A report from the Deloitte

Center for Integrated Research

Swim, not just float

Driving innovation and new business models
through Industry 4.0
About the Deloitte Center for Integrated Research

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issues that cut across industries and functions, from the rapid change of emerging technologies to the
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Digital Maturity Index

Digitization is still a differentiator today, but it will be a necessity tomorrow. To stay ahead of the
competition, companies need to focus on building new business models, digitizing their product and
service portfolios, optimizing their business processes, and developing their organizational and
individual capabilities. Since there is no “one-size-fits-all” approach, Deloitte can support you with our
Digital Maturity Index (DMI) in the development of your individual digital recipe for success. For more
information, visit: https://www2.deloitte.com/de/de/pages/operations/articles/digital-maturity-
index.html.

Deloitte Consulting LLP’s Supply Chain and Manufacturing Operations practice helps companies
understand and address opportunities to apply Industry 4.0 technologies in pursuit of their
business objectives. Our insights into additive manufacturing, the Internet of Things, and
analytics enable us to help organizations reassess their people, processes, and technologies in
light of advanced manufacturing practices that are evolving every day.
Contents

The comfort zone temptation: More protection, 2

less disruption

Defining it is the first step to doing it 4

Why should companies want to move toward 7

transformative innovation?

Getting started: Transitioning from operational 10

excellence to transformational innovation

Lifesaver on? Time to swim 13

Endnotes 14
Swim, not just float

The comfort zone temptation

More protection, less disruption

Recent events related to the pandemic have resulted in significant shifts to the global economic
environment. In situations like these, many companies may choose to stay put and try to protect
their positions in the status quo. However, this approach can leave companies exposed to the risk
of being disrupted, as those companies that are lagging in their digital journeys may be more likely
to fall prey to competitive pressures. It thus more important now than ever before for companies to
focus on innovation in existing/new products and services and build new business models to enable
them to thrive in the fast-evolving economic environment.

I 40 percent of respondents
NDUSTRY 4.0 CREATES many opportunities for
organizations to use advanced technologies
across their entire value chains, driving noted that their investments
prioritize developing
operational excellence and business growth in
multiple areas from products and services to
supply chains and key stakeholders such as innovative and differentiated
employees, partners, and customers.1 And yet,
despite the opportunities Industry 4.0 technologies products and services that
create for innovation, leaders continue to use these
technologies to protect themselves from being
could generate new sources
disrupted by others, rather than to find new of revenue.
opportunities to disrupt their markets.
But why should this happen, given the myriad
In a recent global study of C-level executives, transformational opportunities that Industry 4.0
56 percent of leaders noted that they prioritize and digital transformation can offer businesses?
investments in Industry 4.0 to protect their From a behavioral economics standpoint, this
organizations from disruption by competitors, while aversion to disruption makes at least some sense,
just 26 percent prioritize Industry 4.0 investments as individuals are driven more by a desire to
with an eye toward disrupting competition with new protect themselves from loss rather than to risk
ways of doing business. Further, 40 percent—fewer what they have by seeking something wholly
than half of respondents—noted that their new.3 However, focusing solely on protection
investments prioritize developing innovative and may turn out to be the greater risk. In fact,
differentiated products and services that could companies that pursue and invest in innovation
generate new sources of revenue. We have seen this and disruptive capabilities may be the best
sort of pattern play out in other studies, where positioned to grow in the long term. By focusing
leaders have reported prioritizing protection against their efforts only on protection, leaders might be
external disruption over actively disrupting their missing significant growth opportunities. In fact,
own existing business models by margins of two-to- research has shown that leaders who focus on
one or more.2 innovation can see as much as a 22 percent
increase in revenue and up to 19 percent increase
in earnings before interest and taxes (EBIT).4

2
 Driving innovation and new business models through Industry 4.0

So how might leaders shift from a protective specifically, how can leaders do this without
mindset to one that is more geared toward feeling that they must sacrifice protection—while
disruption—what we refer to as transformational still realizing value and growth from their
innovation—and growth?5 Perhaps more Industry 4.0 investments?

