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Podcast: Champions, Punk and Digital Transformation

Listen to an interview with Jaromír Peterka about how to take digital transformation in a manufacturing plant to the good end and how to get the right people involved from the start. You can also read the interview here. The questions were asked by Ondřej Musil.




You can read the interview here:

I'd like to introduce Jaromír Peterka, the founder of FOXON and a pioneer of digital transformation. And digital transformation is what we're going to talk about today. Let me ask you right away, Jarda. Different businesses seem to have different views on digital transformation. How do you understand it? What exactly is digital transformation?

At FOXON, we understand digital transformation as the transformation of an organisation through change and the introduction of new approaches and technologies. And although we have a lot to do with manufacturing and maintenance, it's not just about that. We're talking about the overall strategy of the company, what products they should be producing, customer service and the overall functioning of the organisation.

Why should companies do this? Some of the classic reasons are greater competitiveness, greater flexibility and better response to market changes. But one of the fundamental reasons, and I think this needs to be said out loud, is that companies want to be around in a few years' time. Let's prepare ourselves for the fact that some well-known brands and companies will go out of business. Because, unlike their competitors, these companies have simply not followed the path of transformation, but the traditional approach to all their problems. And sooner or later, they're going to pay the price.

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So for whom is it ideal to consider digital transformation? From what you've said, it almost seems like everyone should consider it.

Absolutely. Digital transformation is inevitable. And it should be considered by everyone who wants to continue to make a difference in the market, to produce and to employ people. A lot of factories may not realise the importance that we're putting on it now. But there are already a number of factories that see they're lagging behind. And they've already started. It's never too late to start. But please do start.

Can you give any examples? For example, manufacturing plants that have been successful in some way, or have applied it successfully, or conversely, those that have failed?

We can all see what's happening in the car market today. How Chinese car companies are able to produce a car, an electric car. How they're already able to bring it out into the world. And we don't have to go to China. We can look at Elon Musk's factory near Berlin, which is already producing, I think, four or five thousand cars a week. And those cars are just different in some way, different from the cars that come out of the traditional car factories that we have in Europe. There are a whole bunch of other segments, but this one, given that a lot of Czech GDP comes from the automotive industry, is probably the biggest example.

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I think it has a lot to do with a change of mindset. But that often hurts people and they resist it a bit. I wonder how to convince people in the company to take the plunge. How do you start?

Well, good question. Ironically, we don't have much of a technology problem. We have a bigger problem with changing people's mindsets. Their resistance to change, their traditional attitudes. And that's where we come in as an integrator.

The first thing is that any transformation has to start with education. That's where we make a big mistake. A lot of companies get some software or are persuaded by a vendor. They pick a platform, buy a CD and say, "That's it! That's going to save us." It just doesn't work that way. There has to be education. That means talking to people, asking them or informing them about where we are, what's going on in the market and how we need them to improve the situation. So that they start the change themselves.

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It's probably not going to be masses of people coming in and saying they want to change. But we just need one or two champions who say, "Look, this makes sense. You can count on my support." If you get that kind of person, sooner or later more and more people will join them. That's how we build a team. When we have a factory of a thousand people, I'll be grateful for one such champion who understands what's happening, who understands the seriousness of the situation, and thanks to him, the factory moves forward.

Can you be more specific about who that might be?

I mentioned it recently in one of my LinkedIn posts. We can think of this champion as someone who looks at things differently. He's interested in how they work. He's interested in why they work the way they do. He asks why. He looks for ways to do things differently. He ignores a lot of things. He's sort of a punk, but that's healthy. He comes up with new ideas and tries to push them through. He's more of an engineer. He's more into manufacturing than IT. A bit of a tinkerer, let's say. At the same time, he likes technology, enjoys it and looks for ways to make things better, more efficient and faster. That's the kind of person we're talking about.


He's like a pioneer of this way of thinking in the factory. But he can't do it alone, can he? What's the best way to involve people from the factory, from the lower ranks? The ones who actually work there and who know the production. How do you get ideas from them for improvement, for innovation?

In this case, we approach this by talking to these people, but also, if possible, to other people at all levels of the factory. And we always ask two questions. The first question is: What's bothering you about your job? What's holding you back? What's making you ineffective? These people will tell you. Now, the second question... Imagine you had the opportunity to build a greenfield factory and you had an unlimited budget. How would you do it? They will give you not only a list of problems, but often a solution on how to do it. And that's a great assignment for the integrator, who then works with the customer to come up with a strategy on how to proceed and what path to take. And that strategy will be matched by some architecture of the whole solution and then the technologies that we should use. So we start from those people. They'll tell you because they know the problems. You just have to talk to them.

So that should get it moving in the right direction. Talk to these people and ask them what they think and how they would help.

