REDMOND, Wash. — Çağlayan Arkan wants to empower you.
He wants to empower everybody, really, for Industry 4.0, from whole industries, to organizations large and small, to individuals just like you.
“Industries will be remade, ecosystems will be recreated, new players will emerge – with a huge paradigm shift, maybe many of them – and some will become extinct,” he says inside one of the conference rooms that seem to be everywhere on the expansive Microsoft campus. “Because if you don’t take action today, transform and leverage the change, chances are you may not be in the future maps.”
Microsoft is in as much of a sense of reinvention as this industrial revolution itself and Arkan, an industrial engineer by trade with an M.B.A. bent and the tech giant’s general manager of worldwide manufacturing and resources since late 2009, is as qualified to discuss it as anybody in the Pacific Northwest.
Originally from Turkey and the former general manager of Microsoft Turkey, he deals with high-tech industrial equipment, aerospace, automotive, chemicals and pharmaceuticals, life sciences, oil and gas, and mining and utilities. He has ideas about the future that are grounded in fact and are backed by one of the larger research and development teams in the world. He shared some of them during a recent conversation.
IndustryWeek: How will Microsoft empower industries, organizations and individuals for Industry 4.0? What is it about that word?
Çağlayan Arkan: Our CEO, Satya (Nadella), will say that in this new era, Microsoft’s role is empowerment – empowering individuals and organizations across any vertical, in any geography, of any size, and enabling them to do more and achieve more. When it comes to empowering organizations, you may have heard of our partnership with Fujitsu, in the form of a perfect lettuce.
IW: Perfect lettuce?
CA: Fujitsu had a supply problem at their semiconductor plant after the big earthquake in Japan. They decided to convert it into a greenhouse, and they wanted to do two things: They wanted to help people with kidney disease – perfect lettuce has low potassium, which helps people with kidney disease who are on dialysis machines – and they wanted to take automation to the next level. They wanted to do that with us and create efficiencies in feeding people. I have tasted the perfect lettuce. It is delicious, really crispy, also healthy, but the new level of automation Fujitsu achieved by using tablets – completely automated, not by genetically modifying just by tuning the environment to a level of perfection that only happens when you have machine learning and can identify patterns and monitor variables – it has increased the efficiency gains by multiples of 10. It is incredible.
Probably a more obvious example is automotive. Our many partnerships with automotive OEMs – Qoros, Ford, Delphi and a few others – are like any other manufactured product. Those cars are now smarter than ever, always connected to a back-end to identify patterns, prevent failures, maybe prevent recalls in the future. It can change the driving experience. Our thinking is 5, 7, 8 years from now, that whole industry will be completely changed. What we’re looking at in the concept of manufacturing – What is manufacturing? What do we do in manufacturing? – is large capital investment, billions of dollars in plants, and this notion of mass production. Now what we’re seeing is that happened in an era of limited automation investments, so a lot of tasks are done manually, there’s very little flexibility if any, and you can only manufacture one thing. It’s a world of one size fits all, isn’t it? With the increased levels of automation, though, we’re looking at a world where one size fits one. You can customize your car and there won’t be anything like it. It will have reasonable price points and reasonable lead time.
What does it take to do a one size fits one in a manufacturing context? The entire supply chain has to be connected – probably your steering wheel supplier has to have visibility into your dealership, et cetera, and those are conversations we’re having with our enterprise customers.
One size fits one, super automation and Industry 4.0
IW: How can automation affect one size fits all and one size fits one?
CA: Increased levels of automation take away some of the human, repetitive tasks, some of the physically taxing tasks. That means this is going to be less labor intensive. It may mean that advanced economies will get manufacturing back. Are we looking at insourcing? Are we looking at the U.S., Germany and other advanced economies getting those investments back? What does it mean for aging demographics? On the one hand, you can argue the social implications of employment and what we do with the people. On the other hand, you can argue we had 47% employment in agriculture decades back and with Industrial Revolution 3.0, we’re now at 2%, so we are good at re-skilling people.
What do we have to re-think? Vocation, education, industrial readiness, on-boarding, all of those have to be revisited. We’re concerned about an aging demographic and a shortage of skilled labor. If we’re able to take away skilled labor tasks, we can keep the aging workforce in the workforce and be productive. What is happening in our space is tremendously transformational, and Microsoft is redefining its role, its impact, its leadership, and playing a major role, but not by itself. We’ve always been focused on our partners in the remaking of these industries and ecosystems.
IW: How do we transition from an automated economy to a super-automated economy, where people need to be retrained for new tasks?
CA: The cultural mindset will take a while longer to change. Look at the innovation cycles. Some industries just have seven, 10 years of things in the making, and this is the first time we as individuals are exposed to it and adaptation starts. It’s all about change, but it’s also all about adaptation. Those who best adapt will survive – and that goes for individuals, companies, countries. The school system has to think about the new skill sets and that is a conversation between the industry and the policy maker.
Connected vehicles, connected cars will flip the insurance industry on its head. Today, they look at your age bracket, your gender, where you live, your track record, and then they give you an average with the same score as anyone else. Soon, your car knows you, therefore your insurance company knows you, and your insurance will be personal. Maybe you won’t need an annual premium, maybe you’ll need minute-by-minute. … Our kids will not believe we were driving our own cars.
IW: Do you think anything happening today in 4.0 is a bubble? Will anything explode?
CA: Absolutely not. Is Industrial Revolution 4.0 a bubble? Not at all. Is any part of it a bubble? I don’t think so. What we’re seeing, what we’re engaged in, pretty much every early adopter is becoming a software company. This is why we’re excited: Our technology means business. It relates to top line, bottom line, everything.
What we’re seeing in our enterprise customers, who are making tremendous investments, they’re making big bets and they’re changing their companies. You would not believe the brand names that are looking to completely transform their businesses. This is how it happens. Fujitsu, Ford, Kuka, those companies are paving the way, then making real things in a real environment with real impact. What will happen is others will have to follow.
As an industrial engineer, I like this notion of optimization. Optimizing the part will always sub-optimize the whole. For the first time – I’m making a big statement –optimizing the whole will be possible because you will have visibility to your business at the global level, you will have visibility and connection to everything – to services, processes, things – you will be able to monitor, predict, run analytics, make decisions, control and optimize. That’s what 4.0 is. We have every piece of that technology here today.
IW: Is there a point where you stop? Where you say the automation, the robotics have gone a little too far and you worry about the implications of the devices?
CA: That is not my perception of human beings. I think the quest will continue, for better or for worse. As long as the curiosity is there, as long as the intelligence is there, I don’t think anything will stop. I’m not making a prediction of good or bad, just stating my opinion.
I think smart people with the right skill sets will always be in need.
