Digital Transformation: The CEO of the Future is a Technologist, Not an MBA

When Walker Reynolds, meets with company directors, he tends to hear the same question: “What does digital transformation look like?”

The chairman of Intellic Integration, a full-service systems integrator based in Dallas, has a standard response: “Digital transformation happens in two giant steps. Step number one is, you become a ‘smart’ business, which takes three to five years, no matter how big or small the company is.  And you do that through the following process: You connect, you collect, you store, you analyze and you visualize all your data and information.

“Then you find patterns, you predict, you report and then you solve the problems that machine learning and artificial intelligence found in those patterns. That’s a smart business.”

The long-term objective for manufacturers hoping to secure their future, according to Reynolds, is to plug into a digital supply chain, which is a supply chain made up of smart companies. When they have this capability, they refer not only to the links directly upstream and directly downstream, but also the links that enterprises don’t currently work with. “Explain that to the Board of Directors, and the lightbulb turns on,” said Reynolds.

As a solutions architect and an educator at 4.0 Solutions, a distributor of software and products, Reynolds trains engineers and digital transformation professionals on how to support and lead digital transformation initiatives in manufacturing.

In this Q&A with Machine Design, Reynolds discusses his firm’s digital transformation maturity assessment process, the fundamentals needed to enforce Industry 4.0, how a Unified Namespace serves as a single source of truth and why he believes the future C-suite should be run by engineers.

Content has been edited for length and clarity.

Machine Design: At the recent ISA IIoT & Smart Manufacturing Virtual Conference, you were vocal about your views on how to achieve a “smart” factory. Can you recap what said about getting started on a digital transformation?

Walker Reynolds: Believe it or not, digital transformation starts with education. If you look at the Industry 4.0 specification that was written in the EU, in 2012-2013, it says that digital transformation starts with computerization. Computerization is just infrastructure and manufacturers all have infrastructure. What you do with that infrastructure is a function of knowledge, and it has to start with education. Legacy organizations have to stop approaching solving problems the way they’ve been solving them during the Third Industrial Revolution—which is one use case at a time, one machine at a time, one piece of software platform at a time, one capability at a time.

We have a process called the digital transformation maturity assessment. When clients hire us to come in for an assessment, we do basically three things. Number one, we assess the organization top to bottom. Where are you right now? Number two, where do you want to go?

Where do you want to go as a function of solving the problems that you’re aware of and of identifying problems you’re not aware of all. And, number three is charting a path to get you to where you want to go.

We have five core meetings during that digital transformation maturity assessment. One of those is with IT. The first question we ask the IT group is, “Are you a security and compliance organization first, or are you a service organization first? And we always get a laugh and they generally answer like this: “I want to say we’re a service organization, but we’re really security and compliance first.”

If a subset of digital transformation is IT/OT convergence—that is, taking the technology on the plant floor and merging it with the technology on the business side—then the thought processes, the culture on the plant floor and the culture on the business side have to change. 

How do they change? We acknowledge that the first problems we have to solve are the OT problems. The smartest people in your organization are on the plant floor. They already know what all your problems are. Just go talk to an operator and ask them what’s wrong with the process. They’re going to give you a list of 20 things that, if you somehow could enable them to solve, you would capture millions or tens of millions of dollars in gained efficiency. IT’s role is to serve that enablement. Most IT departments don’t understand that. There’s generally one or two young people who understand that, but the legacy IT professional really, really struggles with that concept.

Think about it: Look at IT policies inside manufacturers. What are they? There’s zero trust. (“Trust no one.”) If one person makes a mistake, lock everyone down. So, when someone plugs a USB fob into a USB drive in their computer and opens an executable file that takes down the network, that IT department makes it impossible for anyone to use a USB thumb drive. What they’ve been doing over the last 20 or 30 years is close down the pathways to leverage technology to solve problems. But a truly transformative organization leverages every possible IT pathway to solve problems.

MD: What do organizations need to enforce Industry 4.0? What are the fundamentals and where do they start?

WR: The problem I want to solve today is a function of what we know today as an organization. We have to acknowledge that digital transformation is about exponentially increasing the collective knowledge of the organization. Why? As we transform data into information, we get that information into the hands of the people who need it, when they need it, where they need it, in the format they need it. Collectively, as an organization, we get smarter.

So, we have to start by acknowledging that we have no idea where the finish line is. We have no idea where we’re going, but what we do know is that we’re gonna adopt some guiding principles. Number one: We are going to codify a digital strategy using a three-sentence statement that says: This is how and why we’re going to become a smart company; this is the technology we’re going to use; and this is how our customer is going to benefit. It takes transformative and disruptive leadership to do that. It takes a visionary leader to define that digital strategy.

