Industry 4.0
Effects of digitization
Course: MGMT 200-1 Business and Management II, Winter Semester 2020
Lecturer: Prof. Thomas Röhm
Presented by:
Maximilian Wiebrock
Welfenstrasse 4
81541 München
Course of study:
Bachelor International Business
Submission date:
22.12.2020
2
Table of content
1.
Page
Effects of Industry 4.0 and digitization ..........................................................3
1.1 Problems in the implementation of digitization strategies .......................3
1.2 Managers in a digitalized company ...................................................... 3-4
1.3 Workforce requirements due to Industry 4.0 ............................................4
3
1
Effects of Industry 4.0 and digitization
1.1 Problems in the implementation of digitization strategies
Many companies have already recognized that there is a need for change in their company in order to remain competitive on a global level, but they are sometimes confronted with various problems when implementing or planning a strategy.
One of the biggest problems is the lack of qualified employees. New technologies and
methods can only be used efficiently if they are understood by the user. Accordingly,
in addition to investing in the conversion of their operations to digital technologies,
companies must also offer their staff further training to ensure that the innovations can
also be used.1
Another challenge that companies face with digitization is the unclear definition of
their requirements. Each company must define for itself what impact digitization will
have on its own business processes. However, this presents many managers with the
problem that they do not have sufficient digital expertise to be able to make accurate
assessments. 2
Internal resistance is another enormous hurdle to rapid digital transformation. Existing
structures, processes and hierarchies do not want to be abandoned by the workforce.
The mindset has become entrenched that nothing needs to change as long as things are
still going well. As the saying goes, “Never change a running system.”
In the case of digitization, however, this is negative in most cases. As already described, the longer a company waits to implement digital technologies, the more difficult it becomes. In the digital age, a fast reaction speed is essential to prevail against
the competition. However, if individual organizational units oppose change, it will lead
to problems. In this case, the competence of the executive is required.3
1.2 Managers in a digitalized company
One of the essential tasks of a manager is to accompany and support the workforce on
the path to digitization. Teams are usually heterogeneous, which means that previous
experience with technologies, for example, can vary greatly. Accordingly, employees
can adapt and apply new technological tools and methods in their day-to-day work at
1
Adner R. (2006) Match Your Innovation Strategy to Your Innovation Ecosystem – Harvard Business Review, pp. 98-107, 04/2006
2
Schindler M. (2018) Digitalisierung in deutschen Unternehmen: Fortschritt ja, Revolution nein,
BusinessUser.
3
Unknown (2016) Interne Grabenkämpfe blockieren den Fortschritt, Wirtschaftswoche.
4
different speeds. The assertiveness of a manager is crucial when implementing digitization in the company. Not only should they motivate each individual department in
the company to cooperate as best they can, but they should also be able to take firm
action if resistance arises.4
The previous professional expertise of a manager will become increasingly less important in the course of digitization. In the future, managers will be characterized above
all by the fact that they enable employees to manage themselves and link the competencies of each individual. Furthermore, managers have a role model function. They
should therefore be familiar with future working methods and master the necessary
technologies.5
1.3 Workforce requirements due to Industry 4.0
A study by the Center for European Economic Research dated April 18, 2018, takes
up the discussions of personnel requirements due to digital technologies and examines,
among other things, the effects of technological change on the number of employees.
The study is based on telephone surveys of 2032 German companies with a company
size of one to 200 or more employees.6 The results show that digitization and the associated technological change are having a positive impact on employment. Contrary
to fears of rapid job losses, the digital transformation even leads to an increase in employment of 0.18 percent per year. Although workers are likely to be replaced by artificial intelligence in the future, new jobs will also be created as a result. This leads to
a forecast total employment growth of 0.4 percent per year until 2021. Besides, the
studies show that the impact on employment growth varies from industry to industry.
For example, employment will increase primarily in the electronics industry, in vehicle
manufacturing and in other manufacturing sectors.7
The introduction of digital technologies could replace workers in the long term and
improve the competitiveness of companies. However, the forecast results of the study
indicate that the adjustment effects in the economy will not be able to compensate for
this decline.
4
GFP (2016) Führen im Digitalisierten Unternehmen, DGFP.
Willmott P. (2014) Digital Strategy – McKinsey&Company,05/2014
6
Arntz M. (2018) Digitalisierung und die Zukunft der Arbeit: Makroökonomische Auswirkungen auf
Beschäftigung, Arbeitslosigkeit und Löhne von morgen, Bundesministerium für Forschung und
Entwicklung.
7
Mubarak F., Suomi R., Kantola S.P. (2020) Confirming the links between socio-economic variables
and digitalization worldwide: the unsettled debate on digital divide – Journal of Information, Communication and Ethics in Society, 05/2020
5
5
Bibliography
Adner R. (2006)
Match Your Innovation Strategy to Your Innovation Ecosystem – Harvard
Business Review, pp. 98-107, 04/2006. Retrieved from:
https://hbr.org/2006/04/match-your-innovation-strategy-to-your-innovation-ecosystem
Tabrizi B., Lam E., Girard K., Irvin V. (2019)
Digital Transformation is not about Technology – Harvard Business Review, pp. 2-5, 03/2019. Retrieved from: https://hbr.org/2019/03/digitaltransformation-is-not-about-technology?referral=03758&cm_vc=rr_item_page.top_right
Willmott P. (2014)
Digital Strategy – McKinsey&Company,05/2014. Retrieved from:
https://www.mckinsey.com/~/media/McKinsey/Business%20Functions/McKinsey%20Digital/Our%20Insights/Digital%20strategy/Digital%20strategy.ashx
Wald D., de Laubier R., Charanya T. (2019)
The Five Rules of Digital Strategy – Boston Consulting Group, 05/2019.
Retrieved from: https://www.bcg.com/publications/2019/five-rules-digitalstrategy.aspx
Mubarak F., Suomi R., Kantola S.P. (2020)
Confirming the links between socio-economic variables and digitalization
worldwide: the unsettled debate on digital divide – Journal of Information,
Communication and Ethics in Society, 05/2020. Retrieved from:
https://www.emerald.com/insight/content/doi/10.1108/JICES-02-20190021/full/html
Schweitzer H. (2017)
Datenmärkte in der digitalisierten Wirtschaft: Funktionsdefizite und
Regelungsbedarf? – Freie Universität Berlin, 10/2017. Retrieved from:
http://ftp.zew.de/pub/zew-docs/dp/dp17043.pdf
6
Schindler M. (2018)
Digitalisierung in deutschen Unternehmen: Fortschritt ja - Revolution nein,
BusinessUser, 07/2018. Retrieved from: https://business-user.de/digitalisierung/digitalisierung-in-deutschen-unternehmen-fortschritt-ja-revolution-nein/
Arntz M. (2018)
Digitalisierung
und
die
Zukunft
der
Arbeit:
Makroökonomische
Auswirkungen auf Beschäftigung, Arbeitslosigkeit und Löhne von morgen.
– Zentrum für Europäische Wirtschaftsforschung, 04/2018. Retrieved from:
http://ftp.zew.de/pub/zew-docs/gutachten/DigitalisierungundZukunftderArbeit2018.pdf