Manufacturing's New Digital Divide

There’s a growing divide in manufacturing between Digital Profit Leaders — those leveraging the Internet of Things (IoT) for higher profits now — and Digital Profit Laggards, who are stuck somewhere back in the 20th century.

Which side are you on?

It’s an important question, because the differences between Leaders and Laggards are striking. Not only do Leaders make lots more money, they also think, invest, and manage differently than their Laggard peers:

Think Differently: It's no surprise that having a plan for any venture — whether a poker hand, a football game, a lemonade stand, or the IoT — is better than not having a plan. That wisdom is borne out by the facts that:

• 65% of Digital Process Profit Leaders — those who increased profits by more than 5% last year by leveraging the IoT within their facilities and offices — have an IoT process strategy in place and implemented. In contrast, only 19% of all other manufacturers have a plan in action.
• Similarly, 51% of Digital Product Profit Leaders — those who increased profits by more than 5% last year by embedding intelligence and smart devices into their products — have an IoT product strategy in place and implemented. Just 16% of all other manufacturers have tried to keep up with them by implementing their own IoT strategy.

Invest Differently: It's not enough to have a plan; you have to back it with real money:

• 76% of Digital Process Profit Leaders invested more than 5% of sales into their IoT plant and process initiatives last year. Only 32% of all other manufacturers matched that commitment.
• 72% of Digital Product Profit Leaders invested more than 5% of sales into IoT-enabled product development last year. Just 14% of other manufacturers kept that pace.

Manage Differently: If you plan and invest, all that’s left is to execute well:

• 80% of Digital Process Profit Leaders increased productivity via the IoT by more than 5% last year. Only 21% of all other manufacturers equaled that achievement.
• 53% of Digital Product Profit Leaders make IoT enablement of their products a significant focus of product innovation. Just 15% of all other manufacturers do the same.

There’s no longer any mystery about who's on the right side of manufacturing’s new digital divide – or why. It's the Digital Profit Leaders who think, invest, and manage differently than their analog peers.

Which side will you choose?

John R. Brandt, CEO and founder of The MPI Group, has devoted more than two decades to studying leadership in effective, purpose-driven organizations. An expert on how companies can adapt themselves to the realities of new markets, new corporate structures, and new customer expectations, Brandt is an experienced journalist, former editor-in-chief of IndustryWeek magazine and publisher and editorial director of Chief Executive magazine, and an accomplished management innovator and an internationally recognized expert on manufacturing and technology.He writes one of a series of blogs provided to IndustryWeek by The MPI Group.