Podcast interview with Walker Reynolds, Chairman, Intellic Integration
Transcript of an interview hosted by Daniel Langley with Walker Reynolds, Chairman of Intellic Integration
As part of the 4.0 Solutions community, I wanted to do my part in helping raise awareness of Industry 4.0. So, I created a word-for-word transcript of this fasinating interview with Walker D. Reynolds, Chairman of Intellic Integration.
It took a while to eliminate all the errors in the automated transcript. But it is my hope that others interested in learning about Walker’s mission to save and create middle class jobs in the USA can now find this content more easily.
If you are keen to learn more what Walker is doing, plus other Industry 4.0 topics in general, I recommend you join the Industry 4.0 Community Discord, where you can get all your questions answered!
The source video is here:
Transcript
Daniel Langley: Hi everyone, and welcome to the latest episode of the Manufacturing IT podcast. I’m joined today by Walker Reynolds. He’s the chairman of Intellic Integration, President and Solutions Architect at 4.0 Solutions. He’s got a YouTube channel with thousands of subscribers and 250,000 plus views, helping people understand the complex concepts of Industry 4.0, industrial IoT, and digital transformation in a really easy-to-consume format. So, Walker, welcome to the pod. Nice to have you here.
Walker Reynolds: Daniel, thanks for having me.
Daniel Langley: Funny enough, Walker, when I was first launching the podcast last year, I was throwing it up to my network asking for suggestions. ‘Who would you like to see on the pod?’ And your name came up quite a lot. So, it’s really great to have you here.
Walker Reynolds: Appreciate that, man. I guess being controversial isn’t always a bad thing.
Daniel Langley: No, I think you’ve been building a really good profile online and I really enjoyed watching the videos that you’ve created. So, it’s great. Firstly, I was keen to understand: How are you pronouncing ‘Industry 4 point 0’? I hear it get called so many different things: 4 dot zero, Industry 4… How is Walker Reynolds pronouncing it?”
Walker Reynolds: So, we really talk about three terms. We talk about Industry 4.0 — so, I pronounce it ‘Industry 4 dot oh’, digital transformation, and the industrial internet of things. We talk about those three concepts. They’re probably three of the biggest buzzwords that come up in conversations all the time. And you see two camps. Actually, there are really three camps. Camp number one is the people who don’t understand the potential of those three things. Camp number two are the people who do understand the potential of those three things. And camp number three are the people who are a little more jaded. They haven’t realized the potential of those three things. And this is where the term ‘buzzword’ comes in. So, oddly enough, our channel really started around just trying to correct misconceptions about Industry 4.0, the industrial internet of things, and digital transformation. The first videos that we ever did that really took off… I mean, we were doing content for like six months before I was ever in front of the camera. That was all accidental. It was my digital media strategist who set up the camera and said, ‘Hey, Walker, I’d like you to go up on the whiteboard and explain what is IIoT, just for my editors.’ That was never supposed to go live. That’s why I wasn’t wearing a mic or anything. He’s like, ‘Hey, what is IIoT?’ And so, I just got up on the whiteboard and did it. And he published it to our YouTube channel and it took off. That’s one of our… And a quick correction, we’ve actually broken a million views. We’re just over one million total views. That happened last week. Actually, I think Friday we went to a million. We got the thing from YouTube saying, ‘Congratulations, you just had your one millionth view.’
Daniel Langley: Wow, congratulations! How long did it take to get the million views?
Walker Reynolds: So, we are… I was just talking about this this morning. I think we’re at our four-year mark. So, when you consider that our total available audience for what we’re talking about is only about a million people on the whole planet. The total industry only makes up about a million people. We’ve got something like, I think, 17,000 subscribers on YouTube, 70,000 across all platforms. And then, if you look at IIoT.university, which is the online university where we train engineers and train executives on how to lead industrial digital transformation initiatives but also how to be an engineer to support them, there’s another 5,000 people in our discord server and 500 paid students. So, we have a huge audience relative to what the available audience is. But it did take about four years. A lot of people have asked us questions about, ‘How did you take off?’ and we took a very scientific approach to make sure that the content we were producing was providing maximum value to the audience. So, we always ask three questions before we ever shoot a video. So, any of you who want to get into doing digital media, my first recommendation is: don’t shoot commercials. Content’s all about … the commercial is in the description. If you’ve got something you want to sell or whatever, put it in the description of the video. If they’re interested in you, they’ll click on that. The video needs to be pure value. So, question number one is: ‘What’s the message I want to convey? What do I actually want to say in this video?’ Question number two is: ‘What do I want the audience to take away from this?’ What do I want them to take away? And that oftentimes could be different than what the message of the video is. And question number three is: ‘What will the audience say the value of this video is?’ Ask those three questions before you ever shoot anything and your audience will grow. It’s like a moth to a flame. You’re going to say things that resonate with a cross-section of the audience. And the people who watch that video, where it resonates, they’re going to subscribe. They’re going to come back and watch more. And that’s how a community grows.