Exactly. And that's where we hit a brick wall, because that doesn't happen very often in the factories. Changes tend to come from the top. That's not necessarily a bad thing, but you have to respect the people at the bottom, because they're in production. They're there when the product is made, and they can tell you a lot of things today. And they expect help. They expect things to change.

You often talk about the future being in data-driven businesses. What does it mean?

A data-driven business is a business that you run based on the data that you generate every day. But today, you never or rarely use it in real time to make decisions. In other words, at FOXON we collect data from machines and use it to create information for decision making. A data-driven company is not just about manufacturing. It starts much earlier. We're talking about marketing research that tells you what to produce. We're talking about factories that have suppliers that can give these factories information about the raw materials the factories buy from them. Then the actual production – you produce it and get it to the customer. There are already IoT tools in these products that tell you how the customer is using them. That information comes back to you and you have a huge amount of data that we have to standardise, contextualise and normalise. We put it together and look for certain elements in it to inform decisions, either how to improve things, what not to do, or on the contrary, what to start doing.

So that's a data-driven business. Just like we humans use our mobile phones. That is, you have a problem. It's the weekend, and you want to go on holiday with your family. And within five minutes you can see what the weather is going to be like, if the castle is open and what time the train is leaving. In the same way, I want people to be able to pick up their mobile phones and see how the factory is producing, why it's not producing and where the material is. And a thousand other things that you think about every day, but you don't have the information to make a decision. So that's a data-driven business.

There's going to be an enormous amount of this data. I think every factory is already collecting a lot of data, but they don't know how to read it properly and make it really useful information. Is there a good tool or can you say something about your experience of how to scale this data to inform really good decisions?

Data or information is for different people, from people on the shop floor to management. Each of them needs to process that information differently. Each of them is used to something different. Some people are happy with trends, some with text messages, while others with spreadsheets or shop floor layouts. It's different. So you have to prepare the information differently for different people. Depending on what a particular person does, what area they're in and how they make decisions. That's how we prepare the data. We don't give it to everybody in one form. No. What's incredibly important is that these people have to use it. They have to like using it. They have to understand it. There has to be success management. That means, once we give it to you, we're going to watch you work with it for a while. And then if it's not working the way we want it to, we'll adjust it. That's the agile approach we need to have there. It means that if we get it wrong, we can go back and get it right. That's the way to do it.

FOXON is not a typical software tool vendor, but rather an integrator. How does this integrator approach work? How does the potential cooperation work?

As FOXON, we've brought a number of products and solutions to the Czech market, which we also distribute here. That's true. But as an integrator we try to be independent, because I think the future lies in the independence of integrators. When they come to you to solve a problem, they shouldn't just try to sell you what they have, but they should be able to choose from the plethora of technologies and solutions what suits you.

So we as FOXON, specifically as an integrator, we collect data from machines. We have many technologies and ways to collect the data. In the middle, let's say in the middle layer, where you process, standardise, contextualise and store the data, we have a lot of tools to do that. And at the top, in the presentation layer, again we have a lot of tools that we can use to sell that data to people. Whether that's in a paid platform or in a free platform or in Microsoft tools or in SMS format. We just have a choice. And that's the approach we take with every customer, because every customer is different. Is it a greenfield factory with the potential to expand? Or is it a factory in a built-up area that won't expand at all? Is it a factory that is subject to the decisions of its parent company and is restricted in some decisions? Or is it a Czech company that can do whatever it wants? Does it have a budget? Is it already established in some kind of digitalisation? Or hasn't it started yet? It's going somewhere. It's got to go somewhere. These are all criteria that we take into account. And all of that influences the solution and the strategy that we propose to the customer.

Sounds sensible, but it's probably not going to happen immediately. It's not just a matter of a month or two, that kind of implementation or the beginning of a transformation. What's the time horizon? How will it happen?

It's certainly not a matter of days or weeks. But today, there are approaches and technologies that can significantly accelerate the start of digital transformation and that we can choose from. Today, we don't have the time to spend years digitally transforming a factory to get results. No. It has to be faster, and the technologies are out there. We need to get started. We have to pick the ideal start-up projects, get people involved, convince them and then become their partner for a whole range of other tasks that they give us. But it's not just us. Obviously, there are a lot of other companies that will be involved in getting the factory going in the right direction. That is, they'll help.

This may not be a cheap solution. How do you see it financially? Is it more of an ongoing investment or a one-off?

Again, there's a whole bunch of new ways that you can get software or some technology today and solve a problem. That's the first thing. The second thing is that digital transformation is not for everybody. And it's not just about the mindset. It's about the decision to do it and about convincing management that it makes sense and that it has benefits. Today, we are in a position to bring the first results to the factory within weeks or months.

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