Episode 4: Digital Transformation – The Fourth Industrial Revolution with Ann Jordan of ASQ
In our fourth episode, Ann Jordan, CEO of ASQ, joins Natasha Allen for a discussion on digital transformation and the so-called Fourth Industrial Revolution: Which industries are adapting the quickest? How can it be measured? What barriers are regions around the world encountering? And where does setting quality standards fit in?
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The below episode transcript has been edited for clarity.
Natasha Allen
Hi everyone and welcome. My name is Natasha Allen and I am a partner in Foley’s Silicon Valley offices and the co-chair for artificial intelligence (AI) s within our innovative technology sector. Joining me for today’s podcast episode is Ann Jordan, where we will be discussing technology trends and digital transformation.
Ann Jordan
Good Morning, Natasha.
Natasha Allen
So, just to give you a little bit of back ground, Ann is the CEO of ASQ and we’ll learn a more about what ASQ does and what it stands for shortly. Prior to joining ASQ, Ann held leadership roles and global responsibilities in a variety of industry areas committed to quality systems and improvements. The areas that she worked in include original equipment manufacturers, maintenance repair, and operations as well as insurance risk management solutions. So, welcome again Ann, thank you for joining us and as I alluded to before can you please explain what ASQ and ASQE is?
Ann Jordan
So fundamentally, ASQ and ASQE are both about quality and organizational excellence. I’ll start with a little terminology so we are all on the same page. When we talk about quality, what exactly does that mean? For everyone that’s technical, they’ll come to the conclusion that it typically implies that a product or service is satisfying implied or stated needs, and or that it’s free from any type of deficiencies – is a product or service doing what is supposed to do? Closely aligned with that is the term organizational excellence, and that is whether or not an organization is showing consistent superior performance. Is it exceeding its objectives or meeting expatiations? So, when you think about ASQ and the sister organization ASQE, quality and organizational excellence are really their core. And to be clear, ASQ, which previously is known as the American Society for Quality, is now just condensed to that acronym at ASQ. It’s the leading global membership association to help quality professionals achieve their career goals and drive excellence in organizations and industry.
We have a global memberships spanning 130 countries and we’re in areas like knowledge networks, publications, even standards administrations. Some of you might be familiar with ISO 9001 Quality Management Systems or ISO 1401 Environmental Systems for Net Zero Missions. That’s the stuff of ASQ. Now in 2020 ASQ went through a business model transformation, which I know a lot of organizations are doing now, that changed our operations and value proposition. That led to the creation of ASQE, which is a complimentary (but separate) trade association whose mission is to set the standards for quality driven offerings and insights worldwide for organizations achieving excellence. So you have ASQ looking at individuals, looking at education, looking at standards, looking at top leadership. ASQE is looking at the organizational whole and we come together in an integrated system to promote our mission. So it’s a very unique, very compelling mission statement for the organizations that really looks at improvement. I say I have the best job in the world because every day I get to come to work and say how can I help individuals and organizations advance. And so hopefully that’s what we are going to talk about today.
Natasha Allen
Absolutely. So in terms of your membership, it sounds like a huge number of individuals or organizations that are associated with ASQ. Are there a certain category of individuals who sign up as members? Is it just across the board or a variety of organizations? Are you seeing any patterns in terms of who is associated with ASQ and ASQE?
Ann Jordan
That’s a fantastic question and in fact determining segmentation in quality is something that we are looking at very closely. Now historically I would say going back to the 80’s and 90’s you would have to find professionals that had quality professionals in their title. But now we have seen a transformation of professionals that apply quality practices. That migration has shifted it across all industries and quite frankly into all business operations. So you could see people that are in finance wanting to apply quality, you could see individuals who are in software development that want to apply quality, and so we’ve become a practice and professional organization.
Natasha Allen
That’s amazing. And then there’s an integrated model called insights on excellence (IOE), can you explain a little bit about the methodology of IOE and the IOE tool?
Ann Jordan
If you think about any good business, it is grounded in data right? But what does that data mean? How is it measured? So IOE is the benchmarking tool and survey mechanism that allows ASQE to go out to organizations worldwide across industries and gather critical data in different operational components that lead to organizational excellence.