Daniel Langley: No, it makes sense. And it’s obviously working for you guys. So, congratulations on the million-plus views.
Walker Reynolds: Thanks.
Daniel Langley: I’m sure it won’t be long to two million now.
Walker Reynolds: It’s exponential.
Daniel Langley: God loves the compound growth. So, talk to us a little bit about your journey, Walker. How did you end up in industrial automation, digital transformation, and how did you get to where you are today?”
Walker Reynolds: That’s an interesting story. So, I’m from Texas. I was born in Dallas and lived in Dallas, Texas, until I was seven. My mom passed away when I was young, and at seven, that’s how I ended up in upstate New York. So, I grew up in upstate New York in an adopted family in what is now today called the Rust Belt. Sort of in farming communities where manufacturers had opened up manufacturing facilities. From the 1920s all the way through the 1970s, manufacturing was all over the place in upstate New York. And then what happened was, I observed with my own eyes the manufacturing exodus from the northeastern United States during the 1980s. I saw that while I was in school, when I was in middle school and high school. And I knew what the impact was because I saw it. I mean, I literally watched communities just succumb to blight. I watched families go bankrupt, lose their homes. I watched people go from middle class and upper-middle-class lifestyles to working on farms again, and working in gas stations. And then, over the course of the 90s, I started to see the decline in social discourse which came from that. So, I grew up watching the negative impacts of not having a viable manufacturing sector in your economy. And then I went to school. So, I originally went to an Ivy League school my freshman year. I transferred and I studied sociology, and I had a focus on labor. I took a couple of different courses on labor. What I learned in my education was that the manufacturing exodus didn’t happen because corporations were greedy, which is what I was told in the 1980s. But the reason it happened was because when the third industrial revolution really took off in the 1970s, that is, the automation of industrial processes, programmable logic controllers, the transition from relay logic to computer logic running automating processes, the United States lagged behind Germany and Japan in the adoption of those technologies. And we were late to the game. So, what happened was when US manufacturers were getting crushed by overseas manufacturers because they had optimized their manufacturing processes with automation. In order for American companies to remain viable, they had to quickly reduce costs. The way they did that was to chase cheap labor. They were compelled to do that because they had, in that first 10-year window where they could have leveraged technology to do more with less, they didn’t. Then they came back stateside and they spent the 90s and the early 2000s doing all their automation. So, what happened was, I learned the impact of losing manufacturing and then why did it actually happen. How I got into industrial automation was totally by accident. I put myself through college. I worked in an arcade. When I worked in the arcade, I’ve always been sort of a handsy person, the guy who wanted to know how everything worked. The arcade sent me to get this six-month training in DC control systems. So, I learned how to work on five-volt DC control systems. I learned how to read IEC drawings. My first job out of college was working in a salt mine. I took the first job I could get and I was a laborer. But I happened to be working in the maintenance department, supporting the electricians and mechanics doing their jobs. Sort of a confluence of events, the mine had just upgraded to all German-engineered mining equipment, from conventional electric over hydraulic equipment in the United States. They bought computer-controlled, all remote-controlled, PLC controlled from Germany. Nobody in our mine knew how to work on it. We had this roof bolter out in the middle of nowhere that cost six hundred thousand dollars. It hadn’t run in a year. My boss, a guy named Joe Rolf, who is still one of the key mentors of my career, knew that I knew how to read the German drawings. I could read German and I could read IEC drawings. So, he asked me to go with an electrician one day to translate the drawing for him so he could troubleshoot this bolter. That’s all I was there for. On day one, the electrician basically gave up. He said, ‘I have no idea what’s wrong here.’ And I asked Joe when I came back the next day, ‘Do you mind if I give this a shot myself?’ And he said, ‘Sure, go ahead.’ So, I’m just this guy who drives a loop. I can read the drawing. I went out to this roof bolter that hasn’t been run in a year. I troubleshot it all day long. I learned how to connect to the PLC, read the command line interface. It was all command line PLC programming. I learned how to read the command line interface. I learned the systems just by looking at the IEC one line drawing. I troubleshot it all day. The second day, I didn’t get it to work. Then, on day three, I figured out what the problem was. It was actually a short in a piece of conduit. As the roof bolter was running, the wire would pinch and it would tell the PLC that the top switch had been met even though it hadn’t, and the machine would stop. So, I fixed the short. I run the machine, and as soon as I hit the start button, it drilled; it bolted the roof. From that moment forward, I became the SMAG guy. Suddenly, I’m the expert. I know nothing about three-phase electricity, I know nothing about hydraulics, and I know nothing about thermal dynamics. From that moment, they put me into an apprenticeship program. I learned mechanical apprenticeship, then electrical. At the same time, I went back to school and got a degree in electrical engineering over the next three years. From there, I charted a path. What I experienced when I was a kid, to what I learned when I was in college, to what I learned in my very first job, and now I’ve got this whole new education starting, I charted this path. I’m going to work for lots of manufacturers, learn everything about manufacturing, become an expert in the technology, and then I’m going to become a systems integrator. I’m going to teach manufacturers how to use technology to do more with less. At the time, I thought I was going to be doing it within the paradigm of the third industrial revolution. But what happened, magically, five years into my career, the fourth industrial revolution started, and then the path adjusted a little bit. That’s where we are today. I worked for four different manufacturers and four completely different processes over a 10 or 12-year period. Then I worked for two systems integrators, and then I went into business for myself. Forty-nine companies later, I am where I am.
Daniel Langley: It’s a fascinating journey, Walker. Thanks for sharing that. The bit that I know, so obviously, I’m coming from a recruitment background into transformation and Industry 4.0. And I guess, as you mentioned, five years into your career, the paradigm shifted between 3.0 and 4.0. So, in your experience, what are the kind of key differentiators between a professional working in industry 3.0 and then somebody who’s ready to jump into 4.0? What are the key differentiators for you?
Walker Reynolds: Well, that’s a good question. So, there’s a little background here. Anybody who works in manufacturing technology, whether you’re an industry 3.0 professional — which is, simply put, the automation of manufacturing processes, that is the plant floor — that’s what industry 3.0 is. Industry 3.0, by taking computer technology and putting it on the plant floor and then connecting everything on a network, made the fourth industrial revolution possible. The fourth industrial revolution is the automation of business processes. Digital transformation is the journey between going from an automated manufacturing process to an automated business process. Yes, and that starts with solving problems on the plant floor. So, there is a stack, there’s a stack that we all work within, and that stack is the automation stack or the automation pyramid: PLC, Edge, HMI, SCADA, MES, ERP, and then cloud. The fundamental difference between an industry 3.0 professional and an Industry 4.0 professional is this: the industry 3.0 professional specializes in one of those layers of the stack. They might specialize in PLC edge programming, embedded control, micro-controllers, PLC programming, or HMI factory talk view. It might be SCADA, it might be MES. They may have some fluency in other layers of the stack, but in industry 3.0, you are a specialist; you specialize in a technology. In Industry 4.0, you have fluency across the entire stack. So, as a professional, you are no longer saying, ‘I am a ControlLogix PLC programmer.’ What you are saying is, ‘I am an IEC function block programmer,’ or ‘I am a python programmer,’ or ‘I am a structured text developer,’ and I have fluency across the full automation stack.’ So, that’s number one. Number two, in industry 3.0, professionals were primarily focused on the theory of operation and sequence of operations. So, for industrial processes, I’m focused on the theory of operation and I’m focused on the sequence of operations. But the Industry 4.0 professional is focused on the theory of operation and sequence, but they add in business and industrial process workflow as part of their expertise. What do I mean by this? If you work for a manufacturer or you work for a systems integrator, answer this question for me: How does your organization convert a sales order, which is in your CRM, into a manufacturing order, which is in your ERP system, into work orders, which are in your MES system, into industrial monitoring, which is in your SCADA system, into industrial control, which is in your PLC HMI system, into inventory, which is in your warehouse management system, into AR AP, which is in your finance system, into the shipping component? If you can’t answer that question, then your organization is very early in its maturity in Industry 4.0. The Industry 4.0 professional can answer that question. They understand the business process. Everyone in the organization knows how we convert sales into manufacturing, get paid for it, and sell more stuff. Everyone knows those things in an Industry 4.0 environment.
