2018

Without design, Industry 4.0 will fail

Six challenges where design accelerates successful digital transformation in manufacturing.
The idea of the “smart factory” arose years ago at the ad­vent of Industry 4.0, a concept that put technology in the foreground of industrial processes. However, Industry 4.0 was meant to be about much more than technology-driven change. Now that we have a clearer understanding of what technology can do, we need to start asking fundamental questions around the purpose and approach of the digital transformation. In this white paper, our human industries Venture does just that, outlining six key areas where our experience and research in this domain has uncovered great potential for the future of Industry 4.0 if it embraces design. The paper, titled ‘Without design, Industry 4.0 will fail, is available in PDF format here. Special thanks to our designer Caroline Arvidsson for the great illustrations. 
Download
Get the PDF version![PDF 2 MB]
Introduction

In 2013, when the term “Industry 4.0” was first outlined in a report describing a new type of industrialization, its definition was founded on the connectivity of “resources, information, objects, and people.” However, as more manufacturing processes have become digitized, what we currently observe is an imbalance across these connectivity touchpoints: the main focus is heavily placed on technology. Although we agree that technical connectivity is an essential element, we argue that digital transformation will only be successful if the focus now shifts to put humans – not machines – at the centre. 

The technical side of digital transformation no longer seems like science fiction; instead, many solutions are available off-the-shelf and ready for implementation. These solutions include anything from the modules that provide secure connectivity, to sensors reading physical data along supply chains, to algorithms and IT infrastructure that provide insights based on data, or actuators which allow machines to be controlled remotely. The real challenge in digital transformation is no longer how to technically connect your machines and turn your plant into a “smart factory.” The challenge is to look beyond the purely technical in the industrial digital context. 

Now that we have a clearer understanding of what technology can do and how to best use it, we need to start asking fundamental questions around the purpose and approach of the digital transformation. Whether it’s workers, suppliers, clients (and their clients) or partners, the answer will never lie solely with technology; it will always involve other humans. What we’re faced with today is a design challenge. 

Putting human needs at the centre of innovation is a long-held design practice. The ‘Californian’ tradition of user-centred design, was made famous by cognitive scientist Don Norman. In 1988, Norman published a book which provocatively proposed that the fault lies not in ourselves, but in design that ignores the needs and psychology of people. His timeless principles have been revised to relate to design in the context of new technologies, but the approaches that make user-centred products more successful than others remain more relevant than ever. 

Similarly, the Scandinavian tradition of participatory design focuses on designing technical solutions that are useful to people in their daily work. With an emphasis on “opportunities and constraints for industrial democracy and quality of work,” this tradition again puts human needs at the centre of the innovation process.

As an outcome of these successful approaches, design has broadened its scope over time. Today, design not only includes “designing things right,” which means to make things

useful, usable, and desirable from the client’s point of view,” but also to “design the right thing” – to focus on the areas which have the biggest impact on fulfilling the defined purpose. Bringing this human-focused design tradition to the complex problem of industrial digitalization will be crucial to identifying and taking the right steps. Without it, Indsutry 4.0 will fail.

In the following sections, we outline six specific challenges where design plays the center role in enabling successful digital transformation in manufacturing.

1. Design improves manufacturing processes by involving all stakeholders.

 

 

1.

Although the total number of people working in manufacturing has massively decreased, the idea of the “lights-out factory” remains limited to some rare cases. In fact, though low-skilled workers have often been replaced, the number of skilled workers on the factory floor has even increased over the last 50 years. Where there are people, there is the need to provide a human workplace – a workplace which empowers people to contribute their skills and abilities, while also allowing for natural trial and error so they can learn from their mistakes.

There are two main flaws in today’s top-down manufacturing planning structures, where shop-floor workers are primarily treated as machine-like assets. Firstly, this structure underestimates the abilities of humans to be smarter and more creative than any robot or machine. Especially in a time of increasing complexity in manufacturing, it is a waste not to leverage these human potentials, as companies such as Mercedes Benz are already recognizing. This innovative company recently replaced robots with skilled human workers to assemble highly-customized S-Class sedans in one of its plants, saying that, “the degree of individualization and many variants are too much for robots to handle well […] They can't work with all the different options and keep pace with changes."