IOE is based loosely on Baldrige model, which some people might feel familiar with, but I call it Baldrige plus because it’s more agile. It looks to current trends. Relevant to today’s discussion, one of those areas is barriers and disruptors – how do organizations measure up to one another, what are they focusing on for improvement. IOE was created in partnership between our organizations and Forbes, and so it has been strenuously benchmarked with a lot of subject matter expertise to determine which categories really allow for excellence. And then within that, how do we create a maturity model that allows organizations to see where they are on a scale of one through four, not only within themselves but among their competitors in other industries. And so those four levels that we talked about in terms of maturity, they go from reactive, which really is your base, all the way to predictive where you have that resiliency, you have that antifragility, so you can predict was is coming and adjust more and more.
Just to kind of give you a little taste of what am I talking about: All the data from these organizations shows no surprise, supplier needs and information technology. And I know we will dig into that but all this information becomes valuable to identify those gaps to understand where you need to upscale and improve.
Natasha Allen
Absolutely. So I know ASQ has defined the forth industrial revolution as a result of technology advances of the past decade, and how has this forth revolution driven growth and disruptive technologies?
Ann Jordan
I’ll start by saying that when you mention digital transformation or industry 4.0, whatever term you want to you use to describe it, people jump to the technology itself. And one thing that I’ll challenge when we have this discussion – there’s technology but then there’s how it’s brought into an organization, how it’s integrated, how are people trained, is it providing what customers want, and it goes back to that whole systems approach. For industry 4.0 it looks at these advanced digital technologies with excellence to determine substantial performance and really effectiveness improvements. The tools that ASQ and quality professionals really look at to recognize the digital transformation, whether it be artificial intelligence, big data, deep learning, enabling technologies, machine learning, data science, etc., that’s how we define that bucket, but then how is it applied and executed is that next level in integrative people process and the technology underneath it.
Natasha Allen
How does IOE recognize progress in digital transformation?
Ann Jordan
I have to preface it by saying when ASQ and ASQE started this journey of developing IOE it was in 2017 and then Forbes was brought in to play. It adds a whole category called barriers and disruptors. Which obviously in industry 4.0 that biggest barrier disruptor is going to relate to these technology and advancements and how they are applied. So there is an entire category of it that has really great data that we can dig into. Again, relying on that original Baldrige framework on top of the barriers and disruptors category, you’re going to have leadership workforce strategy, voicing the customer operations at technology. Well digital transformation impacts all of those areas, so you start to see trends that come together within these different components that’s really compelling and tells a story. Now, on that category of barriers and disruptors, when you look at some of the data that we do slice under IOE, it’s very interesting when you talk maturity matrix and where people are on that one through four scale. For barriers and disruptors the overwhelming majority of the respondents, and I am saying almost 98%, are only in level one or level two, reactive or proactive. So the ability of the organizations to come out of the pandemic, embrace industry 4.0 at its full capacity, and become resilient/agile, whatever term you’re using, is pretty low right now and we have a lot of work to do.
Natasha Allen
That’s really interesting, you wouldn’t have thought that but I guess we just came out of a pandemic and people are probably still trying to catch their breath. What industries do you think are winning this race? If any?
Ann Jordan
Yeah, I hate to use winning because that implies losers and everyone is on their own journey – that’s the other great thing about IOE. No matter where you are on your journey to digital transformation it really is about your ability to improve. But to your point there are certain industries that are embracing and getting ahead particularly in digital transformation during the last couple years. The banking, finance, and insurance industries really have taken off and data is showing that they are leading the way.
Now the other industries that had a large number of respondents were automotive, airlines and hospitality, technology, industrial goods, energy, consumer goods, health care services, and government. So we pretty much run the whole gamut in terms of looking at industry. I also should state that the majority of respondents are at very large corporations, we’re talking over $500 million plus in revenues and/or 5000 plus employees. Most of the respondents, I think about 51%, were C Suite so this data is actually pretty reliable in terms of looking in the widest scope possible. But the number one takeaway is that the banking, insurance, and finance industries are really leading the way.
The other area showing a lot of improvement was airlines and hospitality. When you dig into what’s going on with that leading group there are some clear trends in terms of where they are improving and what they are doing to get there. It is pretty compelling.
Natasha Allen
And so what are some of those things that they are doing in order to get them to the forefront?