Daniel Langley: You’ve got a really easy way of breaking down these complex areas, Walker. It’s really a takeaway chunk — golden nuggets, if you will. It’s a really good talent you’ve got. So, I appreciate that. And I guess one of the areas that we tend to find is that we work with software companies who are selling tech, we work with manufacturers, and then we work with the integrators in between. Typically, we’re either looking for somebody who’s got experience with MES and such; that’s our kind of core business area. So, we often are asking our clients: Do you want someone who understands the controls, the automation, the machinery level, and who’s then worked up through that pyramid? Or would you prefer someone who started at the top in the cloud layer and worked down? In your experience, for somebody starting off their career or in the early phases, what would be the best direction of travel for them? Would it be up through the layer or down through the layer?
Walker Reynolds: Definitely, I would definitely recommend up. The best place you can start is on the plant floor. Here’s why. There is a plethora of people who work on the IT/OT convergence. Where does IT/OT convergence happen? It happens at that MES layer in the automation pyramid. That’s where Information Technology and Operational Technology meet. MES is the intersection. If OT and IT are circles in a Venn diagram, MES is where the intersection happens. ERP is wholly IT. SCADA is wholly OT. MES is equal parts IT and OT. That’s where the intersection happens. There is a plethora of people, or rather, there are a plethora of people, who have the IT expertise. They are gifted IT professionals. They understand the software development life cycle, they understand agile project management, and they understand that the problem I need to solve is a function of what I know. Therefore, the more I know, the more problems I’m going to come up with. They already understand that. There’s a plethora of those people who have no OT experience. The lack of OT experience is what cripples them as they’re trying to become an Industry 4.0 professional. It’s really hard to go from the carpeted side of the business to the concrete side of the business to gain expertise. It is much easier, as I come out of school, to request a job on the plant floor, spend my first year learning operations, and then move up the stack. It’s much easier to do that than it is to go the other way around. Because the truth is, IT is a much more standardized environment to work in. Compliance and security generally are the primary focus of IT. On the OT side of the business, in operations, production is king, period. You’re doing nothing but snatching victory from the jaws of defeat. Everything is about ‘we have to figure out a way to make this work.’ There’s no such thing as hitting the pause button and coming back six days later because the work order has to get done. I think everyone understands that. That doesn’t mean that you can’t build a team made out of people who have no OT experience. But you need to have people with OT experience on that team. And the people who don’t have the OT experience need to defer to the OT subject matter experts whenever there’s a conflict.
Daniel Langley: Now, that makes perfect sense. So, obviously, given that convergence between IT and OT, and that MES sits in the middle of that Venn diagram, what I’m finding specifically is that we have a far bigger talent pool of candidates who are coming from that IT side versus candidates who are working out from the shop floor OT side. I don’t know whether that’s because there’s a bigger investment in IT, or it’s seen as more 21st-century. I don’t know. But how do you think we start to bridge that gap and get a bigger flow of candidates coming from the shop floor, or wanting to work on that uncarpeted, concrete side of the business?
Walker Reynolds: Well, let’s say two things. So, number one, when I was younger, I was the first person in my family to go to college. I grew up really poor, but I was a smart kid. I was a really great student in high school, just one of those anomalies. I shouldn’t have been as smart as I was. When I graduated from college, I put myself through school, and when I got what was actually my second degree, I threw my own graduation party. My dad came to this celebration. This was before I got my job working in the mine. He put his hand on my shoulder and said, ‘I’m really proud of you. I can’t tell you how proud I am of you, but I want you to know your education starts today. Nothing you learned in school makes a bit of difference in the real world.’ Now, that was obviously hyperbole. I learned things in school that were valuable. But what my dad was trying to convey was that my first day of my real education was the first day of my first real job. He’s always emphasized to me that there’s no substitute for experience. I learned this accidentally, and I’m very grateful for it. One of the things I learned by starting at the bottom, in a labor position, shoveling belts by the way, meant I was at the absolute lowest rung. I was on the conveyor system, shoveling belts with another guy. I was the lowest paid guy in the mine, although I made good money. The reason I took that job was that I was getting ready to get married, I was going to buy a house, and I just needed a job. Having grown up poor and having worked on farms, I wasn’t afraid of hard work. I wasn’t afraid of labour even though I had a degree. Here’s what I learned. Even though I was more sophisticated because I was educated, meaning I read more books, spoke more articulately, and understood the value of soft skills. I had read Carnegie. I had read Jim Collins. What I learned was the people on the plant floor — they don’t read Collins. They don’t read Carnegie. But what they do is they mastered their craft. It seemed like every time I had a problem, I had to answer some question. Why is it we do it this way? Why is it we do it that way? If I asked a production manager or supervisor, they generally couldn’t give me the answer. But if I asked a production worker, they didn’t just tell me why it is we did it that way, they’d also tell me why it was wrong and how we should do it. And so, across my entire