Improve the Decision-Making Process for Industry 4.0

“Decision-makers must learn to leave egos at the door”

In the era of Industry 4.0, technology will play a greater part in optimizing solutions. But do decision-makers have the expertise needed to fully understand the rapidly evolving tech world?

If leaders can’t stand up and say: “I don’t understand how that tech solution works” and have the humility to learn new things, then optimal decision making in the era of Industry 4.0 may be in jeopardy.

Making a good decision is only validated by the results. However, in an age of constantly growing complexity and the push to be innovative and “out-of-the-box”, there may be too many unexpected variables that can bring about unexpected results. This logical fear plagues decision making.

Decision-Making Process for Industry 4.0In fact, decision making has become more challenging due to the exponential growth and access to information.

Validating information is becoming a serious issue in the Corporate C-suite. Misleading or inaccurate information can contribute to decisions that can actually lead companies down the wrong path; costing millions of dollars, and sometimes careers.

Effective decision making is an essential skill required for business leaders.

Being a good decision maker is not an inborn talent, but something that can be gained through years of practice and a solid process.

Too often, subtle unknown technical factors can distort a logical decision-making process. With all the layers of interconnected technologies and stretched supply chains, making business decisions can demand more input that few decisionmakers fully understand. As we enter Industry 4.0 and its dependence on Big Data, IoT and sophisticated risk hedging strategies, today’s business leaders need to have a solid decision-making process based on the increased collaboration and dependence on Subject Matter Experts (SMEs).

A leader can make any decision, but what matters more are EFFECTIVE decision-making that provides for a positive outcome. A Harvard study came up with a list of characteristics that are correlated with good decision making (positive outcomes). When you make a decision within your company, there are certain characteristics can help bring about effective outcomes.

1) A decision must resolve the problem

When a problem arises that requires a decision, leadership must clearly identify the goal and how to measure it. Problems are often interconnected with tangential processes.

For example, bringing in a new technology that cannot be integrated with a legacy technology solution can exacerbate the obvious problem. Therefore, when there is a technology related problem, it is wise to have subject matter experts (SMEs) provide input on potential unintended consequences.

While adding additional expert input may be costly or overly time consuming, “surrounding” the problem can help prevent an even more costly problem down the road. If the expertise is not found within the company, outside expertise can be brought in to help. Some issues simply require knowing what questions to ask!

When you ask your IT team: “Do you have a deep understanding of the technology and how it can help us?”, make sure you’re getting an honest answer. Keep in mind: no one likes to appear as ignorant-especially if they are getting paid for their knowledge.

However, technology is changing so rapidly that it is almost impossible for even the most astute specialist to know what is current in the field. This situation implies the leaders know how to provide an atmosphere of honesty and transparency that will not be threatening.

2) A decision must be consistent with achieving the goals

For example, suppose, you wanted to retain your customers long term. You have decided to offer discount prices for your products, but you delivered extremely poor service. Despite your pricing, your customer will never come back. So your goodwill gesture of lowering your prices did not achieve the intended outcome of keeping your customer.  Instead, if you had focused more on amazing customer service together with a lower price, you may have earned a return customer.

3) A good decision will be unbiased

For example, when offering special benefits to a segment of stakeholders, there must be a clear definition of what defines that segment. If a stakeholder meets the criteria, they receive the benefit, and if they do not, they are not in the segment. Trying to be impartial is especially important for customers, employees, and partnerships.

4) A good decision should be easy to execute

While the Razor of Occam may not apply in today’s complex, technological world, the solution to a problem should not be overly complicated.

Decision MakingThe more variables, the higher the probability of encountering unexpected problems.

Sometimes, a decision may be more costly to fix than the actual problem. The most important thing to keep in mind is that if there is not a complete understanding of the problem, there can be knock-on negative effects. When a decision has been made, it is a wise process to rigorously drill down and look for potential tangential effects before implementation takes place. Indeed, many companies set up test programs that will not interfere with daily operations before the actual implementation of a solution.

5) Collaboration is key to coming up with the best solution

Usually, a good decision can be formulated by involving others. You could ask your teammates to come up with ideas and alternatives to solve the identified problem. This way, you can draw on a wider range of ideas and experiences. Indeed, more companies are inviting a cross section of departments and personnel as there may be staff that has experience with the same or similar problem.  The team may not have the expertise to even ask the right questions. If there seems to be a lack of in-house expertise, it can make sense to bring in outside expertise that may be able to spot unforeseen consequences. Yes, there is a cost, but that must be subjected to a cost-benefit analysis. There can be little doubt that as industry 4.0 evolves, there will be a growing number of specialists focused on certain industries or problems.

6) Analyze the pros and cons

It’s the old Benjamin Franklin method of troubleshooting a scenario.

Once a potential solution has been developed, the team should invite “outsiders” to help with the testing of the hypothesis.

Keeping it within the team does not allow for a broader range of experience and can fortify the politics of a solution that may not be the optimal solution. Often times, decision makers are not regular users of technology and should invite users to take potshots at the proposed solutions without fear of repercussions.

7) Decisions should be based on sound reasoning and should be transparent

The Industry 4.0 era brings with it a whole new level of expertise that older, C-level management may have little knowledge of. If there is a technological element to a decision, decision makers must make sure they fully understand the implications of how the technology works and how it can contribute as well as negatively impact the decision. Noone, particularly leadership, wants to show ignorance. However, decision-makers must be hyper-sensitive to those elements of a solution they may not understand.

Leaders should be able to say honestly: “Please explain how that works. Pretend you are teaching a sixth grader.”

Moreover, if there seems to be uncertainty among the experts, decision-makers should not be satisfied with an opaque understanding. Instead, bring in outside expertise to help clarify those technical factors not clearly understood.

Summary

As we enter into Industry 4.0, technology becomes an important factor in decision making. Many in the C-suite may not have the level of expertise to fully understand and judge the veracity of the tech solution as part of the decision-making process. As a result, decision-makers should consider bringing in outside expertise if there is no in-house expertise to help clarify the technology in context with the problem. As technology becomes more complex, the in-house expertise may not be sufficient in providing a true picture of how the technology works and how it can solve the problem.

Complex decisions usually mean less Agility

The Lean philosophy implies rapid and decisive reaction to changing market factors, however, to make an optimal decision, there must be a full understanding of the technology and the part it can play in resolving problems. Leadership should be honest about their level of understanding of how tech works as well as what part it can play in problem solutions. Leadership must be able to say: “I don’t have a good enough understanding of the technology. Please educate me.” If leaders can’t stand up and say those words, then optimal decision making in the era of Industry 4.0 may be in jeopardy.

A good decision does not require that everyone be happy with the solution or agree with the decision-maker. To put it simply, a good decision should be created through collaboration and tolerance for other ideas.

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