The second flaw in the current approach is that people on the shop floor are not machines and they will never behave like machines. People will be creative and find new solutions and work-arounds, whether management wants it or not. We saw many examples of this during our in-situ research in factories. Workers have a tendency to hack procedures dictated to them through top-down structures. People establish their own routines to improve procedures locally, often without their superiors taking notice. In day-to-day business, these hacked procedures are an adequate solution for those involved and are often more effective than the original top-down procedures. However, if people leave the company, new team members join, or other unexpected events occur, the improvised procedures are prone to failure, potentially causing larger problems for the company.

User research we conducted in an electronics assembly plant provided a perfect example of such an issue. An instance was identified where entire pallets of semi-assembled parts had not been digitally registered by the workers. The workers explained that this was due to the registration process taking too much time. They therefore often neglected to carry out the process because it was too disruptive to their workflow. We also learned that once in a while entire pallets would disappear or pop up again from the “digital nowhere,” indicating further flaws in the system. The process failed not because the workers were “doing it wrong,” but because the design of digital pallet registration had neglected to take the workers’ human needs into account. The users of the system were not consulted as stakeholders in the design of the process.

Today’s design approaches include a wide set of methods to involve all stakeholders, including end-users, in innovation processes. The involvement of end-users – in this case the factory workers – does not only take place through usability tests once a process has already been developed, but throughout all phases, to ensure the solution also meets their needs.

Elizabeth B.N. Sanders is an industry expert who has been working as a design research consultant since 1981. In her inspiring paper Co-creation and the new landscapes of design, she shows that the early involvement of all stakeholders, even in the, “moment of idea generation,” will help find the best solutions. Sanders states that this is especially the case for so-called “open-ended questions” or “wicked problems,” where a lot of complex interdependencies exist and there is no easy answer. Because digital technologies can be applied in so many different ways and every manufacturing environment is a tightly-couple interdependent system, every digital transformation is a wicked challenge.  

Another intriguing result of involving all players in the digital transformation process is a higher acceptance of new solutions and higher employee loyalty. This has been observed by Ramaswamy and Gouillart, who published a paper which provided global case studies proving that, “by focusing on improving the experiences of everyone involved, firms are achieving breakthrough insights, lower costs, new revenues, and new business models.” We also witnessed similar outcomes in the transformation processes we accompanied: once workers were involved in improving their own procedures, the common, “not invented here” mentality did not occur. On the contrary, workers not only happily adopted the new procedures, but also actively continued to improve it – this time also involving their superiors.

2. Design strengthens your brand by applying your brand promises to all touchpoints.

 

 

2.

A break within the experience a customer has with a brand always leads to damages, be it in consumer products and services, or in the manufacturing world. For example, if a brand promises a premium experience and a customer ends up waiting a long time to reach somebody in the call center, this break in the experience will lead to distrust and eventually to the customer switching to another brand. In a connected world, such bad experiences are often shared on social networks, which can cost a company hundreds of millions in market capital. The United Airlines incident in the spring of 2017 is the perfect example. The company lost $US 250 million of its market value after a video was released online of a passenger being forcibly dragged off an overbooked flight.

On the flip side, a satisfying overall experience in the digital age leads to extreme loyalty. In the mobile phone operating system (OS) market, iPhone customers have a brand retention of over 90%. The overall satisfying experience people have with every touchpoint linked to the iPhone brand guarantees surprisingly high brand loyalty. Human-centred design brings a consistency of brand identity and experience quality not only to the hardware and OS, but also to their brick-and-mortar retail stores. Design rules and strict gating extend the principles even to third-party services which wish to do business on their platform.

Strong branding has always been prominent in the manufacturing world (especially in Germany), with the industry long understanding the power of industrial design. Today’s machines have recognizable brand identities based on the usage of colour, shape, and materials. Already at the first iF award in 1954, many products from the manufacturing world were recognized, including the original “Ameise” platform lifter truck.

However, beyond design aesthetics, we observe that many machine manufacturers fail to identify all relevant touchpoints. This is where service design can help, as it looks at experiences in a holistic manner to identify and design all ways in which we interact with products, not forgetting the “before” and “after” of a service experience.

Another often-missed opportunity is the consistency of an experience provided by a brand. Through acquisition and third-party offerings, many product portfolios in the manufacturing world are quite diverse. Additionally, within larger organizations, the left hand often does not know what the right hand is doing, which leads to additional design diversity. From a customer’s point of view this diversity is confusing –  they will not be able to recognize the brand or experience the values of the company if there are inconsistent design solutions. Such missed opportunities will eventually lead to declining financials returns.

3. Design empowers operators by making processes intuitive and easy-to-use.

 

 

3.