WHAT IS INDUSTRY 4.0? A BRIEF DESCRIPTION

The concept of Industry 4.0 incorporates and extends digital connectivity within the context of the
physical world in digital enterprises, networks, and ecosystems. This drives the physical act of doing
business across interaction, production, distribution, and performance, in an ongoing cycle known as the
physical-to-digital-to-physical (PDP) loop (figure 1). Industry 4.0 technologies combine digital information
from many different physical and digital sources, including the Internet of Things and analytics, additive
manufacturing, robotics, high-performance computing, artificial intelligence and cognitive technologies,
advanced materials, and augmented reality.

Throughout this cycle, real-time access to data and intelligence is driven by the continuous and cyclical
flow of information and actions between the physical and digital worlds. Many organizations already
have some portions of the PDP loop in place, namely the physical-to-digital and digital-to-digital
processes. However, it is the leap from digital back to physical—from connected, digital technologies to
action in the physical world—that constitutes the essence of Industry 4.0.6

FIGURE 1

The physical-digital-physical loop and the technologies used

2. Analyze and visualize

Machines talk to each other
to share information, allowing
for advanced analytics and
visualizations of real-time
data from multiple sources

2
1 PHYSICAL DIGITAL

1. Establish a digital record

3
Capture information from
the physical world to create a 3. Generate movement
digital record of the physical
Apply algorithms and
operation and supply network
automation to translate
decisions and actions
from the digital world
into movements in the
physical world

Source: Deloitte Center for Integrated Research.

Deloitte Insights | deloitte.com/insights

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Swim, not just float

Defining it is the
first step to doing it

L
EVERAGING TECHNOLOGY FOR protection Challenging the status quo:
involves using it to optimize existing Applying transformational
processes—in other words, to do the same
innovation in the organization
things better, faster, more safely, or more
efficiently. Protection is often associated with Monitoring and analyzing how leaders are
defending or improving bottom lines through cost investing in Industry 4.0 technologies and
reduction and efficiency gains, and with capabilities—and to what end—can help shed light
operational excellence. on how their organizations are considering putting
transformative technologies into practice. In a
On the other hand, using technology for disruption 2019 study of C-level executives’ perceptions of
involves doing something wholly new—either to drive Industry 4.0, we asked respondents to choose a
new processes and recognize new efficiencies, to grow more critical immediate priority for their Industry
revenue by developing new or innovative products 4.0–related investments: either protecting
and services, or to drive new business models. themselves or disrupting others. Two-thirds
Traditionally, disruption has meant a change that selected protection, while 33 percent selected
either upends an established market or industry or disruption—a two-to-one margin.8 A 2020 study
creates an entirely new one. Disruption can lead to asked executives to select any number of priorities
established market leaders losing their dominance to from a range of strategic Industry 4.0 investment
new types of competitors that typically did not exist focus areas but did not force a binary choice
in their industry, or finding themselves up against between the two extremes. In the updated study,
companies from other industries as lines between more than half of leaders (56 percent) still
industries grow more blurred.7 prioritized investments in protection from being
disrupted by others, while 26 percent prioritized
Both protection and disruption strategies can be investments in disruption—again, a roughly two-
valuable and critical for organizations—and they to-one margin.9
gradually scale up. To encapsulate the range of
innovation organizations can explore and combine, Research has shown that disruption can exist along
it may therefore be more accurate, for the purposes a continuum of innovation, with some approaches
of our analysis, to refer to “disruption” as strategic more dramatic than others.10 The choice need not
or transformational innovation. be solely between protection and full-on

4
 Driving innovation and new business models through Industry 4.0

transformational strategies with nothing in services—or move into entirely new business
between, and leaders can play in multiple areas models, companies, customers, or markets.11
across the innovation spectrum either singularly or
simultaneously. For example, organizations can Evidence exists that leaders are exploring those
innovate by using technology to develop new, multiple innovation paths across a continuum of
improved versions of current processes, products, their products, services, and business models, as
or services. Alternatively, they can innovate in our recent global study of CxOs demonstrates
ways that lead to completely new products and (figure 2).

FIGURE 2

Organizations’ Industry 4.0 investments suggest they are looking

at innovation in different ways
Given the list of Industry 4.0 priorities, where will your organization be investing the most?

