced change leaders who inspire confidence and influence transformation are more critical at this stage than those with deep sector-specific expertise alone.
Moreover, accelerating progress is crucial for retaining top talent. Implementing structured programs for rapid pilots and iterative learning keeps potential leaders engaged, fostering a positive cycle of growth and retention. Momentum in transformation efforts also creates new leadership opportunities, helping companies stay competitive.
Real-World Applications of Industrial Transformation
Many companies are leveraging digitalization to drive change. Advanced platforms and integrated solutions are proving instrumental in connecting digital technologies with industrial processes.
• Energy Management: In Greece, real estate company Prodea achieved net-zero emissions goals. With connected products and software, Prodea’s ESG department could track and forecast energy needs, ensuring proactive energy management. • Electricity Grid Planning: In Norway, grid operator Elvia enhanced grid stability by leveraging intelligent software, gaining visibility over its low-voltage grid, and managing fluctuations from distributed energy resources like solar panels and heat pumps. • Wind Farm Operations: German wind farm operator Denker & Wulff deployed IoT-enabled medium-voltage switchgear, enabling real-time system monitoring, reducing unplanned downtime, and improving operational efficiency.
These examples illustrate how digital solutions are transforming industries, from real estate to energy and manufacturing.
The Future of Industrial Transformation
The future of industry lies in the seamless convergence of connected products, advanced software, and digital services. Companies embracing this shift will unlock significant business value, enhance customer experiences, and maintain a competitive edge in a rapidly evolving landscape. However, the key to successful industrial transformation extends beyond technology – it hinges on visionary leadership that understands the interplay between technology and business.