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June 19, 2015
Management 2.0 in the World of the Industrial Internet
By: Mark McDonald

The Industrial Internet of Things (IIoT) is correctly understood as a disruptive technology across multiple industries. What is less understood is the dramatic impact the IIoT will have on organizational and management practices.

Most of those management practices—organization design, job roles, etc.—are built on the assumption that companies need something called “human middleware”—a topic I wrote about in a previous blog. There, I said:

    “Human middleware are the people in your organization whose responsibilities revolve around greasing the skids to keep things moving. Just like their technology counterparts, human middleware sits in the gaps between processes, they coordinate corporate messages, and they are both the grease that keeps things moving and the glue that keeps things from falling apart.”

The IIoT overturns those human middleware assumptions by enabling information to move around the organization in a more fluid, instantaneous way. Sensor, analytics and communication technologies alter the fundamentals of business operations. They change the nature of work, but they also change the nature of management and its required resources.

IIoT will help to usher in a new era of “Management 2.0.” What exactly does that era look like?

Information connectedness

The Industrial Internet of Things extends information intensity and connectedness to new levels. The ability to connect everything to everything else via digital technology creates new disruptive relationships, products, services and operating models. Driverless cars, intelligent equipment and automation in the extreme point to only a small part of IIoT’s disruptive potential.

Disruption occurs whenever technology overturns foundational assumptions about business. While the IIoT intensifies information flows and coordination amongst devices, it overturns three fundamental assumptions about organizations and their management: latency, ambiguity and slack.

  • Latency refers to the time gaps that exist in every organization between decisions, actions and recognizing those actions. Despite years of integration investments, there remain gaps between what happens and what is in an organization’s database.

  • Ambiguity abounds in organizations, fueled by multiple versions and interpretation of the facts. There are few indisputable truths in business—facts that are free of assumptions or distortions—but that is about to change.

  • Slack exists between functions and processes given uneven balance between supply and demand. Rounds of cost takeout have sought to eliminate slack by reducing resources under the mantra of doing more with less.

An organization carries a certain level of resources—again, “human middleware”— to deal with each of these assumptions. But imagine an enterprise where there is near perfect information in real time (zero latency), a single version of the truth (no ambiguity) and no slack (as the supply of resources readily matches demand). Now think about the resources that no longer need to be dedicated to such middleware tasks and the disruptive nature of the IIoT becomes clear, regardless of your industry, market or customers.

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