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Digital Transformation: Dow Breaks Down Cultural and Organizational Barriers

March 27, 2020
Dow’s digital strategy is to move from simply being a chemical company that “does digital” to become a digital developer of new materials.

Despite some initial false starts and questionable implementations, digital transformation is now beginning to deliver tangible business benefits in plants and factories around the world, according to what we learned at the annual ARC Industry Forum in February -- Driving Digital Transformation in Industry and Cities.

The keynote address brought together information technology (IT), operational technology (OT) and engineering technology (ET) via Peter Holicki, senior vice president, operations, manufacturing & engineering, and EHS at Dow; and Melanie Kalmar, Dow’s corporate vice president, chief information officer, and chief digital officer.

Dow Breaks Down Traditional Organizational Silos

The ensuing, often entertaining, back-and-forth talk provided us with first-hand insights into the traditional disconnects, differing priorities and cultural divides between OT/ET and IT organizations, respectively, and how Dow overcame these to enable the company to move forward on its digital transformation journey. As we learned, when both Holicki and Kalmar started out at Dow, operations had no link to or understanding of the IT group, and operations was a largely unknown entity to IT. This helps illustrate the cultural barriers and functional disconnects between different groups that’s still prevalent across much of industry and infrastructure.

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As we learned, Dow’s digital strategy is to move from simply being a chemical company that “does digital,” to become a digital developer of new materials. Corporate management’s mandate for Dow to become a digital company sparked Holicki and Kalmar’s efforts to break down the silos between their organizations. This would enable them to tap into the respective domain knowledge resident in both groups so they could work together more effectively to solve business and operational problems.

“It just made sense to break down the barriers between the two groups,” Kalmar said. “We always thought operations needed more discipline, but as we learned more about that group, we gained new understanding of how site-to-site operational differences called for a more custom approach than we were used to in the IT world.” To this, Holicki added, “OT and IT speak different languages. Also, while operations are dispersed across sites, IT tends to be more centralized.”

According to Kalmar, “We needed to find the common ground across the two organizations. We also had to think about the cultural issues to enable our two groups to work together.”

The company’s Manufacturing 4.0 initiative revolves around the three pillars of customers, employees, and improving the way work gets done. Holicki explained that for Manufacturing 4.0 to succeed, he would need help from IT and digital experts. In particular, he clearly saw that his team needed new digital tools to improve turnarounds. According to Holicki, “We had to look at the work processes and break down the silos to be able to work together to solve problems.“

To help bridge the cultural divide between the two groups, “Melanie started sitting in on my meetings and I did the same with her group,” Holicki said. They both also sit on Dow’s corporate strategy board. “We got to know each other a lot better and started to build common ground and trust,” he added. This led to the creation of a joint innovations team.

The Dow Digital Operations Center

Kalmar explained how the Dow Digital Operations Center (DOC) brings together the deep domain expertise resident across the company. She admitted that while creating the DOC was a risk, it was one that both she and Holicki felt comfortable with.

A few examples of the new digitally enabled capabilities developed at the Dow Digital Operations Center include using drones, robots and crawlers to help make Dow a safer place to work and enhance the quality of inspection work. “Robots are also starting to do real work, not just perform inspections,” said Holicki. Virtual reality solutions developed at the DOC help engineers solve problems. “We’re also rolling out innovations that allow us to track both people and equipment better.” Many of these innovations have been implemented across the company’s manufacturing sites globally. “The Digital Innovations Center was a big investment, but well worth it,” according to Holicki.

Lessons Learned At Dow

“Without cooperation, we would have missed opportunities and be more exposed to cyber risk,” Kalmar explained. Trust is key. We challenged the normal way of doing things. The biggest surprise to me is that it didn’t take a lot to get the other leaders on board.”

“We both work for speed and value,” Holicki added. He explained that solutions must be able to be rolled out across multiple sites to achieve business value. This requires collaboration. Collaboration also helped the cross-functional team screen and identify many of the solutions already available out there that could help it do many of the things it wanted to do. “Value creation is key – if it doesn’t create value for your company, why bother?”

“If I had to do something different, it would have been to get my people out into operations sooner,” Kalmar said. “Also at first, rather than seeing what manufacturing really needed, we allowed our budget to be a crutch. Eventually, we began to focus on the things that could really ‘move the needle.’ But we know that our journey will never be over and we have to keep working together. We also know that we will continue to evolve with an influx of new skills. IT and OT roles will continue to cross over and we have to become more agile.”

“We each have our respective strengths; it’s about our willingness to work together whenever needed,” Holicki added. “I learned a lot about cyber, and IT learned a lot about manufacturing’s reliability requirements. We have over 100 sites around the world and we’re working together to optimize them one at a time. We also have to address digital threats and make even better use of our data. This includes working together to sanitize data so we can trust it.” Summarizing his key takeaways, Holicki mentioned the importance of trust, cooperation, benchmarking and free and ongoing collaboration. “You also need a strategy and a value proposition.”

“Success will never happen without alignment at the top and you have to keep communicating across the company,” Kalmar added. This often involves ‘wearing down the leather’ on your shoes by physically visiting with other groups. She then threw out a challenge to those gathered for the general session: “We’d like each of you to think about areas where teams at your own company could work together better. Go start the conversation to break down those silos.”

Paul Miller joined ARC in 2008 following a stint as contributing editor for our sister publication Control Global. Prior to that, Paul served as global public relations manager for Invensys Process Systems and, before that, The Foxboro Company. Paul has followed the gradual emergence of industry interoperability standards, the transition from analog-to-digital field instrumentation, the breaking down of the barriers between plant and enterprise systems, and the ramifications of it all to end users and vendors alike. He has 30 years of experience in the industrial automation industry. You can email him at [email protected]

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