career, those first four stops where I worked in mining for five years, then I worked in the printing industry for two, the steel industry for three, and tier one automotive for two, early on I adopted a philosophy that the people who work on the plant floor are the smartest people in the organization. Therefore, they’re the ones I want to learn from. I believe if we teach that in schools. So, number 1, if we teach in school that the smartest people in a manufacturing operation are the ones who’ve been doing it for 25 or 30 years on the plant floor, they’re who you want to learn from, then more people will be drawn to those positions. Number two, education has to change. It is changing. We need to augment professional training with our core education in college. What I mean is this. There’s a university, Penn College, Penn Tech, outside of Pittsburgh. We work with Jeff Rankin, one of the professors there. I think he’s the department head in the robotics and automation group. We work with him and the dean of his school. They coordinate with us so that while their students get a university education in robotics and automation, but at the same time they also participate in our augmented education at IIoT.university. They are learning the application skills. So, education needs to change. Instead of getting your first exposure in your junior year co-op or your junior year internship, you should be getting that exposure from your freshman year day one in an augmented education. How does that work? Jeff Rankin in Penn College has his students sit through our live Q&A podcast every Tuesday afternoon at 12 o’clock central. His class, that class that’s in there, they actually watch our podcast. They see use cases. They’re seeing professional analysis of the actual work. That is augmenting the education they’re getting in the lab. And I think that’s going to happen more and more. That’s how education is going to transform. Someone had commented the other day you don’t learn how to develop SCADA systems in college. What you learn is the software development life cycle. You learn the software stack back-end API UI. You learn those tools. You get a little bit of introduction into matlab. You dabble. But you don’t learn how to build a system from scratch. You don’t learn how to convert control theory in an alarm matrix into ISA 101 visualizations. You learn that piece of it on the job. And what we need to do is give students a head start. We need to use the internet. We need to use social media to teach students these skills before they get their first job.
Daniel Langley: I can see that. That makes a lot of sense. Of course, and I can see that’s something that you’re passionate about. So, no, it’s really great. And if we can help share that message then we can start to develop that further. Now that makes a lot of sense. So which industries are you most experienced with, Walker? So you mentioned seeing you started in mining. And I know you’ve done a bit of oil and gas as well. What other industries have you spent your time in?”
Walker Reynolds: I would say the only industry that we avoid is semiconductor. Primarily because SECS/GEM is the standard and the protocol technology that’s sort of underlying all of semiconductor. And we generally just stay away from semiconductor for the most part. That doesn’t mean that we haven’t worked in semiconductor. And then the second industry that we try to avoid if we can is life sciences, pharmaceutical. We only work with life sciences company who really need our help. And here’s why. And you had touched on this — it’s a highly regulated environment. Regulation is not the problem. It’s the documentation. If you look at the, if you look at the turnover, engineers who go into life sciences, who go into biosciences, who go into pharma. It’s about 80% documentation. So, validation of data is really important. You do a lot in documentation, and that’s not for every engineer. Not every engineer wants to spend 80 percent of their time just documenting their work. And so, in this employment market, we really try to focus on keeping turnover low. That’s a philosophy in general for us, but now we have very low turnover. And part of that is we made a strategic decision not to work in the industries that engineers don’t want to work in. I would say where our bread and butter is just pure discrete manufacturing. So any type of midstream and supply chain. We’ve done a ton of work in oil and gas initially. That really funded all of our development. Oil and gas pays a huge premium when they have a lot of money because they want everything done two weeks ago. So, we used that money to basically fund our development in discrete manufacturing. We’re doing a lot in food and beverage right now. We’re doing a lot in tier one automotive. We’re doing printing, flexible packaging. I would say food and beverage, tier one automotive are probably the two biggest industries we’re in right now. We have two big projects with life sciences companies, pharmaceutical companies. But those, that’s on the R&D side, not on the commercial side. One of the strategies we’ve decided to do is focus on changing the way R&D handles the acquisition of data and its conversion into information. And then they can use that to drive the improvement on the commercial side of the business. So, for those of you that don’t know, life sciences, every pharmaceutical company has a research and development division that creates the new drugs. And not only do they create it there, but then they learn how to manufacture it at scale there in a lab. And then once they’ve decided this is how we’re going to manufacture at scale, then they send it to the commercial side of business who does manufacture it at scale. The research and development side is not nearly as regulated as the commercial side. The commercial side’s going to the customer, so therefore regulations kick in full-blown on the commercial side. So, now we’re really focused on transforming pharmaceutical companies on the R&D side. But again, that’s an edge case because not every pharmaceutical company … some of them buy the drugs. They buy the intellectual property and then manufacture it. So we’re doing a lot of contract manufacturing too as well.