The shortage of skilled workers is becoming the major threat in manufacturing. In Japan, 81% of companies with 10 or more employees are worried about finding skilled employees; in Germany and the US, around 40 % expressed the same concerns.

Design enables the creation of systems that both novices and experts can work with and take full advantage of. In the academic discussion around digital learning, the request is to build environments with “low thresholds” which empower beginners and “high ceilings” which allow experts to be as creative as possible. Furthermore, systems should provide “wide walls,” meaning that they should offer the opportunity for a wide range of different applications.

Looking at today’s interfaces in manufacturing, we mostly observe that they are made by engineers, for engineers. This approach is not scalable. Anybody who uses such a system needs to be a highly-trained expert which, as mentioned above, is a growing problem in recruiting. This engineer-focused approach does not allow for expansion into new markets. Potential new business opportunities are missed when tools are built to be inaccessible to anyone but a well-seasoned engineer. For example, the maker community and dental laboratories are eager to embrace manufacturing technology but the people in this market expect tools with a high level of usability and a lower learning curve to get started. Estimating the volume of markets such as these is not easy, but the potential to open up new markets through easy-to-use interfaces is hugely evident. One of the most prominent examples is the microcontroller Arduino, which not only empowered millions of non-engineers to work creatively with hardware but it also became the foundation to launch many innovative startups and products.

4. Design expands your offering in a connected world by creating new services.

 

 

4.

There are many forecasts and estimates for the Internet of Things (IoT), with several detailed reports predicting that the IoT will have a significant impact on the manufacturing world. Forrester predicts that industrial asset management in manufacturing and industrial production is one of the hottest growth areas for the IoT. AT Kearney Consulting foresees productivity improvements of $US1.9 trillion by 2020 through the IoT. General Electric predicts that investment in the Industrial Internet of Things (IoT) will top $US60 trillion over the next 15 years.

Already now we observe that demands for a connected manufacturing environment are rising. Workers and shop floor managers expect more information and better support for their work, while planners and purchasing departments expect integrated service-product-solutions and new pricing models based on connectivity.

Although much of the technology being used in the IoT is still relatively new, the level of innovation in this field is mostly evolutionary. The majority of services that can be enabled through the IoT were around prior to the technology being introduced or have been well defined in the past years. Some obvious examples include remote access to machines, predictive maintenance, or pay-per-use. However, as with any digitally-enabled service, the execution of such services is crucial. Only if your service fits seamlessly into the existing processes – from a client’s side – will it be accepted and paid for.

As manufacturing has been slower in its move towards digital transformation through the IoT, there is the opportunity to learn from other industries. In consumer electronics, for example, a lot of money was lost by manufacturers that thought connecting TVs to the internet was simply a technical challenge, which was short-sighted. The real winners in the connected TV space ended up being companies such as Netflix, Apple TV, and Google Chromecast which went further to provide a superior experience based on an acute understanding of their customers. At the same time, TV hardware remained a commodity.

This is important for companies in manufacturing to consider, so as to avoid the same fate. By understanding customers and offering them a superior service based on connected hardware, there is a much higher opportunity for success. Using tools derived from design processes, companies will be able to develop successful user-centred services.

5. Design disrupts your existing business model and prepares you for the future.

 

 

5.

In addition to the evolutionary innovations based on connected hardware, we see a wide range of disruptive innovations which have the potential to fundamentally change the industry landscape. Platform businesses, in particular, hold huge opportunities for the manufacturing world, but at the same time huge threats. These are the so-called “service-providing platforms” (like Airbnb) that have the possibility to displace or threaten existing, often regulated, service providers.

In our experience, it’s difficult to design suitable platform business solution for one particular industry. The design challenge is extremely complex as there are no role models, a wide range of possible business models, and many different players with varying interests and motivations. Therefore, we began to establish a new process for these kind of design challenges: a process based on the philosophy from Lean Startup. We are using virtual MVPs (Minimal Viable Products) and the Build-Measure-Learn cycle in a process inspired by Google Ventures Design Sprints to understand market opportunities and involve all stakeholders early on. A Minimal Viable Product traditionally would be defined as the bare minimum feature set required to release a product or service commercially. In our process, we test the value proposition, the pricing model, and the market viability of a product or service before building anything.

An example of a virtual MVP is the landing page we built for Bosch Healthcare Solutions, investigating the potentials of an emergency service called “Lifebuddy”. To find out whether people were interested in this service at all, we built a website, convincingly promoting the service, its features, and its pricing models. At that time the development of the service itself had not started. Then we advertised the site and observed the reactions, from both the ads, as well as the website analytics. Through constant changes in all aspects of this virtual MVP, Bosch gained a clearer understanding of the most promising direction for such a service--an understanding based on evidence and numbers, not personal tastes or gut feelings.