Then, we acknowledge that we’re going to write minimum technical requirements for all the smart things in our business. What that means is that if I want to use the Siemens PLC, and Rockwell software, and I want to use SEEK analytics, and I want to use PTC’s cloud technology, and I want to use AWS over here, I want to use Azure over there, we’re going to enable people to do that. But we’re going provide the list of the minimum technical requirements those solutions have to meet. The three things are: They have to support this protocol, they have to be edge-driven and report by exception lightweight.

The next step is to start iterating. We acknowledge that what we want is a function of what we know. The organization is going to get exponentially smarter, which means that what we want is going to change exponentially.

To summarize, a digital transformation starts with a digital strategy, it is driven by transformative leadership, it is based on common technology and we acknowledge that what we want is a function of what we know.

MD: Explain what you mean by the Unified Namespace.

WR: I’ll read it to you. The Unified Namespace is the structure of your business and all of the events. It’s a single source of truth for all data and information in your business. It’s a place where the current state of the business exists (where it lives). It’s the hub through which the smart things in your business communicate with one another. And it’s the architectural foundation of your Industry 4.0 in digital transformation initiative, which is based on your digital strategy.

In a nutshell, for the layperson, the best way to describe a Unified Namespace is think of a file share. If I go into Windows Explorer and I want to navigate through a file share, the hierarchy that you create in that file share is a hierarchy designed to get you to the data and information that you need.

We use ISA-95 Part 2. So, it’s not a file share; it’s really a broker namespace. But the best way to describe it is to compare it to a file share, or a tree system that gets you to the current value of the thing you care about. So, using ISA-95 Part 2, which structures data sources: for instance, following from Enterprise to Site to Area to Line to Cell. My first folder is going to be the name of my enterprise, the second folder is going to be the site I want to go (the plant location), the third folder will be information in that site level that I care about. It might be the CEO of that site, or it might be the general manager of that site, or it could be current electricity consumption at that site).

Imagine you’re navigating through a file share that gets you to any data point that you want to view in your organization. This gives you the current value, and it’s structured on a common standard. All of the smart things in your business publish data into that namespace and they consume it from that namespace. So, if I want my MES system to consume raw events from my PLCs, so that they can calculate overall equipment effectiveness, and then write the OEE number, then they’re consuming from the Unified Namespace and they’re writing back to the Unified Namespace. It is the single source of truth for all data and information in your business. It records only current state—the structure of the business right now.

If you want to look at historical values, you need to use another smart device, connected to the Unified Namespace, to store the history. That could be either a historian or data lake.

MD: What is your take on using agnostic technology?

WR: I am a huge proponent of remaining agnostic. I’m the chairman of a systems integrator.

We’re values-driven, we’re mission-driven, we’re agnostic. We do not sign distribution agreements with any one vendor. We recommend the best solution for our client’s use case, as long as it meets the minimum technical requirements. It could be Rockwell’s connected enterprise, or it could be PTC…. As long as they meet the minimum technical requirements.

What technology do we use in our organization to interoperate our data? In 90% of the cases, we use MQTT Sparkplug. We use MQTT as the communications protocol, and we use Sparkplug B as the specification for how we package everything and create the Unified Namespace. What we say is, if you want to use Rockwell's MES system, it has to support and MQTT Sparkplug B.

The reason you need to remain agnostic is this: Digital transformation happens from the ground up; it doesn’t happen from the data center down. It doesn’t happen from the boardroom down. The data center and the boardroom enable solving problems from the plant floor up. I get this question a lot…My recommendation is to always remain agnostic; pick best in class for your problem, not best in class from the limited suite of solutions from one vendor.

MD: Let’s circle back to the future state of manufacturing. What are the limitations and what needs to change in order to achieve digital transformation?

WR: When I’m in the boardroom, the executives are generally MBAs. They’re not engineers. What fundamentally needs to change about manufacturing organizations is that they need to be run by technologists. You need more engineers as a CEO and fewer MBAs.

It’s no secret that the most transformative organizations in the world are run by engineers. All the Industry 4.0 companies are run by people who either are professional engineers, formally trained engineers or self-trained, self-taught engineers. So, the CEO of the future is a technologist, not an MBA.

Here’s the message I give the boardroom: If you have not defined your employee the future, if you haven't codified your digital strategy, and you’re not working toward a technology-driven infrastructure in lieu of buying capability focused products, then you are wasting your time and your money, and you will fail. Full stop.