Protecting our organization from disruption from new or existing competitors

56%

Finding growth opportunities for existing products and services

53%

Developing innovative/differentiated products and services

40%

Disrupting competition with new ways of doing business

26%

N= 2029
Source: Punit Renjen, “Industry 4.0: At the intersection of readiness and responsibility,” Deloitte Review 26,
January 20, 2020.
Deloitte Insights | deloitte.com/insights

5
Swim, not just float

IT’S ALL RELATIVE: DEFINING TRANSFORMATIONAL INNOVATION BY INDUSTRY

While most organizations realize the importance of embracing transformational innovation, it’s
important to note that the notion of disruption is relative. Industries adopt technologies at different
rates, build capabilities for different purposes, have varying appetites for experimentation and risk,
approach technology investment and implementation differently, and face very distinct challenges; thus,
what passes for protection in one industry may be seen as full-on transformation in another (figure
3). As an example, implementing blockchain in the financial services industry may not be considered
transformational, but a manufacturer or a logistics provider may consider it as such. One such example
of the latter is transport, logistics, and energy company Maersk launching an open global supply chain
platform called TradeLens, in partnership with IBM. Based on blockchain technology, the platform
evolves the supply chain network by enabling paperless international trade, which incorporates a greater
degree of traceability, transparency, and efficiency into the process.12 This has enabled Maersk to move
into a new area of service—ecosystem integrator—connecting organizations across the value chain.13

FIGURE 3
Organizations’ innovation needs are relative, and their priorities differ by industry
Given this list of Industry 4.0 priorities, where will your organization be investing the most?

Growth in Developing
existing innovative
products products
Industry Protection and services and services Disruption
Consumer 59% 62% 54% 28%

Energy, resources
51% 50% 37% 22%
and industrials

Financial services 62% 54% 31% 27%

Life sciences and health care 51% 51% 39% 24%

Technology, media and

59% 48% 37% 29%
telecom

Aggregate 56% 53% 40% 26%

Note: Aggregate figures also include responses from government and public services and other industries.
Source: Deloitte Global’s third annual CxO survey.

6
 Driving innovation and new business models through Industry 4.0

Why should companies

want to move toward
transformative innovation?

D
ELOITTE’S RESEARCH SHOWS that, when These questions are critical, and failure to answer
done right, digital transformation has the them can lead to an unfocused approach—or worse,
potential to increase an organization’s stagnation.17
revenue by up to 22 percent and EBIT by
up to 19 percent.14 Further, organizations
driven by innovation are nearly as likely
Research shows that typically two
to recognize significant return on years are enough to observe initial
financial impacts, from digital
investment (ROI) from transformative
digital transformations as those that are
driven by operational and production initiatives related to developing
goals.15 Moreover, returns from
investment focused on transformational new products, services, and
innovation could be faster: Research
shows that typically two years are
business models.
enough to observe initial financial
impacts, in terms of revenue and EBIT uplifts, What’s holding companies
from digital initiatives related to developing new back? Identifying
products, services, and business models. At the
the challenges
same time, it could take up to five years to see
the same results from more protective measures As companies evaluate the transition from
such as internal optimization. 16
protective strategies toward transformational
innovation, they are likely to encounter an array of
Given that the benefits of digital transformation multidimensional challenges, which are detailed
seem obvious, what are the barriers preventing below along with ways to manage them.
companies and leaders from pursuing
transformative innovation? The answer involves CHOICE OVERLOAD
multiple considerations: having the right strategic Behavioral studies suggest that people are more
mindset, the right mix of people and culture, along likely to invest for the future if they are presented
with having a clear plan of action, including timing with fewer, not more, investment options.18 The
and focus of investments. These considerations challenge of having too many technology choices
include a more focused set of questions: Do leaders and making technology decisions is even greater for
know what they want from technology, and do they organizations intending to disrupt the market
have a clear strategy for what they are trying to through tech investments, because transform-
achieve with it? ational innovation can require them to select
unconventional approaches and technologies to
achieve outcomes.19