Daniel Langley: The CDMO space is really booming for us as well in terms of recruitment on that side. Well, the reason I asked about the industries, Walker, was I was keen to understand if you’re finding that there are certain industries that are adopting these changes and are adopting this co-education style. Or are you finding some industries are laggards, for want of a better word? Are you finding a clear distinction between different sectors?
Walker Reynolds: So, I would say the organizations that are really investing in Industry 4.0 are those who are not focused on the quarterly earnings. So they’re playing the long game. So it’s companies that have transformative and disruptive leadership. So it’s companies who have technologists at the helm and not MBAs. So, the best CEO now, the best CEO now in manufacturing, is going to be either a mechanical or manufacturing engineer, a physicist who went back and got an MBA. That is your perfect CEO. If you come from the finance side, if you come — you could come from IT as long as you were transformative as a leader — that is, you look at IT as compliance and security and go, you know what, they really need to be a service organization. But the best CEOs now are the ones who are asking this question: who is our employee of the future? The companies who are led by those CEOs, they’re all digitally transforming. And here’s why: most young people, and you already experienced this, Gen Zers and millennials don’t want to work in a traditional manufacturing environment. Why? Is it because manufacturing sucks? No, manufacturing is awesome. Building stuff is awesome. It’s because they feel like when they walk into a manufacturing facility, the typical manufacturing facility, they’ve gone backwards 50 years. You got to remember, Gen Z’s and millennials were born with a smartphone in their lap. The smartphone came out in 2008, and today, in 2022, every human being who has a smartphone is an android. We are connected to all of human knowledge 24 hours a day, seven days a week. The employee of the future, the Gen Zer and the millennial, is a technologist who is accustomed to solving their own problems without talking to other people. So, if you’re an organization who puts your internet on lockdown, if you’re an organization whose IT department thinks that people who work on the plant floor can’t be trusted to plug in a USB thumb drive, therefore, we have to lock everything down. If you’re an organization who blocks Slack, or Teams, or Facebook Messenger, if you’re doing those things, you will not be able to hire Gen Z’s or millennials. Because they walk into these facilities and go, ‘Ok Boomer, what is going on here?’ You need to be focused. The best organizations are the organizations who have CEOs who are focused on creating the environment that the employee of the future wants to work in. So, what is that environment? They want to be able to work remote. They want to always be at work and always be at home. They’re accustomed to that. They’re accustomed to being everywhere all the time. So, the idea that you are going to be plugged into work only eight to four, Monday through Friday, or only second shift Monday through Friday, it’s absurd. That concept is absurd. So, the best organizations right now are the organizations who have transformative leadership. And that’s across many different sectors. Now, where does transformative leadership come from? Well, I think in publicly traded companies, it’s when the board of directors sees the train coming down the tracks and they say, ‘We got to make a change. We’re in trouble.’ I mean, look at Ford. Look at Toyota. Look at General Motors. Those are companies that are walking dead. I mean, General Motors has zero chance. Let me say this, General Motors has zero chance of surviving the fourth industrial revolution as a car manufacturer. Why? Because Mary Barra is not a transformative leader. She does not get it, and therefore, by extension, General Motors’ board of directors does not get it. But when you walk into the room, walk into the C-suite, and you talk to a transformative leader, you know this leader gets it. It’s all about enablement. It’s all about creating the environment, the infrastructure, and the digital strategy that you turn over to the rank and file and say, ‘Start solving our problems by starting to solve your problems.’ Those are the companies that get it.
Daniel Langley: That makes a lot of sense. So, that makes so much sense. And again, I think it’s the way you break things down, Walker, to really have that easy-to-absorb message. But, as part of your qualification, and when looking to new manufacturers to bring out clients, is that really an area that you focus on, the leadership of the business? What kind of leadership is in place? Is that something that you look at? Because, for me, that’s not something I would have considered. Really, is that leadership ready? Is it transformative? Is it enabling? But is that really where your qualification starts with that company?
