By letting people drive innovation, Oil and Gas can help lead Vietnam’s Industry 4.0 future

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Cyril Coste 09:35, 2019/10/10

The Oil and Gas sector has been at the leading edge of change in every industrial revolution to date.

From Blockchain to AI to IoT, digital technology is changing the face of industries as diverse as healthcare, construction and energy, with huge potential to deliver more efficient and sustainable outcomes. Industry 4.0 – the name for the new era in which industrial production will be optimised and customised rapidly – will offer rich rewards to those companies and economies, guided by forward-thinking governments, best able to leverage the digital technologies underpinning it.

It is an interesting challenge for a country like Vietnam; all the more because challenge comes hand-in-hand with opportunity.

Cyril Coste, Principal Consultant at Emergn

On the one hand, Vietnam may appear to lack the preparedness and connectivity required by the Fourth Industrial Revolution; something indicated by at least two major surveys – a joint assessment in 2017 and 2018 of industry readiness by the country’s Ministry of Industry and Trade and the United Nations Development Programme, and a 2018 report by the World Economic Forum.

On the other hand, Vietnam is clearly already heavily invested and committed to the digital economy. Earlier this year at the Vietnam Private Sector Economic Forum, Deputy Minister of Planning and Investment Vu Dai Thang highlighted a survey by Google and Singapore’s Temasek which valued Vietnam’s digital market at US$30 billion by 2025. Mobile phone and broadband usage are also extremely high by both Southeast Asian and global standards.

Interesting also is the fact that the oil and gas sector – the country’s biggest foreign currency earner and an industry facing its own issues – is also one that, throughout the history of industrial revolutions, has always been a driver of adaptation and innovation.

Few would dispute that oil and gas needs to rise to several challenges, not least in the digital sphere. If Vietnam needs a hero industry to lead its 4.0 future, then perhaps Oil &Gas is the one.

A digital era, led by people

Much continues to be written about the new possibilities thrown up by the latest innovations in digital technology. But this only tells part of the story. There is a less reported side to the 4th Industrial Revolution that will be equally integral to its success: building organisational cultures that are capable of driving the implementation of these technologies.

Digital transformation is, after all, nothing without people to guide it.

As more and more industries make the leap into the 4th industrial age, organisations with long-established working methodologies will be forced to rethink their management practices. In some cases, radically so. A McKinsey report last year found that just 30 percent of digital transformations are successful.

In my experience of working on digital transformation projects, success depends upon an innovative and varied management strategy:

Be agile

First, companies need to nurture an agile mindset and new ways of working to meet the constantly shifting demands of the digital age.

Building smaller, more dynamic teams that break the rigidity of established working methodologies and norms is essential. These teams must be empowered to develop value propositions, identify hypotheses to test and experiment rapidly to validate (or not) these hypotheses.

Try again. Fail again. Learn again

Second, firms must foster a fail-fast culture. Experimenting with digital technology necessarily involves failure. Firms must learn to embrace this failure, recognising that it provides unique opportunities to learn. By failing often and quickly, firms can learn, in the most efficient way possible, how to utilize new technologies and new ways of working.

For many firms this will involve moving out of their comfort zone. Traditional working cultures – and one could argue that label applies in Vietnam - are often geared towards avoiding ‘failure’ and preserving the status quo. However, to nurture a culture of innovation major organisations need to unlearn their fear of failure, empower teams to experiment quickly and trust their people to build success out of setbacks.

Multi-disciplinary, cross-functional teams

Third, digital transformation should be an all-encompassing agenda. It requires teams to have vision of all sides of a business. To work effectively, the smaller, more flexible teams must have a broad spectrum of skills and expertise in different aspects of the business. One mistake often made is to leave digital transformation to the ‘tech’ people. That’s a recipe for inefficient and misaligned transformation which loses sight of strategic goals as they relate to the business’ needs.

Upskilling

Fourth, an obvious, but often neglected, ingredient of digital transformation is training employees to develop their skills and an understanding of new technologies. Therefore, it is essential to ensure that they receive adequate training and benefit from opportunities to apply their new skills. Where appropriate, new talent may be brought in to supplement in-house development of skills. In this respect, Vietnam has an enviable recent track record of skills development.

Crucially, this is just as true for the C-Suite level. More and more firms are turning to Chief Digital Officers to take on a specialised, overseeing role.

Changing mindset: the example of Oil & Gas

None of this is beyond Vietnam, especially with oil and gas a potential pace-setter and game-changer. The sector has been at the leading edge of change in every industrial revolution to date. Even its most high-level decision-makers are giving serious consideration to how to embrace digital transformation. Indeed, at next month’s ADIPEC in Abu Dhabi, the world’s largest oil and gas conference, it is likely that we will see clearly how the industry’s focus is shifting. Structured around “Oil & Gas 4.0”, delegates will be considering a holistic agenda for the industry’s digital future with workforces at the heart of the conversation about change.

Big thinking

The Fourth Industrial Revolution presents enormous challenges and precious opportunities. To seize those opportunities, firms need to trust their people by building flexibility into teams and empowering them to experiment with new tooling and ways of working. That will require a radical rethink coming right from the top of organisations and nurtured by governments. Industry 4.0 is all about change but it is always people who move us on from the status quo. Recent economic history and development suggest that the Vietnamese people can drive the country into the Fourth Industrial Revolution and beyond.

* Cyril Coste is a digital transformation expert. He currently works as Principal Consultant at Emergn.

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