MIT Sloan Executive Education Blog

Implementing IIoT: A systems challenge disguised as a technological one?

The current challenge facing operations across the globe can be summarized as follows: Make an increasing variety of products, on shorter lead times with smaller runs, but with flawless quality. Improve our return on our investment by automating and introducing new technology in processes and materials so we can cut prices to meet local and foreign demand. Mechanize – but keep your schedules flexible, your inventories low, your capital costs minimal, and your work force contented.1

Industry 4.0

While these words succinctly address the majority of challenges companies are trying to address with the Industrial Internet of Things (IIoT), it should be noted that they come from Wickham Skinner's 1966 Harvard Business Review article, "Production Under Pressure."

Advances into IIoT and initiatives such as Industry 4.0 may seem to operations executives to be more of a threat to defend against rather than an opportunity. Perhaps this is why a 2016 Cisco survey found leaders skeptical regarding investment in IIoT.2 As expressed by Daryl Miller, vice president of engineering at Lantronix, "Companies need to keep the IoT simple by adapting their existing systems to become compatible with the IoT."3

In other words, the introduction of a new technology often reveals a lack of understanding of the current system, rather than that of the new technology. Therefore, adoption of IIoT is primarily a systems problem, rather than a technological one.

Fortunately, there is over a century of experience in systems thinking that, if utilized properly, can significantly reduce the systemic stress of adopting IIoT while helping to quickly achieve positive cash flow. Historically, many technology-driven initiatives fall short of expectations as the facility slides back to its “usual way” of working, a chaotic mix of unstable and ad hoc procedures and norms--a phenomenon dubbed "The Hidden Factory" by Dr. Armand Feigenbaum in the early 1960s. While these hidden factories often represent the greatest source of value to be realized through technology, they are also capable of fiercely resisting any change.

To that point, the value of the IIoT may be in providing the capability to expose hidden factories, enabling teams to shrink them through creative problem solving. Most managers of facilities I have visited in the last year simply want to know the current status of their most important machines without walking out to the floor or requiring the operator to stop and either write data down or key information into a computer. In this respect, we require IIoT in order to understand our system rather than to replace it. Perhaps then we will have a sustainable methodology for continuously improving on Professor Skinner's observations.

Dr. John Carrier is a Senior Lecturer in the System Dynamics Group at the MIT Sloan School and is currently leading the MIT Sloan Executive Education program, Implementing Industry 4.0: Leading Change in Manufacturing and Operations.

[1] SKINNER, W. (1966). “Production Under Pressure” Harvard Business Review, November–December, 13–146.
[2] Murison, M. (2016). “IT Leaders Remain Skeptical of Digital Transformation and IOT”, Plant Engineering
[3] Ibid.


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