Stymie Risk and Stimulate Innovation in Business With Operational Efficiencies

• Many architecture, engineering, construction, and manufacturing companies function defensively when it comes to operational resources, only deploying them as problems arise. 
• Being proactive and agile can help leaders prepare for future shocks, even if they can’t always foresee them. 
• To achieve operational efficiency and turn it into operational innovation, business leaders must build strong bridges between their IT organizations and their operations teams. 

There’s no such thing as a crystal ball for business leaders. Whether they sit in top-floor offices or on shop floors, they can see into every corner of their far-flung enterprises but can’t see far forward in time. No matter how much money and effort they invest into forecasting, the fact remains: The future is unknowable. 

This inability to predict the future has convinced many organizations that their resources are better spent playing defense than offense. According to market intelligence firm IDC’s 2021 Future of Connectedness survey, one in two organizations has a reactive approach to operations, meaning they can shift operational resources and processes only when a problem arises. 

Just because you can’t predict the future, however, doesn’t mean you shouldn’t prepare for it. 

That’s especially true in the architecture, engineering, and construction (AEC) sector, according to Nick Otto, chief information officer of planning and design consultancy Kimley-Horn. “Our No. 1 mission is ensuring that we can deliver for our clients,” Otto says. “In the building projects that we support, so much tees off of the initial design and planning work that we do. So meeting deadlines is paramount. And to do that, we have to stay ahead of the curve.” 

This is equally important in the manufacturing sector, suggests Tim Shinbara, chief technology officer of the Association for Manufacturing Technology (AMT). During the COVID-19 pandemic, he says, manufacturers learned firsthand how quickly demand signals can change—and how consequential it can be when manufacturers aren’t prepared. 

“The supply-chain problems that took place during the pandemic made a lot of folks in the C-suite question how they operate in the face of disruption,” Shinbara says of manufacturing firms. “And what they realized was: The fundamental problem is supply-chain visibility.” 

Although their industries have unique challenges, being proactive and agile can help leaders in AEC and manufacturing prepare for future shocks, even if they can’t always foresee them. The key is having technology that can make the business operate more smoothly, as well as strong relationships with IT professionals who can help business leaders discover, develop, and deploy it. 

Achieving Operational Efficiency 

Digital transformation is the term du jour. Beneath the buzz, technology offers real, tangible benefits, according to Otto, who says business leaders who fixate on shiny new technology often miss its primary use case: operational and business efficiencies. 

“Operational efficiency is about being very, very good at delivering on the fundamentals of your business,” Otto says. “For me, that means providing predictable, secure, and reliable services. Are our systems doing what they’re supposed to do? Are they up and running? And are they meeting the needs of the business? Everything else is just fluff.” 

The desire for those predictable, secure, and reliable services is why many organizations remain stubbornly faithful to legacy systems. But in reality, in areas of your business where new technology can increase speed, accuracy, and affordability, it actually makes services more dependable. 

At Kimley-Horn, Otto is promoting digital workflows that save time and increase collaboration. “I’m getting people away from plotting and redlining and doing plan reviews on paper in conference rooms where everyone takes their own notes,” he says. “Instead, we’re moving toward digital plan reviews so that everyone can work together in a consistent way and with a shared operating picture.” 

Automation also is a priority at Kimley-Horn. “My mantra is: Automate everything you can,” says Otto, who has spent several years creating automated workflows for his business customers. “For example, we have automated our process around certificates of insurance for subcontractors, which are an important requirement in the AEC industry. Subcontractors log in to a portal where they upload their documents, and those get pushed through an automated workflow for verification. We want to automate laborious and frustrating things with a lot of steps and which don’t really benefit from a human touch.” 

Digitalization and automation also create operational efficiencies in manufacturing, according to Shinbara. Unfortunately, manufacturers often are saddled with expensive legacy equipment that was not built to integrate with new technology. To help bridge the gap between the equipment they have and the capabilities they want, interoperable connectivity is paramount. In 2007, AMT and industry partners drafted the initial specification of a common language for manufacturing machinery. Then, AMT established the MTConnect Institute to further develop the MTConnect Standard: a set of open, royalty-free standards that have facilitated greater interoperability among manufacturing controls, devices, and software applications for more than a decade. 