Walker Reynolds: It starts with … the answer is yes. That’s one-fifth of where it starts. So, we have a process called the Digital Transformation Maturity Assessment. When we engage with a client, when we engage with a manufacturer, we ask really two questions. Number one, does that company have a digital strategy? That is, can they tell you their digital strategy in three sentences or less? Can the executive leadership tell you, ‘This is how, by us becoming a digital company, we are going to provide value to our shareholders or to our ownership?’ Most companies, most legacy companies don’t have it. If you go to Tesla, they got it. You go to Amazon, they got it. So, we start with, do they have a digital strategy? If they have a digital strategy, then we ask, do they have an open architecture? That is, an architecture based on common technology, edge-driven, report by exception, lightweight, open architecture technology. If those two answers are no, then we have to start with the Digital Transformation Maturity Assessment. That’s the educational phase. There are 10 pillars that they get scored on. So, what we do is, we go in, we generally spend between a week and three weeks with that client, and we’re going to score them against all other manufacturers across 10 pillars in our data set. And I think we have 1,300 manufacturers in our data set that have been scored across these 10 pillars. And they know where they are on a bell curve. They know where they are now relative to other manufacturers in the sample set. 1,300 is a huge number. So, what are the five groups that we talk to? We talk to executive leadership, we talk to operations, we talk to IT, we talk to quality, and we talk to engineering maintenance. Then, we do breakout sessions. When we are in the executive leadership meeting, what we’re trying to ascertain is just three things. Number one: do they know that the smartest people in their organization work on the plant floor, yes or no? If the answer is yes, we keep going.
Daniel Langley: How do you phrase that question, let me ask you?
Walker Reynolds: I ask them directly. So, most of the time, clients are now, we have many people in our organization who do the DTMAs. They’re the architects who lead them, but me personally, what I tell everyone else when they’re doing a DTMA is, ‘Don’t do the DTMA the way I do it.’ They’ll sit in and watch how I do it, but I say, ‘Do it the way you would do it.’ The way I would do it is just to ask the executives bluntly. I’m a very wealthy person. They probably make 25 million a year. I’m worth way more than them, so I’m not intimidated by them. That’s probably part of it, but also, I’ve learned that executive leaders, they want to cut through the BS. They want execution. So, let’s get down to brass tacks. So, the first question I ask them is, ‘Do you believe you guys are the smartest people in the organization or is it the people who do the actual work on the plant floor?’ And obviously, they say it’s the people on the plant floor, and they generally mean it. So, number two, we ask them about digital strategy. So, I’ll say, ‘What is your digital strategy?’ Most of the time, you might get somebody who pulls out a PowerPoint slide. It’s got four pages, and this is our… I’ll say, ‘That’s not a strategy. A strategy is a sentence. It’s a sentence that everyone in your organization can recite, three sentences.’ And here’s why that matters: Digital transformation, that journey between an Industry 3.0 company and an Industry 4.0 company, happens in two giant steps for organizations. The first step takes three to five years, and that’s just becoming a smart digital company. That is the process of connecting to smart stuff, collecting storing data, analyzing, visualizing, finding patterns in that data, predicting, reporting, and solving problems. That journey across a huge organization could take three to five years, that first huge step. The second big step is plugging into a digital supply chain. Every manufacturer is used to talking to only the links in the supply chain directly upstream and only the links directly downstream. A digital supply chain is a hub and spoke, where all links in the supply chain talk to one another through common technology. So, I can collect data not just from my direct customer but from my customers’ customers. Digital smart companies make products that get better after customers buy them. They become data companies. So, we say to them, we ask them about their digital strategy: ‘What is the digital strategy to do your first two steps?’ And they realize at that point, ‘Wow, we’re probably in trouble.’ And then, number three, we ask them, ‘Describe the employee of the future to us.’ And from that moment coming out of the executive leadership, what invariably happens is there’s one or two members in the executive leadership who say, ‘I’ve been wanting to do this for five years. We need your help.’ And they’ll say, ‘What are the strategies to get us there?’ And the reality is that you start solving problems on the plant floor and work your way up. Start solving the problems you’re aware of and understand that digital transformation is about exponentially increasing the collective knowledge of your organization. So, your whole business gets smarter. The problem I want to solve is a function of what I know. The problems we want to solve as an organization is a function of what we know as an organization. If digital transformation is about exponentially increasing the collective knowledge of an organization, then it naturally follows that what you want to fix is going to also exponentially increase. And this is where most companies get in trouble. This is scale. This is why picking the technology, having the strategy, and using the partners is so important. Because anybody can build a proof of concept that provides value, but very few strategies, technologies, and partners have the ability to take that value created in the proof of concept and scale it, within the paradigm of understanding that as I get smarter, I’m going to want to change things at the speed of light.
