Leading Digital Adoption in an Organisation

By Naguib Mohd Nor

Business owners are often unsure of which areas of digitalisation to embark on 

These days digital adoption in organisations is a conversation around almost every boardroom and pantry across the country. The conversation is often tricky as everyone seems to approach the subject from a different angle. I find that most of the time with Malaysians, the conversation revolves around the novelty of the technology, akin to people talking about the latest features on their mobile phones. We talk about these latest things, marvel at what utility they afford us, whilst pontificating about how we would be light years ahead if only we embraced this change.

A cut and pasted operation may not be sentient of the nuances and intrinsic dependencies to be able to fundamentally alter a process.”

Why then is digital adoption in the industry yet to blossom in Malaysia? Studies by the Malaysian Aerospace Industry Association (MAIA) and the Federation of Malaysian Manufacturers (FMM) have found that Industry 4.0 readiness amongst Malaysian SMEs is less than 15% on average. 

Ironically, from the CEO down to the shop floor operator, everyone carries a mobile phone - which, in some surveys, is considered evidence of “digital adoption”. The fact of the matter is that digital adoption is yet to have a game-changing impact on our industrial landscape. Just like the conversations, the reasons for this are also multi-faceted.

The diagram above illustrates conceptually the transformation the Malaysian industry is envisaged to undergo towards Industry 4.0. Each level represents the entire ecosystem producing a complete product e.g. a complete aircraft tail. The white spaces are gaps (filled by outsourcing to or from other countries) whereas the black and grey boxes represent Large and SME companies respectively.

First Hurdle to Digital Adoption

The first challenge often heard is to determine where to begin the digitisation journey. Here is where most companies face the first hurdle which is simply to define their processes, despite many companies having ISO approvals. Perhaps not such a mystery if you consider that the attitudes towards having these certifications in the first place, is often in the best-case compliance and in the worst-case, viewed as a necessary evil. 

...Malaysians can leverage the diversity of the country's cultures and ethnicities to develop the dynamic talent that will power these companies of the future.

Coming from the aerospace industry, AS9100 or similar approvals are granted not by demonstrating an ability to comply (which is a given) but the ability to demonstrate continuous improvement. To do the latter, one must know and be in full control of one's processes. This is the prerequisite to being able to improve them and therefore the prerequisite to be able to automate them. This seemingly logical sequence of reasoning is deceptive in its simplicity. At every level it implies an escalating level of industrial maturity, taking into account a host of high-level technological and managerial capabilities. 

For example, to be in full control of one's processes, one often has to have designed them oneself or have the ability to do so. A cut and pasted operation may not be sentient of the nuances and intrinsic dependencies to be able to fundamentally alter a process. In one of my recent consulting experiences, I observed how a Malaysian Kaizen expert was trying to apply methods he learned in the automotive sector to aerospace. The instinct was to go for the micro improvements in processes. 

This, I realised, was where his focus had been all this time in Malaysia because he had no visibility of the wider processes which had been cut and pasted from Japan. The problem was that it was the higher-level process considerations that required reconfiguring. Micro process improvements, a fraction of a minute here or there, were meaningless if the larger process was inefficient.

Those who lead industrialisation in Malaysia, whether from the government or private sector need to understand these fundamental differences to be able to affect meaningful change. We often whitewash these things to the point where we blur significantly the lines between competence and replicability. The former implies deep knowledge and understanding and the latter relies mainly on memory. This becomes more critical in the Fourth Industrial Revolution (IR4.0) as manufacturing and business processes are evolving more and more fundamentally. 

A Closer Look

To illustrate this, let us appreciate Malaysia’s strategy for growing Foreign and Domestic Direct Investment (FDI/DDI) in the country over the last few decades. The process begins with lots of effort being put into seeding an industry; for example, attracting a large global player to establish its manufacturing in the country. Then, we incentivise the growth of that company's supply chain and we hope that over time, Malaysian SMEs begin to emerge to fill that supply chain and form a complete and sustainable value chain. Reads like a fairytale with a “happily ever after” except that IR4.0 demands that we smash that rigid supply chain into smaller agile units connected by a digitised knowledge framework. 

This more flexible structure will now be able to bend and mould itself to cater for a more rapidly changing market. A market that demands more tailored products with sustainability built-in. Leading digital adoption in this more volatile, uncertain, complex, and ambiguous (VUCA) environment requires deep technical knowledge and broad strategic thinking. It requires companies that can continuously reinvent themselves as demands emerge and dissipate.

I believe that fundamentally, Malaysians can leverage the diversity of the country's cultures and ethnicities to develop the dynamic talent that will power these companies of the future. Our global diaspora has shown that Malaysians can be highly effective. We must take the time to understand the “nuts and bolts” of how to make this work and direct our efforts towards achieving this. 

I was once asked, “How can we, as a country, reduce our dependence on fossil fuels?”. My response was that it's not a “dependency” that we have but an “addiction” and that just as addicts undergoing rehabilitation the process will be long and painful. We will not look pretty going through it, but we will come out the other end truly emancipated. 

This article is a contribution by Naguib Mohd Nor, CEO of Strand Aerospace Malaysia (SAM) and President of the Malaysian Aerospace Industry Association


By Fourth Leap's Jamie Axel