“Is the Mittelstand ready for Industry 4.0?” was the question the Financial Times, in partnership with Autodesk, raised during the event that took place at the Waldorf Astoria in Berlin on June 21st. I had the honor of having been invited as one of the speakers, besides:
- Henning Banthien, Secretary General Plattform Industrie 4.0
- Alexandra Horn, Head of Associations and Projects Bundesverband mittelständische Wirtschaft (The German Association for Small and Medium-sized Businesses)
- Dr. Klaus Mittelbach, CEO ZVEI, Zentralverband Elektrotechnik- und Elektronikindustrie e.V., Association of Electrical and Electronics Industry in Germany
- Karl Osti, Industry Manager Manufacturing Autodesk
- Cornelia Yzer, Senator for Economics, Technology and Research, Government of the State of Berlin
- Michael Pooler, Financial Times as our host
This recap of the event states my personal opinion and how I perceived the meeting.
First, Cornelia Yzer emphasized, that the German Mittelstand employs approx. 60% of all employees in Germany, and that most of these companies are family owned. The Mittelstand is the backbone of German economy. She also commented on IT infrastructure in Germany, which still lacks high speed internet in the remote areas where we find many SMBs. She pointed out that this cannot be the business of politics.
Then, Mr. Osti gave an impressive presentation on “The Future of Making Things.” Disruption is an ongoing trend that we better embrace. He pointed out that Digital Transformation will not only change technologies, but entire value chains and, of course, the way we do business. Here are the major points from his presentation:
- The means of production are changing
- Product intelligence is increasing
- Customer demand is growing
The panel discussion started with the definition of Digital Transformation; besides Industry 4.0, IoT (Internet of Things), 3D printing etc., Digital Transformation is a much more holistic approach. It also covers Digital Customer Experience (DCX) and CRM 2.0, which include social media use in B2B.
The discussion was very Germany-centric, since my fellow speakers (besides Karl Osti) represented German industry and SMB associations. Mr. Banthien pointed out that 25% to 33% of German businesses are already active in the field of Digital Transformation. That figure is even below the one that I read earlier. There is a definite need for information and clarification regarding Digital Transformation.
Dr. Mittelbach emphasized that society and politics are in charge to set a framework. Mr. Banthien shared a remarkable conversation with a United States colleague who asked, “Why do the Germans [politicians / associations] care about SMBs? They either make the change or die. This is a free market!” I very much agree with this thought, since I personally believe in the subsidiary principle. I pointed out that it is the responsibility of CEOs to lead their businesses towards Digital Transformation, the fourth industrial revolution.
I also agreed with Ms. Horn, who pointed out that politicians should concentrate on IT infrastructure, which they don’t currently do by the way (see above). Many SMBs won’t be able to move to the cloud because their internet connection is insufficient.
During the discussion, it became evident that German businesses are still more concerned about IT safety and security than I experienced in other countries. I pointed out that they have to learn to weigh risk and opportunity. Of course, we must look into security issues when adopting new technologies. At the same time, however, we have to look at our global competitors. Deutsche Telekom is building a fully German-owned datacenter in Magdeburg, because German businesses don’t even trust the datacenter run by Microsoft and others in Europe. They are willing to pay 20% higher rates on Microsoft Office 365 with less functionality (no Yammer in the first phase), while our global competitors pay less, get more and…are more competitive.
When Michael Pooler asked “Are the SMBs resting on their former successes?” I answered that, from my observation, they are struggling rather than resting. They are too busy to do what is necessary. I described the following cartoon that circulated on LinkedIn.
I often hear from others that they have to do Digital Transformation, but just not now. They feel the pressure of having to address other things first.
“It’s all about Imagination. Imagine what new technology,
what Digital Transformation, can do for you!”
Mr. Osti pointed out that we need to overcome old habits and that we must not rest on our laurels. We have to stop discussing and start doing. “Digital Transformation is a task for the entire society,” said Mr. Mittelbach. He also emphasized the role of politics.
All in all, it was a very interesting and meaty discussion. Obviously, no one on the panel denied the necessity to embrace an ongoing Digital Transformation. The role of the politics was discussed with some controversy.
A very last note from the open discussion. One guest, not really from an SMB (50.000 employees), pointed out that they started to digitally connect all of the machines in one plant and gained better planning, better overview and a smoother production. One member of the panel commented on how difficult that is, since all machines use different standards. He described a whole bunch of problems that could hinder SMBs to do so. I could not resist, so I commented that this company did not know about all the difficulties and problems…they just did it! There are times in which you have to make tough decisions. If you don’t want to be left behind you have to “just do it!”
It became evident that events like this are extremely helpful to raise the attention of executives toward Digital Transformation.
The purpose of this blog is to start a discussion. Whether you agree or disagree, please leave your comments below. I hope to hear from you!