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Digital Culture: Driving Digital Transformation

Your Guide to the Most Important Part of Digital Transformation

Chapter One: The Argument for Putting Culture First

When you hear the phrase “digital culture,” what’s the first thing that comes to mind?

If you’re like most leaders, what you imagine likely has something to do with the “digital” half of that ubiquitous pairing.

We often forget, however, that technologies don’t exist in a vacuum. Every new manufacturing technology still requires human intervention to function. Whether those people are operators, engineers, IT, or management makes little difference. All technologies have an inherent human component. What technologies accomplish on the shop floor will always be limited by how humans use them.

Put a little differently, digital technologies are always part of digital culture.

This guide is our attempt to convince you that the second word in the phrase “digital culture” is the more important of the two. Throughout, we’ll define and describe digital culture in manufacturing, outline important technological concepts, and provide concrete strategies for aligning vision with practice. At the end, you’ll have a foundation for fostering a strong digital culture in your organization.

Chapter Two: What is Digital Culture?

What is a Digital Culture?

Culture is a vexed concept. Management scientists, anthropologists, and business leaders all have their own definitions.

It doesn’t have to be complicated, though. Our definition of culture is this:

Culture is what people do, what they believe, and how they behave over time.

Culture is the practices and attitudes of people in a given social group. These groups could be nations, regions, ethnicities, or any other way of fragmenting affinity and identity.

For our purposes, the social group in question is the manufacturing firm.

Digital Culture and the Shop Floor Society

It may seem counterintuitive to put so much stock in culture in such a mechanical industry, but what people do and think on the shop floor has a greater impact on production than you might think.

Manufacturing has one of the highest percentages of human error of any industry. In a recent study, however, the Department of Energy found that up to 70% of those errors are a result of organizational weaknesses. Chief among those organizational weaknesses was culture. Indeed, as much as culture can enable positive performance, it can also encourage poor performance.

So when we talk about culture on the shop floor, we’re concerned with the things people do, how they interact with their surroundings and one another, and their attitudes toward the things the activities that make up their work. Culture can manifest in positive ways, like open communication across the hierarchy, a willingness to learn, and an effort to always adhere to best practices. Or negatively, in unnecessary information silos, a disregard for standard procedures, and tolerance of sub-optimal results or unsafe conditions.

Digital culture, therefore, is the attitudes, behaviors, and habits relating to digital technologies that employees repeat over time.

Chapter Three: Why Digital Culture Matters in Manufacturing

When it comes to manufacturing, we can’t stress the second half of this definition–repetition over time–enough.

The reason is simple.

Something you do once is an action. Something a large group of people repeats over time is a culture. The difference between the organizations that succeed in the digital era and those that fail will be how leaders foster a collective embrace of digital potential throughout their organizations.

Digital culture is not about getting a single project deployed and profitable. It’s about laying a repeated framework that can guide every project into the future.

From Digital Transformation to Digital Organization

Digital transformation–perhaps the hottest buzzword in manufacturing at the moment–isn’t a one-and-done initiative. Technological change is incremental. It starts as a trickle, perhaps with a single technology or solution, and builds to a flood–the modern connected factory. Therefore management should consider how their organization’s culture will enable or hinder the many projects and technologies that, in the aggregate, result in digital transformation.

Indeed, recent research on the most innovated manufacturers in the world bears out the fact that culture is essential. WEF and McKinsey found that “Lighthouse” organizations invested heavily in the workforce slated to use digital technology. They made technology a human–a cultural–matter.

And digital technology isn’t going anywhere. All of the best estimates anticipate manufacturers will accelerate their adoption of digital tools in the years and decades to come. So building a culture around digital technologies is essential. It’s not necessarily enough to execute the best IoT strategy or to set the stage to use AI as the technology matures. A piecemeal strategy will never close the gap between digital projects and digital enterprises.

It’s about creating an organizational belief and behavior structure robust enough to guarantee the success of all future digital projects–including those you can anticipate and those you can’t.

Chapter Four: Welcome to the Connected Factory

Welcome to the Connected Factory

In this section, we’ll walk through a shop floor increasingly networked by new digital tools. This factory isn’t hypothetical, nor is it an exercise in futurism. It’s a look at your operations now–or your competitors’.

Rather than give a technology-by-technology survey, it suffices here to describe two fundamental concepts: the Internet of Things (IoT), and cyber-physical systems. Likely these are two concepts you’re already familiar with. But it helps to review them in order to understand how the connected factory is powered by digital culture.


If the Internet of Things refers to the networking and connectivity of everyday objects, the Industrial Internet of Things (IIoT) refers to the networking of industrial assets, sensors, and processes. This allows previously analog machines to receive and send information and creates more points of visibility and control on the shop floor.