We have been working with various players in the B2B field, developing platform business solutions. What occurred as an interesting commonality throughout all industries was the fear of working with competitors. This is very much understandable in a traditional business sense, but when traditional companies are entering the platform world, today’s competitors have to become partners and customers. If not, you are likely to end up building another dead silo solution--that is, one which does not generate enough traction for the platform to become relevant. Co-Creation, especially when led by an external design organization, can help to overcome corporate borders and offer a neutral playground, where competitors meet to discuss joint opportunities.

6. Design investigates the potentials of novel technologies for your organization by building and testing prototypes.

 

 

6.

One essential part of any design process is to prototype concepts. By prototyping we mean making an idea or a vision for a new product or service “experienceable.” To accelerate innovation processes and to allow risky explorations which might fail, these prototypes need to be built as fast as possible and as cheaply as possible. They need to be “Just-Enough-Prototypes”–  just enough to explore key aspects of a solution at a given stage of innovation.

Donald A. Schön, a philosopher and professor in urban planning, coined the term, “reflective practitioner.” He maintained that only by doing will one produce “a surprise – an unexpected outcome, pleasant or unpleasant” and learn from it. Bill Buxton, principal researcher at Microsoft Research, describes this process as a “dialog” between “mind” and “sketch” and that this “reading” of a sketch generates new knowledge.

In this sense, designers are often involved in prototyping ideas around new technologies, especially when these new technologies might be part of the experience with a product or the foundation of novel services. In our observation, only through the process of prototyping can the potentials and limitations of new technologies be experienced and fully understood, allowing for an informed decision to be taken.

Currently, there are many new technologies that are interesting to explore in a manufacturing context, ranging from gesture control, air-flow based feedback, proximity sensors, and voice interaction to augmented reality (AR), machine learning (ML), and artificial intelligence (AI). Only through doing, building, and prototyping will a company find out how to best utilise these new technologies in a way that is most relevant to their individual purpose and context. Design processes which allow businesses to combine technical intelligence and human-focused design in a rapid prototyping environment give these businesses a clear advantage over competitors who fail to embrace agile and design-driven innovation.

Outlook

The six areas presented are those where we currently see the most potential for design to accelerate and improve the quality of digital transformation in manufacturing. These areas will become even more critical to address in the coming years, as digital disruption takes a stronger hold on the industry. This will require proactive, rather than reactive solutions to enable a smooth and successful transition. 

Our recommendation is to establish a user-centric and co-creative approach in all research and development (R&D) and strategic activities within manufacturing organizations. For this approach, a high diversity of skills and experiences are required. This is where we see designers playing a crucial role as experts who will fill the gaps and become essential collaboration partners with the relevant industry stakeholders.

In recent years, the design discipline started to build up specializations, which have become increasingly applied across various industries for the successful creation of digital products and services. These specializations include service design, business design, user experience (UX), and user interface (UI) design. The same design skills are required in an industrial context where, depending on the focus of the organization, industrial design or storytelling may also be important to add.

Engaging with external design teams is also beneficial in enabling larger, or more traditional, companies to innovate faster and to test and implement new tools and processes without organizational restrictions. Not only do designers work in short sprints, but the rapid prototyping and user testing approach means there is a larger element of trust in the solutions being created as a result and possibilities become tangible. The team can therefore not only help to successfully conduct innovation projects, but also accompany the cultural change within the organization required to adapt and respond to digital disruption.

IXDS has been providing these services for the past 10 years across various industries, with interdisciplinary teams of designers and engineers supporting many companies as they undergo digital transformation and create relevant products and services. We have learned a lot from this experience and, over time, have not only witnessed this approach as being fruitful and suitable for addressing the challenges at hand, but have also built up our own team of industry experts to further expand our offerings. Our next big steps in our mission to empower, companies, teams, and individuals to enact meaningful change in the world will be in the industrial context, to help build better relationships between man and machine. We now have a specialized internal IXDS Venture dedicated to Smart Manufacturing and other industrial topics, called Human Industries. This Venture is made up of a strong team of professionals, who are specifically focused on the exciting opportunities available in this space.

You can contact the Human Industries Venture to discuss more about what you’ve read in this paper or share ideas at human-industries@ixds.com