7
Swim, not just float

LACK OF VISION AND but also includes making progress on most

SHORT-TERM THINKING Industry 4.0 priorities. In fact, research has shown
Without a clear long-term vision, it is challenging that companies with comprehensive plans for
to sift through all the choices, build a business case, Industry 4.0 are more likely to report achieving
and look beyond the short term to develop a strong results, irrespective of the desired
longer-term plan that can enable truly priorities—protection or disruption (figure 4).
transformational change but that may take longer Further, clearly-stated goals are critically
to realize ROI. Moving from protective technology important; without them, it can be difficult, if not
strategies to a more transformational innovation impossible, to evaluate what success looks like and
requires such a vision—while remaining grounded whether it has been achieved.
in today’s shorter-term needs. Quick and tangible
benefits to the bottom line often get approval from LACK OF RIGHT TALENT AND SKILLS
the board, but they may not drive transformational, Talent and training continue to be areas of ongoing
long-term growth. In other words, initial benefits focus for leaders, and consistently rate as a top
can be seen relatively quickly in the medium term concern and challenge with respect to navigating
while fuller benefits in the form of higher ROI are digital transformation. Seventy-four percent of
likely to manifest in the long term. leaders in a recent study noted that they prioritize
Industry 4.0 investments for “training and
Companies that truly aim to be more strategic developing a workforce with the skills needed to
(rather than protective) need to find the right ratio compete,” followed by 59 percent for
between low-hanging fruit and a more holistic, “understanding what skills will be needed to
long-term strategic transformation effort that may compete effectively now and in the future.” While
take longer to manifest results. A long-term vision leaders are prioritizing talent development, they
should also weather economic and business cycles. are still not confident about the effectiveness of
Indeed, companies best placed for disruption and their existing talent-related efforts: Only 21 percent
strategic success stay invested for the long run and say that they have made progress in understanding
don’t lose sight of their strategic north star; rather what skills will be needed to compete, and only
than being impacted by business cycles, they 20 percent say that their organization possesses
maintain their focus on investing in what will the skills they will need in the future.21 With that in
bring more strategic impact in the long term, and mind, talent development appears to be an area of
perhaps leaving them better positioned for ongoing focus that requires concerted efforts,
transformational growth. In fact, research adaptation to ongoing changes, and a disruptive
suggests that companies that invest in key mindset to drive truly transformative efforts across
technological advances during downturns are the organization.
better positioned to leapfrog competitors when
economic conditions improve.20 LACK OF DIVERSE PERSPECTIVES
Research suggests that most organizations are not
LACK OF A STRATEGIC PLAN making decisions based on a diverse and inclusive
Having a strong long-term vision and clear set of perspectives and stakeholders—which
outcomes can help organizations develop a robust means they are not necessarily living the “end-to-
plan for strategic innovation. Without a plan to end visibility,” “fully connected” ethos of Industry
turn that vision into action, it can be difficult for 4.0: Four in 10 leaders do not strongly agree that
them to know where to invest in pursuit of a larger their organizations have a culture of inclusivity
goal. The importance of a strategic plan isn’t that allows for diverse voices to be involved in
limited to achieving transformational innovation, top-level decision-making.22 This is a cultural

8
 Driving innovation and new business models through Industry 4.0

issue that needs to be addressed to enable cross-functional teaming that promotes

organizations to identify new opportunities and collaboration across multiple stakeholders within
make fully informed and inclusive decisions. and outside the organization, to help create an
One way this can be achieved is through organizationwide connective tissue.23

FIGURE 4
Organizations with comprehensive plans for Industry 4.0 are more likely to
achieve better results, regardless of their focus on protection or disruption
How much progress—in terms of seeing some positive outcomes—have you made to date on each
of these top priorities? (Percentage of respondents stating significant progress (6–7 rating) in various
strategy development stages)24

Ad hoc Begun developing Comprehensive,

No formal approach in a broader, holistic,
strategy at specific areas organizationwide organizationwide
Priorities this time as needed strategy approach strategy
Protecting organization
from disruption
13% 12% 27% 73%
from new or existing
competitors
Finding growth
opportunities for existing 8% 8% 21% 60%
products and services

Developing innovative/
differentiated products 9% 12% 28% 61%
and services

Disrupting competition
with new ways of doing 3% 4% 15% 67%
business

Source: Deloitte Global’s third annual CxO survey.

9
Swim, not just float

Getting started
Transitioning from operational excellence
to transformational innovation

D
IGITAL TRANSFORMATION IS a continuum products and services; supply chain; and
and not an either-or between protection stakeholders such as customers, partners,
and disruption. Companies may start with or employees.25
leveraging advanced technologies for protection
and process optimization, building a firm So how do companies ensure a smooth transition
foundation of operational excellence and from protection to transformational innovation?
familiarity with technological capabilities, and There are multiple strategic and operational
gradually building upon those capabilities to push pathways that companies can adopt to protect their
forward into growth and market disruption margins, and eventually disrupt the competition
through new and innovative products, services, (figure 5). Taking a holistic approach enables
and business models. Or, rather than pursuing a organizations to think across the many facets of
sequential approach to transformative innovation, innovation they can pursue, and mix “protection”
they may play in multiple spaces simultaneously, with “disruption.”
following a protective strategy in one area while
pursuing transformational innovation in another. Operational activities drive the core of digital
Indeed, companies don’t need to leave behind investments and tend to focus on streamlining and
protection as they pursue innovation; instead, they improving business processes, use of technology,
can pursue multiple approaches to build a strategy and the flow of information to make organizations
that spans the three pillars of the organization: smarter about what they do—in other words,