“Whether you’re interested in machine tools, robotics, automation, discrete manufacturing technology—whatever it is—you can either download and implement the standard or contact the MTConnect Institute or AMT directly with a business problem,” Shinbara says. “We’ll walk you through it to see how standards can help enable a solution.” 

The benefits of interoperability—for example, between legacy machines and advanced sensors that can be attached to them—are evident in the promise of digital twins. IDC reports that by 2023, 30% of manufacturers will combine their shop floor digital twins with real-time signal transponder data, resulting in an 80% reduction in production throughput time. 

Turning Efficiency Into Innovation 

A surprising benefit of operational efficiency is operational innovation, according to Autodesk Chief Information Officer Prakash Kota. “If you can’t keep your business and operations running smoothly, you can’t have discussions about what new capabilities or values to enact,” he says.  

In that spirit, leaders from various support functions at Kimley-Horn (such as IT, human resources, legal, and finance) convene periodically to pursue collaborative and collective continuous improvement. 

“We sit down regularly to look at what’s working, what’s not working, and how we as support functions can continue to improve the way we support the firm,” Otto says. He mines those meetings for innovation opportunities with the help of his Engineering Applications group, an IT team including CAD managers and engineers. “That group partners with our practice and production folks to figure out new opportunity areas and to assess where new software and solutions might be needed to help our production managers work faster, more efficiently, and with improved quality,” he says. 

In manufacturing, the product of innovation isn’t just efficiency—it’s also evolution, according to Shinbara. He says a major priority for manufacturers is discovering new materials and production processes that will improve their products and productivity. 

“One of the biggest hindrances in manufacturing is empiricism: You have to physically make things and touch them either with human hands or machinery in order to buy off on them,” says Shinbara, who adds that technology can accelerate discovery by digitalizing manual methodologies. “One of the biggest opportunities for innovation is within the design of experiments, which help you determine with reasonable certainty that a given material with a given process will give you certain properties.” 

Achieving a sufficient level of certainty through traditional means is typically cost- and time-prohibitive. With technology, like simulation via digital twins, the return on investment becomes exceptionally greater. 

“If we could just design experiments better, we could more easily determine what we want to make, how we want to make it, and what materials to make it with,” Shinbara says. “And we could be relatively assured that it’s actually going to work and reduce unnecessary experiments.”  

Squashing Silos  

To achieve operational efficiency and turn it into operational innovation, business leaders must build strong bridges between their IT organizations and their operations teams, according to Otto, whose Engineering Applications group is the picture of interdepartmental collaboration. Its secret, he says, is Kimley-Horn’s flat organizational structure. 

“We have a one-firm, one-team kind of mentality,” Otto says. “We operate as one team and are really averse to any kind of divisional silos. When there are problems in the business, everyone comes to the table to help solve them. That’s our culture.” 

Collaboration is so important to Kimley-Horn’s culture that Otto deliberately keeps humans in the loop for certain tasks that might otherwise be automated. For example, he considered implementing a chatbot for his IT help desk but decided against it. 

“We made a strategic decision: If a Kimley-Horn employee needs help, we want them talking to a Kimley-Horn IT person,” Otto says. “We decided it was more important for Kimley-Horn employees to maintain a personal connection with IT support staff than it was for us to realize any efficiencies we might gain from using a chatbot.” 

A closer union between IT and operations is also forming in manufacturing, according to Shinbara, who says talent shortages have necessitated developing functional training and credentialing that makes it easier for employees in information and operational technology to share responsibilities and move between roles. “What used to be two disparate communities eventually may become a more singular pipeline,” he says. “We often talk about IT/OT. The slash between them is starting to go away.” 

Having more IT professionals embedded in the business won’t just solve talent problems. Ultimately, it could generate growth. 

“Again, it’s all about efficiency and effectiveness,” Otto says. “When IT and operations work together, it makes us more efficient. The more efficient we are, the less we’re fighting fires. And when we don’t have to spend as much time fighting fires, we can spend more time thinking proactively about how we can improve and what we need to do next.”