‘Digital Operational Excellence’, using digital solutions to improve process efficiency, is rapidly gaining traction. Especially in heavy industries such as construction, manufacturing, engineering, and energy.
LabelA, a leading digital product agency based in Amsterdam, led by Account & Technology Director Jeffrey Bouva, aids clients such as Van Oord integrate digital solutions. Sweav, co-founded by Joeri Schouten, assists clients such as Wavin, ZND, and Elastofirm in creating their digital operational strategy via freelance strategy consultants and interim operational managers.
In this article, Jeffrey and Joeri discuss the case for digital operational excellence. Why staying agile and focussing on the ‘how’ is key, what common leadership pitfalls are and how ‘complexity’ shifted from software development to internal data and IT dependencies.
Why do you believe digital operational excellence is a no-brainer in heavy industries?
Jeffrey: “Well, the short answer is because potential efficiency gains are immense. Most of the time, companies in heavy industries are lightyears behind when it comes to the digitization of their core business processes. They work with old, scattered, and highly user-unfriendly systems”.
Joeri: “Let’s say sales employees of a €500m construction company need to copy-paste data manually from one system to another. And in 10% of the cases, an error is made. Then building a solution that connects these systems is probably an easy business case. It’s basically Digital Operational Excellence. It’s nothing fancy, but it still has a very high impact on the bottom-line.”
What are the most common leadership pitfalls you observe when implementing digital operational excellence?
Jeffrey: “Overall, I’d say there are two main issues. Firstly, using ‘digital’ or ‘data’ as an objective in itself is quite problematic. Too often, I hear, ‘we want a mobile app’ or ‘we need a dashboard.’ Instead, the best approach is to start with the goal and then determine the most effective means to achieve it. Sometimes, it could be an app or a dashboard, but maybe it should be something else. Besides, it is crucial to test your idea with the end-user, also if they those end-users internal employees.”
“Another important one is that senior leaders get too involved in decision-making. As a CEO, it is critical to concentrate on what customers and employees will require in two years. He or she should trust the project manager or 'product owner' to know what to build at present.”
Joeri: “Most of the time, product owners are overruled by senior leadership and, unfortunately, few are willing to push back. I believe senior leaders should only challenge the PO on whether what they are building is right for the customer/user. After all, that’s the only thing that truly matters.”
“When it comes to setting business goals first, as Jeffrey mentioned earlier, sometimes they are not clear enough to provide direction for a development agency. Sweav and LabelA work together in such situations to clarify strategic priorities before building the solution.”
Should digital project managers embrace ‘agile’ or stick to their usual way of running projects?
Joeri: “Project managers in heavy industries are used to having all the details before starting a project, which makes sense. It's impossible to build a bridge or power plant without clearly understanding the specifications, budget, and timelines. However, the problem with digital solutions is that you can never know 100% for sure what a great result looks like in advance. And unlike building physical stuff, software can be easily adjusted along the way.”
Jeffrey: “Most importantly, you really don’t want to build solutions you don’t need. In this context, being agile basically entails the capacity to implement new insights you gather along the way to adjust and improve your solution while building. Moreover, you need to stay focused on the goal (the ‘what’) and be flexible on the way to achieve the goal (the ‘how’). This is also the case in heavy industries.”
“However, when working with clients for the first time, they may find this approach daunting. The only way to convince them is by asking them to take a chance on us. Once they try it, they don’t want to go back.”
Technical projects are often perceived as complex. Do you agree?
Jeffrey: “It used to be the case from a technical perspective. Nonetheless, over the past few years, software development has been commoditized. Once, we used to build everything custom. Now, most solutions are ‘off the shelf.’ If you look at your personal life, from WhatsApp to even ChatGPT: everything works seamlessly and is (almost) free.”
“Hence, our role as an agency has shifted from pure builder to bridging all different solutions together and being the guardian of user-centricity.”
Joeri: “Nowadays, complexity is more likely to lie in the company itself. For example, suppose you’re implementing a digital solution and discover that your company's master data is a total mess. In that case, it will be a significant internal challenge to resolve.”
“Alternatively, when you’re a multinational company with operating companies worldwide, you encounter a problem where the once uniformly implemented ERP system is now configured in many different ways. Getting back to a uniform configuration will be a big challenge."