FIGURE 5
Factoring in both operational and strategic pathways can help organizations take
a holistic approach to transformational innovation and disruptive change

Operational activities Strategic activities

Companies that are strong in operationalizing their digital Companies that are strong in strategic activities
strategy capitalize on their core value chain and available digitize products and services, and create new digital
resources to build their digital capabilities, strengthen business models and complex digital ecosystems to
their IT functions, and increase the intelligence of their offer new services to their clients.
business functions.
• Define transformation road map • Monitor new technologies
• Integrate central IT systems • Identify business opportunities
• Collect and analyze real-time data • Adapt to changing market requirements
• Implement scorecard of the digital journey • Invest in new digital assets
• Enable an end-to-end digital supply chain • Extend partner collaboration

Source: Deloitte analysis.

10
 Driving innovation and new business models through Industry 4.0

activities that might be classified as “protection” or, This increased agility better enables companies to
perhaps more accurately, an important pursue those new opportunities and innovate more
foundational step toward a fuller transformation quickly. Ongoing monitoring of new technologies
road map for innovation and growth. By focusing and investment in new digital assets build upon
across the value chain, companies can ensure their that foundation and allow organizations to keep
digital and physical technology implementations developing their capabilities and evolving the ways
can truly transform the way the organization in which they innovate. Further, thinking
operates and realize more significant benefits. A strategically and approaching innovation with a
leading global manufacturer, for example, has clear plan can help cut through choice overload
leveraged digitization to establish end-to-end challenges by enabling companies to make targeted
visibility across the supply chain, using sensors to technology investments that will connect the right
enable a line of sight into inventory information. dots. Finally, and perhaps most importantly,
The program has helped the company optimize strategic pathways to transformational innovation
existing processes through lower costs, steadier also identify and leverage strengths that exist
gross margins, enabling existing inventory to outside the organization in the broader ecosystem.
address demand without increasing production and
ultimately helping reduce more than US$250 Leaders who can successfully drive
million in inventory. 26
transformational innovation are able to do so
because they can optimize both strategic and
As noted, operational activities can form the first operational approaches—increasing not only their
step of a transformational road map that brings revenue but also their EBIT. Focusing on just
together technology, drives the creation of new innovation is effective, but only to a certain degree.
data and information to make the organization Because this approach is not as holistic and may
smarter about what’s going on within its four walls not incorporate the full value chain (including the
and throughout the broader network, and connects supply chain), it does not necessarily harness the
the organization end to end throughout its value full power of productivity and operational gains.
chain and network. Once this foundation has been Likewise, a focus on process to the exclusion of
laid, companies can use the data and information products and services can create a strong value
to not only make their business processes smarter, chain and improved productivity, but not
but also to identify new business opportunities— innovation and revenue growth.
moving into more strategic innovation.
As companies start their journey along the pathway
From a strategic perspective, leaders can to transformational innovation and disruption, it
pursue not only new technological capabilities to is important to note that they shouldn’t feel
drive digital and physical connectivity but also use impelled to move as quickly as possible. Research
the resulting flows of data and information to suggests that companies that start their digital
identify new business opportunities, improve or transformation journeys later than their peers may
build new products and services, and adapt more actually be able to move to strategic disruption
quickly to change. In one example, Merck has been activities more quickly—whether by learning from
leveraging advanced technology to develop the experiences of competitors, taking advantage
modularized smart factories that will enable it to of the rapid pace of technological innovation to
better and more quickly meet demand for smaller invest in more advanced technologies and
production runs across a broader array of capabilities after they have had the chance to
medicines. The modules can be reconfigured as develop more fully, or putting together a deeply
needed to adapt to production needs.27 considered strategy.28

