Ready for the revolution?
Deloitte's international survey reveals the dimensions of the transformations brought about by Industry 4.0, which affects the most diverse areas of concern from the companies, starting by the business strategy itself.January-March | 2018
The Industry 4.0 is already a reality and reserves new and major challenges for executives and government leaders from around the world. Organizations need to adapt to follow and take full advantage of the potential of the Fourth Industrial Revolution. This is what indicates the Deloitte’s study “Industry 4.0: Are you ready?”, which interviewed 1,600 C-level executives from 19 countries – including 102 from Brazil – to explore the market readiness for the Revolution 4.0. The respondents of this survey, which was officially launched at the Davos World Economic Forum, to which Deloitte is a strategic partner, represent companies with revenues of $1 billion or more, and more than half comes from companies with revenues over US$ 5 billion.
Historically, the industrial revolutions were marked by the adoption of technological innovations, with the goal of bringing productivity and efficiency to processes. Thus, Industry 4.0 arrives characterized by the marriage between physical and digital technologies, such as artificial intelligence, robotics, cognitive computing, Analytics and Internet of Things (IoT).
“It is necessary for executives to identify what changes in their company with Industry 4.0. In addition to technology, aspects related to strategy and qualification of people will influence both the internal environment, as well as the customer and supplier chains. It is a transformation in the local and international markets which will require planning and long-term investment, resulting in the outline of new business models,” explains Ronaldo Fragoso, Deloitte’s lead partner of Market Development.
The study shows that the change goes through four main pillars: strategy; technology; talent and labor force; and social impact. The results reveal a relative optimism about the advancement of Industry 4.0 among the interviewed executives, although it also demonstrates that they need to be better prepared to address this new step.
In general, the Brazilian executives stand out from their global peers by giving more attention to HR and talent issues when approaching Industry 4.0. They also indicate a greater concern with cyber security, while global executives seem more apprehensive with geopolitical affairs.
When questioned about the main challenges faced by their companies over the next five years, the interviewees highlight the emergence of new business models – 44% of Brazilian executives already see changes due to the adoption of new technologies, against 40% of global executives. Regulatory concerns also have a relevant position, as 40% of the respondents believe in designing new rules to accompany the new market parameters. Another attention point is the cyber risk, reinforced by technological innovations, which is a concern for 37% of Brazilians and 24% of global executives.
The technology is the motivation for the Fourth Industrial Revolution and is indicated as the great competitive differential by 39% of interviewed Brazilians. This number drops to 20% in the global opinion. The Brazilian executives also are more willing to address the technological challenges of Industry 4.0 – 42% of respondents believe they enable an ecosystem with multiple participants to deliver more value to customers, compared to 33% obtained in global responses.
Despite its relevance, the technology is not seen as a current determinant of efficiency. Only 29% of Brazilian executives consider having more advanced technologies to increase their companies’ efficiency, against 47% of the global sample.
Talent and workforce
The transformations implemented by Industry 4.0 will bring changes in the labor market. For this reason, 71% of Brazilian executives say that their employees need to be trained for new skills, against 61% of global respondents. The Brazilians still have doubts on the dynamics of the employee-company relationship in this new industrial phase.
For 60% of the Brazilian executives, the trend is to have full-time employees, while 61% of the global respondents bet on temporary and/or on demand contracts, per project. Following this logic, 56% of the global respondents estimate that a complete overhaul of the social and labor contracts is required, compared to 35% of the Brazilians.
It is expected that the Industry 4.0 will have a sizeable influence on social issues: 38% of Brazilians estimate that their businesses will be a relevant agent of change for a balanced and fair market, compared to 24% of the global opinion. The Brazilian participants estimate that their organizations are better able to service underserved markets, in need for social support. The Brazilian executives are also more optimistic about society’s future: 93% of the Brazilians are confident with the society that will be created from the Industrial Revolution 4.0, against 87% of the global sample’s executives. They believe the Industry 4.0 will lead to social equality and economic stability.
The Brazilian reality
Deloitte’s survey revealed that several companies operating in Brazil have already adopted technological solutions, but they still need to be integrated to obtain a synergistic view for all areas of the organization.
According to Ronaldo Fragoso, there seems to be a “detachment” between the perceptions about Industry 4.0 in Brazil and in other countries. He attributes this to the fact that many executives believe that their companies are on the right path, but are unaware of all the opportunities that technological innovations can provide.
“The Brazilian industry had few chances to think about the incorporation of new technologies and modernization of processes due to economic difficulties,” explains Fragoso. “It was difficult to make investments to accelerate the transition to Industry 4.0 with the two or three years of recession. With the improvement of the economic environment, this issue is back on the companies’ agenda,” he concludes.The study emphasizes that executives need to identify and strengthen key connections that will bring benefits to their customers, employees and companies. The old business model no longer works, and those who embrace all facets of Industry 4.0 will expand their opportunities for success in this new phase.