5 Hard Truths of Digitalisation: Practical Q&A with SME Manufacturing Boss

The digital transformation journey is anything but easy. For SMEs with limited resources, the journey may seem even more tumultuous than it really is. The disruption caused by the COVID-19 pandemic has also exacerbated the need for transforming our businesses.

Our government has highlighted in the four budgets this year the various grants and initiatives aimed at helping businesses along the digitalisation journey. But not all SMEs are ready for digitalisation. Many SME owners still cast doubts over it, as digitalisation comes with a plethora of implications to the business.

In this post, Jeremy Fong (JF) and Joseph Wong (JW) from Fong’s Engineering share with us the 5 Hard Truths of Digitalisation that nobody really talks about, but which are integral to the digital transformation journey.

Fong’s started out as a manufacturer of metal components, supplying individual parts to sectors such as electronics, defence and oil & gas in 1982. Less than 40 years later, the company has transformed itself into a product owner and now specialises as a manufacturer of high-end medical devices, making headlines for being the first Singapore SME to launch a fully-automated production line.

It’s no denying that people management is one of the hardest aspects of running a business. When it comes to digital transformation, it’s no different. Getting everyone in the company onboard the digital transformation journey is crucial, but difficult. Be prepared to communicate effectively to your staff on why you choose to digitalise processes, and how it affects them. 

JF: As a CEO, you have to constantly think ahead and plan for the company. Right from the start, we believed that in order to achieve our objective, our people are key. Not only do our machines and operations transform, our staff will have to pick up new skills and change their way of working.

But your staff may not share that vision with you right from the onset. You have to consider carefully how to handle their resistance, how to allay their concerns over job security and how to convince them that digital transformation is not only necessary to the organisation, but beneficial to them.

JW: No doubt, handling people is always the toughest. Effective and open communication through various channels is the crux when dealing with such challenges.

In your internal communication, it’s important to involve all departments regardless of rank or designation, so that every individual is made aware of the company’s direction and vision. You also have to be careful in how you frame the situation – explain how such changes will affect them and more importantly, benefit them.

All over the world, the idea of automation, artificial intelligence, Industry 4.0 and robots go hand in hand with the connotation of job displacement and replacing people. It’s not easy to separate the two, which is why many SME bosses are reluctant to embark on the transformation journey altogether. But there’s another way.

JF: I think there’s a fine line between automation and transformation, and I prefer to use the latter. When embarking on digitalisation, it’s natural that employees will wonder if their jobs will be affected, or worse still, if they will eventually get laid off. That’s why I think it’s important to reframe their mindset to think of it as transformation instead.

As our processes and operations transform, so must our people. We try to approach it this way, which is why we have a huge emphasis on upskilling and upgrading our staff.

JW: Yes. They know that they have to be open to learn new things. If they don’t, it means they are not transforming with the organisation. And that means they will get left behind.

What we are looking at is entering a new era of Smart Factory Transformation, which is more than just automation. If you go above and beyond automation, upskill your people to take on new roles and tasks, then this would not be a problem. In fact, throughout the whole process, we have not replaced a single person. We upskill everyone.

Often, SME bosses wonder whether they are ready to embark on the transformation journey. It is not an easy decision to make, given the heavy investment required in terms of finances and resources. For SMEs who are just starting on the digital transformation journey, be prepared to keep developing skills in different areas, namely, adaptive, technological and technical skills.

JF: We categorise it into three pillars. The first one is adaptive skills. This refers to the soft skills we need to develop, such as leadership skills, problem solving abilities and communication skills. The second one is technological skills. This means being at the forefront of emerging technologies and anticipating trends, such as robotics, data analysis, IoT, cloud computing and so forth. The third set of skills is technical, which is your current domain expertise. This means growing your vertical knowledge and diving deeper into your specialisation.

JW: We fondly call these three pillars the “ATT” – Adaptive, Technological and Technical. These are the three areas we think anyone, especially SMEs looking to start the Smart Factory Transformation journey, should pay attention to. It will help you keep yourself updated, relevant and in a constant state of improvement.

Let’s face it. Digitalisation is scary. It’s new, it involves risks, it requires planning and expertise. It’s usually way easier sticking to models that have proven to work for our business. For SMEs especially, we often do not have the capabilities or abundance of resources for trial and error. Even so, don’t be afraid to start. The longer you wait, the worse it gets.

JF: As a leader, you must be able to anticipate opportunities. More importantly, you must be able to react fast. This involves being adaptable to changes. It’s not going to be easy. Many times, it will involve difficult decisions such as changing your business or operating model. But what’s important is that once you have decided, be firm and stay on your course.

Challenges will emerge but you need to be persistent and resilient, believing in why you took this path in the first place. This will trickle down to your employees who will be able to see the changes in the organisation.

JW: Don’t be afraid to try, and don’t be afraid to start. If you know that technology is going to disrupt our lives and our jobs, we have to do something about it. If you don’t act now, you are just kicking the can down the road, and one day you will face a bigger problem than the one you are in today. Technological disruption is an external event, but how we respond to it determines our outcome.

So how do you start? Where do you begin? Believing in digitalisation and being willing to transform your business is the first step. Once you have adopted the mindset shift, the next thing would be to set the direction for the company. Lay out concrete action plans, budget for your resources, speak to external stakeholders and governmental bodies to get the necessary help and training.

JF: Everyday, we have breakfast meetings to discuss what needs to be done. We constantly check in and review if our methods have worked, what could be done better, and how we should go from here.

It helps to have a committed and trusted team working with you on the transformation journey.

JW: Think big, start small, scale fast. If you believe that Industry 4.0 is here to stay, and this is a trend that cannot be changed by any one of us, then it’s better to take action now.

You can start by thinking big, but you might not necessarily have to start big. You can start small, but most importantly – you must be able to scale fast. Once you have achieved certain momentum, you have to be quick to scale fast through that small experiment you did, and this will continue to scale up. If you see value in the changes you made, continue replicating them to other areas of your business.

Jumpstart your digitalisation and automation journey through the SME Go Automation initiative. Discover how you can transform your enterprise and upskill your employees with this guidebook from Schneider Electric “The SME Owner’s Guide to SG Budget 2020” To find out what are the available government grants for SMEs in Singapore that can help subsidise your digitalisation and automation costs, check out the Schneider Electric 17-page guide.