11
Swim, not just float

Lifesaver on? Time to swim

I
NDUSTRY 4.0 PROVIDES a spectrum of of operational excellence and technological
opportunities, each with differentiated value and infrastructure and capability that positions them to
complexity and with impacts along the value explore opportunities for innovation and
chain. Depending on the organization, its goals, or transformational change.
even its industry, the pathways to operational
excellence, growth, and innovation may differ The journey from protection to disruption brings
tremendously—but leaders have a real opportunity with it its own set of challenges and considerations.
to create a holistic, transformational approach to Given the number of technology choices available
leveraging Industry 4.0 capabilities to drive a to business leaders, a strategic approach to
smarter, more flexible organization. innovation and a clear vision on the path forward
is critical. Organizations can consider
Depending on the organization, making technology investments as
part of a long-term approach that is
its goals, or even its industry, the dynamic and ongoing: Think about

pathways to operational excellence, investments that will have a short-

term ROI impact and operational
growth, and innovation may differ. activities, but that will also enable the
organization to build toward its long-
At the same time, however, companies still term, transformational vision.29 It is also essential
predominantly prioritize protection over for organizations to foster a culture of cross-
disruption when making investments and functional teaming and use external partners
executing their digital transformation efforts, throughout their ecosystem, harnessing the end-to-
leaving opportunities for more profound end possibility of Industry 4.0 across the network.
transformational change on the table. By shifting By investing in innovation strategically, leaders can
their mindset to recognize that the choice is not prepare for tomorrow without sacrificing their very
“either-or,” companies can build a firm foundation real needs today.

12
 Driving innovation and new business models through Industry 4.0

Endnotes

1. Mark Cotteleer and Brenna Sniderman, Forces of change: Industry 4.0, Deloitte Insights, December 18, 2017.

2. Punit Renjen, “Industry 4.0: At the intersection of readiness and responsibility,” Deloitte Review 22, January 20,
2020.

3. Daniel Kahneman and Amos Tversky, “Prospect theory: An analysis of decision under risk,” Econometrica 47,
no. 2 (1979): 263–91.

4. For upcoming analyses from the Global Digitization study, see Deloitte, “Digital Maturity Index: On the pulse of
digitalization,” accessed May 13, 2020.

5. Mark Cotteleer, Monika Mahto, and Tim Murphy, The strategy paradox: A defensive position on digital
transformation, Deloitte Insights, October 10, 2018.

6. Cotteleer and Sniderman, Forces of change.

7. Clayton M. Christensen, The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail, Boston, MA:
Harvard Business School Press, 1997; Clayton M. Christensen and Michael E. Raynor, The Innovator’s Solution:
Creating and Sustaining Successful Growth, Boston: Harvard Business School Press, 2003.

8. Renjen, “Industry 4.0.”

9. Ibid.

10. Christensen, The Innovator’s Dilemma; Christensen and Raynor, The Innovator’s Solution.

11. Deloitte, “Multi-channel corporate venturing: A Build, Partner, Buy approach to corporate investment for the
new decade,” January 2020.

12. Insolar, Changing the rules: Blockchain is dramatically improving the efficiency of shipping and logistics, 2019.

13. TradeLens website, accessed March 18, 2020.

14. Survey question: By how much percent was the profitability increased in the course of digitalization?; For
upcoming analyses from the Global Digitization study, see Deloitte, “Digital Maturity Index: On the pulse of
digitalization,” accessed May 13, 2020.

15. Deloitte Insights, The Industry 4.0 paradox, accessed March 18, 2020.

16. For upcoming analyses from the Global Digitization study, see Deloitte, “Digital Maturity Index: On the pulse of
digitalization,” accessed May 13, 2020.

17. The three pillars: Industry 4.0 can be applied to achieve operational excellence or business growth across
three pillars of the organization: products/services, supply chain, and stakeholders (customers, partners, or
employees). Focusing on these pillars can enable organizations to think through what they want to achieve,
and how—and where—as well as provide a pathway forward for developing a road map to fit the individual
needs of the organization. For more analysis, see: Cotteleer and Sniderman, Forces of change.

18. Mark Cotteleer and Tim Murphy, “Behavioral economics key to maximizing human-technology engagement in a
digital supply chain,” Supply Chain Navigator, October 2017.

19. Renjen, “Industry 4.0.”

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Swim, not just float

20. Martin Reeves, Kevin Whitaker, and Christian Ketels, “Companies need to prepare for the next economic
downturn,” Harvard Business Review, April 2, 2019.