Ann Jordan
When you look at that these industries compared to all of the others, some of the big trends that pop out was that they’re the least challenged by online digital and security vulnerabilities. That area really showed improvement and they don’t see the vulnerabilities compared to a lot of the other industries. They also have the strongest data measurements to identify customer needs and using data analytics. So their adoption rate really skyrocketed over the last two years. They also identified that data analytics and digital literacy were one of the lowest skills that needed improvement within the workforce, compared to the other areas, and so they really must have invested in upskilling and getting ahead.
Some other interesting things that we saw within this same industry bucket: when it comes to workforce readiness and adoption, there is overwhelming data showing that they believe they had the right leadership in place to manage digital transformation. So the support was starting at the top. They had high ratings on understanding how digitalization would change quality related skills and how to establish strategy to attract digital transformation talent. One of the other top things that popped out in this area about the world of technology is that they felt their organizations had up-to-date knowledge of digital transformation. They felt that they had successfully implemented it. They did substantial investment in resources for it, and they actually were seeing that it positively impacted their operations. So pretty compelling across the board in all the different areas.
We talked about winners but I can say a little bit about those that maybe didn’t advance too, which was surprising. One of the areas that really had a hard time was in the consumer goods. They saw a lot of challenges that needed to be resolved for quality issues, delays from suppliers, and then they were lagging behind in the area related to information technology shortfalls. And so in terms of that digital transformation obstacle and figuring out how to integrate it, consumer goods really struggled to maintain competitiveness.
Natasha Allen
Interesting. And then obviously while doing this work you’ve had an opportunity to talk with a variety of leaders at large organizations, are there any things that you would advise organizations that are trying to pursue a digital transformation or trying to be more technologically advanced to do to move the needle?
Ann Jordan
One of the great things about this interconnected model between ASQ and ASQE is that ASQ has a very robust community of technical experts so all this great data that’s coming out of IOE, we’re able to bring over to these communities. And those technical communities represent all industries so it’s fantastic. We love to get their insight and they love it because they can take that knowledge back to their employer and say here are the trends we’re seeing. So to that point when the IOE data dump comes out every year, it is in fact given to the subject matter experts to identify what are these key takeaways. And in this situation, what really are the things that organizations should pursue with the still uncertain future in digital transformation, and I got a couple for you that I think can help.
One of the big ones is to make the crucial connection between technology and the greater quality process. So the data is showing that technology in it of itself is not the cure all for those problems that organizations are facing, and in fact if you’re not integrating it in the right way or have an underlying system, you’re going to have subsequent issues. Training, upscaling, staffing, integration with consumer voice of customer data. So to fully realize the potential and to advance in industry 4.0, that technology has to be aligned with the outcomes of the strategic initiatives and prioritized and integrated. That is one of the key takeaways that we’re seeing.
Another key takeaway is when organizations are pursuing digital transformation it needs to be targeted and they needed to do it yesterday. We can’t emphasize how much the minute you think you’re on track, you’re actually already behind because of the pace things are going. So companies that grasp the “where are we really implementing it into this system” early had a much different experience during the pandemic, and their customers reacted in different ways – to either embrace them if they did it, or really reject them.
One of the other things that was tracked in different areas was looking at the direct communication that customers now have with the organization. Think about social media with all these different platforms. How is that being used? Because you suddenly could have a massive disconnect with your customers that didn’t exist two years ago, because they have changed the way they expect to interact and the need and speed for that transformation. And so looking at the forward thinking roadmap for digital transformation and strategy, it has to be ahead of the game. One of those things that was tracked by IOE looked at “do we have a digital transformation roadmap?” I’ll get into some of that a little bit later, but there were big difference within industries and then globally within countries based on whether or not they proactively had planned for things.
The last one I’ll say is investment in customer focused technologies. Investments in better technologies, like consumer relation management or marketing automation tools, allow companies to have that measurable relationship. They’re better at adapting to the rapid change in market conditions because that feedback is already there, right? They just have to be able to collect it. So organizations are a placing their customers first and their industries are seeing competitive advantages.
Natasha Allen
Oh, absolutely. To the flip-side of that, what are some of the challenges to adopting innovating technology in organizations?
Ann Jordan
Again, when we look at the barriers and disruptors within that area, there are some really key trends that I want to call out. So the first one, we talked about workforce and upscaling. And I want to note that when organizations needed to identify the biggest challenges they have in adapting quality programs to meet the needs of the workforce, the number one challenge was properly using technology, right? And that was the same in 2020.