Daniel Langley: Now that makes it so, I’m curious on this one. So, when you go in and you do the digital strategy, how many companies, do you, is there a percentile that you would say, 50%, 80%, 100% of companies have that digital strategy nailed and can really recite those three sentences? Or are you finding less and less companies actually can do that?
Walker Reynolds: Ten percent. One in ten, I would say one in ten have the actual digital strategy. So, we have a program called Mastermind on iot.university. So, two of our key programs are Mentorship, which is where we train engineers and software developers on how to support these initiatives. So, it’s all the technical training. And then Mastermind is teaching the leaders how to lead these initiatives. Part of that Mastermind program is we teach you the workflow. So, what are the prerequisites before you take the next step? It’s an iterative process. Digital transformation happens iteratively. I solve a problem, and I solve another problem, then I solve another problem. But I do that in a way where the problem I’m building now is going to be the shoulders upon which the thing I solve tomorrow is going to stand on. One of the big differences, you asked about engineers or when you’re hiring talent, what’s the difference between Industry 3.0 and 4.0? Industry 3.0 professionals do not consider how is my data going to be consumed. It doesn’t consider, if I’m a machine builder, I never ask the question from within the Industry 3.0 perspective, how does this fit into the much larger digital architecture of this company? The Industry 4.0 professional asks that question because I’m going to generate data and consume information from an infrastructure to make this business smarter in Industry 4.0. So, in Mastermind, there is a workflow. We teach the iterative process. We teach leaders all how to check these boxes off. So, to make sure that you, we call it not painting yourself into a corner. Don’t create technical debt. Stay in the center of the room. Make sure you build a team. In the beginning, your team is made up of only true believers. No KSM, no citizens against virtually everything. You win over the cavemen by solving their problems, but you solve the initial problems with a team of true believers.
Daniel Langley: So, that’s really interesting again. So we’re coming towards the end of the recording now. Walker, those curious to understand, you’ve obviously got the augmented education piece which you’re doing with the university, and then obviously it sounds like you’re educating manufacturers as well. But what’s the future for you then? Do you see yourself progressing more down the educational road and helping the next generation, millennial generation, get further up? Or where, let me start again, what’s the five-year plan for you?
Walker Reynolds: Yes, so from a technical perspective, I also have a data science firm. And now what we’re doing is we are converting data into pattern matching and predicting how to create value for clients. So right now, a huge focus for us now is machine learning and artificial intelligence. You remember, the manufacturer has got to go through two huge steps. And that first step, becoming a smart digital company, can take three to five years. But once you get through that, once you’re mature — 80% through that first three to five years, you can start converting, looking for patterns in data, and you can predict future outcomes. More importantly, if I can predict failure and I can monitor success, then I can use deep learning and neural networks to suggest optimal operational adjustments that mitigate the possible failures. So not just flagging and saying, ‘We may predict that we’re going to fall short on the shipping date,’ or we may predict, ‘hey, it’s wrong for us to do product ACB, we should do product ABC in order. Instead of A change over to C, change over to B, we should go A, change over to B, change over to C.’ That’s optimal. It’s one thing to predict that that’s not optimal. It’s another thing to recommend what is optimal. And that’s the part that we’re focused on. That’s the piece we’re focused on here over the next five years. And then the last thing is, there’s a third prong to my vision. Our mission is to help save and create middle-class jobs in the United States. I have many companies, but Intellic Integration and 4.0 Solutions achieve that mission. Number one, Intellic Integration helps the manufacturer as a systems integrator. 4.0 Solutions does it by helping train the engineers and the professionals who help the manufacturer. And then we also have a foundation in my mom’s name, the Bonnie Mae Austin Foundation. We raise money to put kids who are the victims of domestic violence in school. That is, if I lose a parent to domestic violence, I generally lose both parents, one dead and one goes to prison. So we have a foundation where we sponsor kids. We raise money and sponsor kids to send them to school. And our goal, our big mission here, is we have our first couple of scholarship students. Five years from now, I want to hire one of those kids out of college and have them join this journey with us. So it’s two pieces. It’s the data science component, but then it’s also the changing the world component, which is my focus over the next five years.
Daniel Langley: Wow, really impressive. And I thoroughly enjoyed the conversation, Walker. Obviously, hearing how busy you are, how much you’ve got going on, and how many plates you’re spinning, I’m even more grateful for you spending an hour with me. So thanks so much for joining us. It’s been educational. I’m sure the listenership has gotten great value as well. So thanks for your time.
Walker Reynolds: Appreciate you, Daniel. Thank you.