21. Based on a subset of respondents; n=938.

22. Renjen, “Industry 4.0.”

23. When looking at digitally mature companies within our MIT SMR study, 84 percent of them agree with the fact
that cross-functional teams work effectively in their organization to support digital business, while only 43
percent of respondents from less digitally mature companies agree with the same. This illustrates a positive
correlation between effectiveness of cross-functional teaming with digital maturity and performance.

24. Renjen, “Industry 4.0.”

25. The three pillars can enable organizations to think through what they want to achieve, and how—and where—
as well as provide a pathway forward for developing a road map to fit the individual needs of the organization.
For more analysis, see: Cotteleer and Sniderman, Forces of change.

26. GR, “Caterpillar: Building the supply chain of the future,” Harvard Business School, November 15, 2017.

27. Tim Sandle, “Pharmaceutical sector embracing Industry 4.0,” Digital Journal, September 22, 2018.

28. For upcoming analyses from the Global Digitization study, see Deloitte, “Digital Maturity Index: On the pulse of
digitalization,” accessed May 13, 2020.

29. John Hagel and John Seely Brown, Zoom out/zoom in: An alternative approach to strategy in a world that defies
prediction, Deloitte Insights, 2018.

Acknowledgments

The authors would like to thank Jay Parekh for his significant contributions to the research and
analysis presented in this paper. The authors would also like to thank Negina Rood, Aditi Rao, and
Abrar Khan for their valuable contributions to the paper.

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 Driving innovation and new business models through Industry 4.0

About the authors

Thomas M. Döbler | [email protected]

Thomas Döbler is responsible for the Energy, Resources & Industrials and the Industrial Products &
Construction sectors in the German market. Previously, he led the Operations practice at Deloitte.
Döbler has national and international project experience, which ranges from strategy development to
the area of aftersales and service to cost transformation programs. He is also a proven expert in the
areas of networking, Industry 4.0, and digital factory.

Brenna Sniderman | [email protected]

Brenna Sniderman leads Deloitte’s Center for Integrated Research. Her research focuses on Industry
4.0, advanced technologies, and the intersection of digital and physical technologies in the supply
network, operations, strategy, and the broader organization. She works with other thought leaders to
deliver insights into the strategic, organizational, and human implications of these technological
changes.

Monika Mahto | [email protected]

Monika Mahto is the India research leader for the Deloitte Center for Integrated Research. Mahto has
over 12 years of experience in research focused on digital innovations related to additive and advanced
manufacturing, future of work, Industry 4.0, the Internet of Things, and other advanced technologies.
She has developed original quantitative and qualitative frameworks by using various research
methodologies. In her role, she collaborates with other thought leaders, industry executives, and
academicians to deliver insights into the strategic and organizational implications of
these technologies.

Claudia Ahrens | [email protected]

Claudia Ahrens is director in Strategy & Operations with a focus on global value chain transformations.
With more than 10 years of professional experience in successful cost and digital transformation
programs in the manufacturing industry, Ahrens is responsible for the Deloitte Digital Factory, together
with Harald Proff’s team. Her expertise lies in combining short-term cost programs and long-term
digital transformation.

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Swim, not just float

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Our insights can help you take advantage of change. If you’re looking for fresh ideas to address your
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Industry leadership

Thomas M. Döbler
Energy, Resources & Industrials leader, Germany | Partner | Deloitte Germany
+ 49 173 5498934 | [email protected]

Thomas Döbler is responsible for the Energy, Resources & Industrials and the Industrial Products &
Construction sectors in the German market. He is based in Munich, Germany.

Dr. Harald Proff

Lead partner, Operations | Deloitte Germany
+49 211 87723184 | [email protected]

Dr. Harald Proff is the Germany lead partner for supply chain network operations and the lead for the
Deloitte Digital Factory. He is based in Dusseldorf, Germany.

Claudia Ahrens
Director, Strategy & Operations | Deloitte Germany
+ 49 151 58004551 | [email protected]

Claudia Ahrens is director within the German Operations practice. She is an expert on digital value
chain transformation.

The Deloitte Center for Integrated Research

Brenna Sniderman
Executive director | Deloitte Center for Integrated Research | Deloitte Services LP
+1 929 251 2690 | [email protected]

Brenna Sniderman leads Deloitte’s Center for Integrated Research. She is based in Philadelphia.

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