Organizations were also asked which barriers or factors were blocking implementation of digital transformation or industry 4.0 globally. Now before we slice this by region, globally the number one leading response was a weak digital strategy. So not the technology itself but the strategy and implementation. Second to that was the cultural resistance to adopting the new technology. And then third goes back to the workforce shortage of digital skills. And that’s just within that bucket globally for these barriers and disruptors. Now if you look at a slightly different question with respect to technology, you start to see a little bit of difference but that goes to more of the actual needs and implementation. But going back to those barriers the other thing that I’ll state is that it’s not the same throughout the globe. And so if you want a quick peek, where do the different regions of the world fall? I can share some of that information.
Natasha Allen
Oh absolutely. I think it would be interesting to take a world view. Where did some of the other countries fit in terms of being on the forefront of technology and advancements in those areas?
Ann Jordan
Yeah, there are differences. It was very unique to understand this, and of course we don’t know why and that’s why we as an organization love bringing together a subject matter experts to say, hey, can you tell us why just within the automotive industry you see distinctions between Germany and the United States and Mexico. Why is that? That is a lot of what our organization strives to do for that mission impact.
But when we look at barriers to implementation and digital transformation and ask different regions of the world to state what it is – Asia specifically is number one in terms of progressing in organizational excellence and digital transformation over other regions. They were the clear leader through all this data. When you look at what they identified as their barriers, they too were different, probably because of that maturity level. Specific just to Asia the number one concern was cybersecurity.
Natasha Allen
Interesting, okay.
Ann Jordan
Right, and shortly behind was a shortage of digital skills and weak digital strategy. Now, Asia was the only region of the world that identified cybersecurity as its leading barrier for digital transformation. Jumping over the pond to Europe, the leading barrier that came out of the organizations there was the cultural resistance to adopting technology, followed by weak digital strategy. So if you just compare Europe and Asia with that little data, you see differences in progression because Asia doesn’t have the hang-up from a cultural standpoint of embracing technology. They’re already there, they’re looking at application. Europe has seen this resistance and weak digital strategy.
Now, North America and the United States have different results still. When the North American organizations responded to this, they identified their number one problem is outdated infrastructure. And so they obviously weren’t seeing that same level of investment as other parts of the world. Then we had kind of a catch-all for largely developing countries that were bucketed together. They, as you can image from a maturity standpoint, have some different needs and so the top two were resistance to adoption and lack of funding, which is what you would expect to see in that area.
The top five challenges outside of barrier disruptors also very much aligned with some of this thinking, so as we stated like in Europe, it was that cultural element of embracing it. And if you look to the overall top five challenges in Europe of that complete excellency model, the number one challenge was quality itself. Like, are we producing the right products? Are we embracing organizational excellence? Quality is a culturally sensitive issue. So getting alignment within the organization was leading. There is some of that unique data. You look at how industry is progressing, or you look at where multi-national companies right now might consider growth, offshoring and onshoring, with everything that’s going on geopolitically and otherwise. Some of this data becomes interesting from a maturity standpoint.
Natasha Allen
Absolutely. And you touched on it too. If you’re a global organization, what you may need in North America is completely different from what you would need in Asia, right?
Ann Jordan
Completely different. And kind of to the point of when we talked about those challenges, even here in the United States, when you get outside of those barriers and disruptors again and say what are the biggest challenges the organization has in adapting quality and organizational needs of the workforce. North America, uniquely to what we just covered, is properly using technology. It just shows that different parts of the world are at different places, and one of the things that I love about the IOE tool is no matter where these organizations are, it gives them a roadmap to improve that aligns with that educational component, community, and networking that could be valuable to them.
Natasha Allen
That is amazing. Well, thank you so much for joining us. This was super informative and I had a chance to go through the phenomenal reports and information that is being generated. And like you said you can pull a lot of insights and get a lot of information from the hard work of your organization. So again, thank you so much for taking the time to talk with me and everyone. Until next time.
Foley & Lardner’s Innovative Technology Insights podcast focuses on the wide-ranging innovations shaping today’s business, regulatory, and scientific landscape. With guest speakers who work in a diverse set of fields, from artificial intelligence to genomics, our discussions examine not only on the legal implications of these changes but also on the impact they will have on our daily lives.
