Indian entrepreneurs must strengthen the human side of their firms as it is the people who must control technology
Industry 4.0” is a big buzz-word in business and policy circles. It is expected to change the world in ways that cannot be comprehended yet. What is Industry 4.0? How will it change the world? What should businesses and policy-makers do to take advantage of it?
Iconic visions of Industry 4.0 are robots and self-driving cars that will eliminate human workers, and 3-D printers that can compress the capabilities of a large factory with hundreds of skilled workers into a small machine operated by a single person. A broader view of Industry 4.0 includes the rapid advance of digital computational and communication technologies that have created platforms, such as Google, Amazon, Uber, and Airbnb, that are disrupting service and knowledge industries ,including the media.
Pervading through Industry 4.0, in manufacturing, service, and knowledge industries, are advances in artificial intelligence (AI) and ‘machine learning’. With these, Industry 4.0 is going beyond all previous transformational waves of new technologies (such as electricity and automobiles) which replaced human energy in the ‘doing’ of work, to replacing human minds in ‘thinking’. Therefore, the fear of who will be in charge in the future is rising. Human beings using machines? Or, machines using human beings?
This profound question should concern us. However, of more immediate concern for policy-makers and citizens is, how new technologies are changing employment patterns, and how industry-leaders are harnessing Industry 4.0. If we can learn to ride the bucking horse before it grows too powerful, we will be equipped to harness its power when it grows further.
CEOs of three manufacturers, leaders in applying technologies to improve their competitiveness, were asked these questions at CII’s AGM in April 2019. One was Toyota-Kirloskar: Toyota is a world-wide leader in the management of manufacturing. Another was Bosch, a global leader in the design and production of high-tech equipment for several industries. The third was Bharat Forge, one of India’s most successful component producing companies, who broke into global supply chains with its world-best ability in rapid prototyping, wherein computer-aided equipment enables the combination of flexibility with accuracy. Bharat Forge supplies to OEMs around the world and now runs plants in Sweden and Germany also.
All three said that the key to improving productivity with technology was people. Vikram Kirloskar emphasised that the fabric uniting Toyota’s supply chains remains the famous ‘Toyota Production System’, of collaboration between parts of the system to improve the reliability of the whole system. ‘People to people’ collaboration and trust enables ‘win-win’ improvement within factories and across firms’ boundaries in the supply chain. Teams choose new technologies as they are developed to improve the systems’ performance.
Bosch had the same solution. It assists its vendors — many of whom are SMEs — to experiment with and determine which ‘Industry 4.0’ technologies will enhance their competitiveness. Industry 4.0 is ‘pulled in’ by people, not ‘pushed on’ to them.
Baba Kalyani of Bharat Forge has been a path-finder in the automobile component industry, always ahead in using technology. He too re-iterated the necessity of human intelligence in improving the systems’ performance. Bharat Forge employs graduate engineers to run its sophisticated machines. Technical know-how is a base-line requirement. However, curiosity — a very human quality — is essential for innovation and for continuous improvement of the system, he said.
The Toyota example
The Toyota Production System was described as the ‘Machine that Changed the World’. Because Japanese companies applied its tenets of ‘total quality management’ through ‘small group activity’ on shop floors and offices, where workers used system analysis and simple statistical techniques for ‘zero defects’ and ‘just-in-time’ deliveries across supply chains. With these methods, Japanese companies became world-beaters in many industries — automobiles, steel, chemicals, electronics, etc.
Western companies began to imitate Japanese methods to catch up. However, often they could not see the ‘people-to-people’ fibers within the fabric that enabled the Japanese systems’ pace of continuous improvement, with which it had overtaken the rest of the world. American automobile companies hired Prof WE Deming, who had catalysed the total quality movement in Japan, to guide them.
After a few years, when he was asked on US National Public TV whether the Americans would catch up, he replied very sadly: “They don’t get it. They think the solution is in the statistics. Whereas it is the people.”
Industry 4.0 technologies are disrupting many industries. They are changing patterns of employment and are creating new jobs too. The gig economy, led by food delivery firms and ride-hailing firms, has created over one million jobs in the Delhi region, according to IIM(B). An estimated 56 per cent of new employment in India is being generated by the sharing economy across both the blue-collar and white-collar workforce, according to Team Lease.
“The gig economy is an extension of India’s informal labour, which has been prevalent for a long time. These workers do not get any social security insurance,” ICRIER says. The flexibility in their employment, enabled by technological platforms, results in workers becoming mere tools in a technology-powered production system.
Contrast this with the wisdom of the world leading manufacturing companies cited before, for whom the people who work are their sources of competitive advantage, with people using technologies as their tools to improve performance.
Human beings provide the ultimate source of competitive advantage in enterprises. Enterprises are ‘socio-technical systems’. They combine a social/human side with a technology side. Indian enterprises must strengthen the human side of their enterprises.
Indeed, India’s masses of trainable people, eager to earn, can be a source of competitive advantage for enterprises in India. Workers cost less in India than workers in many other countries, whereas technology (and capital) costs more. Therefore, enterprises in India would do well to strengthen their social sides.
Employers (even in gig enterprises) must show more commitment to their workers’ welfare, and to their continuous learning, to get the best out of Industry 4.0 technologies. Government policies must enable, and induce, employers to do this rather than change laws to make it even easier for them to informalise employment.
Finally, returning to the existential question of Industry 4.0. Humans must remain masters of technology; they must not let technology become their master with an excitement to adopt the latest Industry 4.0 technologies whatever its consequences.
The writer is a former member of the Planning Commission and author. (Through The Billion Press)