IIoT, however, isn’t a strictly technological phenomenon. It’s one that connects humans, machines, and sensors in a dense array on the shop floor. If IoT is a network, let’s put pressure on what’s happening at each node.

In an IoT-connected factory, who’s performing changeover and maintenance? Who’s interpreting the machine data? Who’s completing the last-mile manual assembly? Who’s in charge of quality checks (even those that are assisted by connected devices?).

Phrasing these questions in the form of “who is” may have given it away, but the point is clear: there are still humans integrated into manufacturing processes at innumerable points. Integrating the right technologies is therefore only going halfway.

Success in digital manufacturing requires accounting for how humans participate in manufacturing processes.

Cyber-Physical Systems

Cyber-Physical Systems (CPS), like IoT, are a complex development that can be described in simple terms.

Cyber-physical systems are systems in which actions that occur in the physical world are modeled or processed by a digital system. This digital modeling may then instigates new actions in the physical world, creating a human-technological feedback loop.

But what’s the source of physical action in manufacturing? There are many, and a number of which are, in fact, purely mechanical (refining, machining, assembling). Not all of those actions, however, are performed by machines.

Again, humans are responsible for much of the physical activity that takes place in manufacturing. This is true even in machine-intensive operations. Thus, bleeding-edge manufacturing technologies are still beholden to the quirks and limitations of humans.

At this point, humans’ role in manufacturing success shouldn’t be in question.

The question now, is this: what are you going to do to empower the humans in your digital operation?

Chapter Five: Digital Strategy from the Bottom Up

Here, we’ll review how to execute a digital strategy with the people in your organization in mind. Understanding the business and manufacturing cases behind digital transformation is essential for understanding the kind of digital culture you want to encourage in your organization.

Two Ways Into the Digital Factory

It’s a truism that digital transformation isn’t a one-size-fits-all endeavor. Even so, you can map types of digital manufacturing projects onto a spectrum ranging from human-focused to machine-focused.

On the machine end of the spectrum, you have machine monitoring use cases like condition monitoring, resource monitoring, remote monitoring, real-time machine status tracking, and KPI analysis like OEE and OPE.

On the purely human side of the spectrum, you have applications like digital work instructions for complex manual assembly, process visibility, and in-line quality assurance.

What technology or use case you pick depends on your operations. No matter what your unique operational requirements, though, it helps to consider how humans will figure into the project.

For machine-intensive projects, humans will still need to perform changeovers, analyze data, and write programs for new tool paths. For discrete assemblies, humans are still responsible for working putting parts together accurately at the rate required to meet quotas.

So when you think about your digital strategy–for 1, 5, 10, 25 years into the future–you need to have a rock-solid understanding of where humans fit at each stage.

It bears repeating: success in digital manufacturing isn’t just about “error proofing” lines against human fallibility (remember that most errors are actually organizational errors). Nor is it devising a “change management” strategy that amounts to early notifications to workers of technological change without involving them in the process.

It’s incumbent upon leaders to make sure that digital strategy includes and empowers workers.

Ultimately, they’ll be the ones who turn digital technology into profit.

The Risk of Unilateral Projects

There’s been a curious trend throughout this history of technology. In the years after major technological breakthroughs, when new ideas are finding their way out of laboratories and into products or onto the shop floor, workers have rejected, or even sabotaged new tools. This is a pattern that occurs with remarkable consistency across eras, geographies, and use cases. Though the technologies might be radically different, the motivation for workers’ rejection of new technologies is clear:

Workers will fight against tools that they perceive to be a threat to their livelihood.

The danger of top-down, unilateral digital transformation is that workers won’t embrace tools that they think will threaten their job security. Without the right culture or communications structures in place, it’s possible that workers will reject, refuse to use, or not take full advantage of new technologies.
Manufacturing projects that consider the workers voice and concerns are far more likely to create a return on investment in the long run.

As management scientist Thomas Kochan has persuasively demonstrated, manufacturing projects that consider the workers' voice and concerns are far more likely to create a return on investment in the long run.

Indeed, worker well-being and firm performance are often inextricably linked.

Asking the Right Questions

When it comes to building a digital culture, understanding the human component of your operations can help you outline principles that guide action on the shop floor. Knowing what you expect from humans can help you encourage attitudes and behaviors that will be good for workers’ careers and the business.

For every technology-based project, ask yourself this list of questions:

1. Who will use it?

2. How much of their job will it represent?

3. How much does the manufacturing process depend on correct human usage?

4. How much training will it require?

5. What are the consequences if technology isn’t used correctly? If it’s ignored?

6. Will this technology feel threatening to workers?

7. What will be needed to deploy at scale?

Chapter Six: Designing a Digital Culture for Your Organization

The most important question you can ask yourself is, “What does a successful digital culture look like?” Your answer shouldn’t just be a number. Where culture is concerned, success can be measured as the extent to which workers embody organizational values in their work and in their daily lives.

In our experience, here are the most important things you can consider.

Power Cultural Change By Empowering Worker

Remember that workers will not embrace projects they feel to be threatening.

Leaders need to realize, however, that threat to job security isn’t the only reason workers won’t use new technologies. At times, workers will ignore new technologies because they, a.) believe the old ways worked better, b.) don’t want to invest the time and energy to learn the new system, c.) aren’t included enough in the success of the project or company to break their status quo.

There’s a simple way around this.

When technology empowers workers, they’re exponentially more likely to buy into new projects.
Empowering workers is the best way to create successful digital strategies.

It serves to clarify what we mean by “empower.” Empowerment is not just about making workers feel included. It’s about considering them–their perspectives, their needs, their input–from the planning stage. Empowerment assumes a fundamental respect for people at all levels, and trusts that when given opportunity and incentive, they’ll rise to the occasion.

So before implementing a digital initiative, hold consistent, open conversations between stakeholders and workers. Ask front line workers the following set of questions. What are your challenges? What tools do you have? What would you like to have? What features would let you do your job better.

And always keep and open mind. More often than not, you’ll be surprised by what you hear.

Building a digital culture that prioritizes empowerment requires that leaders understand the individual human strengths of their organization enough to factor them into strategic projects.

Think From the Bottom Up

Many digital projects are the result of executive initiatives. But just as many move from the bottom up. In these types of digital transformations, workers realize the value of a particular technology or solution before the c-suite, and advocate up the chain of command for its implementation.

Many of these have a higher than average success rate. It’s not surprising why this is true: Those closest to manufacturing problems understand them best. Workers facing specific manufacturing challenges day-in, day-out will naturally have an eye for promising solutions. And workers are far more likely to stick with projects that they brought to the table.

When it comes to digital culture, this means that leaders should create an atmosphere where workers feel comfortable recommending, advocating, and staking their advancement on digital projects.

For leadership, this means listening. Fostering a digital culture that encourages bottom up transformation is an exercise in empathy and communication.

The results are clear, though. Higher success rate, longer term success, and an empowering culture durable across projects.

Digital Culture is Data-First Culture

Arguably, the biggest difference between digital and analog technologies is the quantity and quality of data they make available.

Digital technologies have made manufacturing data of a staggering variety available on an unprecedented scale. Indeed, manufacturing produces more data than any other industry.

It’s easy, however, for workers to mistake increased data collection with increased surveillance. While one could (and managers might want to) use digital technologies to track worker performance, it’s important to consider workers’ perception and their legitimate concerns that visibility might jeopardize their job security.

Instead, a healthy digital culture is a data-first in which data is the starting point for process improvements. It’s a source of truth that all can reference and use to guide improvements. If data is used as a foundation for learning, growth, and dialogue, then projects can grow and succeed organically.

Build Consensus Throughout The Organization

Whether a project is top-down or bottom-up, it’s still going to involve coordination and alignment across levels. In short, there needs to be consensus about what kinds of projects will be prioritized, why, and to what end.
Aligning on vision across organizational hierarchy for digital culture.

This involves conversations with workers on the shop floor–that’s simply an extension of empowerment. But it also means that shift, plant, and regional managers understand and, crucially, buy into the broader vision.

When the different levels of an organization agree on vision and direction, it’s much easier to find ways of getting there.

Think About What This Technology Looks Like at Scale

For digital transformation to be truly successful, it needs to be replicable across lines, plants, and geographies.

How to scale a program is usually framed as an operational or financial question. It’s equally one of culture.

This is because scaling projects requires sharing knowledge, best practices, and experience. It requires workers training other workers, representatives from one plant training another, and collaborating as the organization explores new territory together.

So, ultimately, the competence, attitude, and behaviors of those on the ground are essential to scaling projects.

This is where culture becomes a ripple effect. When the way people act across an organization produces outcomes that would not have been possible without this high-level coordination.

Chapter Seven: Conclusions

There is no magic bullet for successful digital transformation. Digital revolution doesn’t happen overnight. But there are best practices, and there are ways to create conditions for success.

Fostering a digital-positive culture is a proven way to ensure replicable success.

Proven, however, doesn’t mean easy. Creating a culture is harder than purchasing new technology and taking advantage of new media. But the potential gains justify the effort and suggest that all leaders should think about digital strategy from a starting point of digital culture.

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Day-in-the-life of a manufacturing facility illustration