In episode 20 of the podcast, the topic is: The Digitalization of Körber. Our guest is Daniel Szabo, CEO of Körber Digital.
In this conversation, we talk about Transforming a German industrial company through digital acquisitions and spinouts. Körber went from mechanical engineering company, to diversified manufacturer through the 1990s, to an international technology group over the past five years, with a digital arm focusing on venture building, building digital solutions and digital enablement. We discuss building new businesses that leverage "unfair advantage", accessing customers to co-develop scale commercially. Where is European industry heading? How to combine agility and scale?
After listening to this episode, check out Körber Digital as well as Daniel Szabo's social media profile:
Trond Arne Undheim: "My takeaway is that Körber's journey is still quite unique and also about to become typical, at least of manufacturing or engineering companies that want to survive. Embracing deep digitalization is a smart choice, but not the easiest feat to accomplish."
Thanks for listening. If you liked the show, subscribe at Augmentedpodcast.co or in your preferred podcast player, and rate us with five stars. If you liked this episode, you might also like episode 10, A Brief History of Manufacturing Software, episode 9, The Fourth Industrial Revolution post-COVID-19, or episode 4, A Renaissance in Manufacturing. Augmented--upskilling the workforce for industry 4.0 frontline operations.
#20 The Digitalization of Körber_Daniel Szabo
[00:00:00] Trond Arne Undheim, host: Augmented reveals to stories behind a new era of industrial operations, where technology will restore the agility of frontline workers. In episode 20 of the podcast, the topic is the digitalization of Köber, our guest is Daniel Szabo CEO of Körber digital. In this conversation, we talk about transforming a German industrial company through digital acquisitions and spinner Körber. Went from mechanical engineering company to diversified manufacturer through the 1990s, to an international technology group of the past five years with a digital arm, focusing on venture, building, building digital solutions and digital enablement. We discussed building new businesses that leverage unfair advantage accessing customers to co-develop scale commercially and where is European industry heading and how to combine agility and scale? Augmented is a podcast for leaders hosted by futurists through presented by Tulip.co the frontline operations platform and associated with MFG works. The Manufacturing upskilling community launched at the World Economic Forum, each episode dives, deep into a contemporary topic of concern across the industry and airs at 9:00 AM us Eastern time every Wednesday.Augmented upskilling the workforce for industry 4.0. Operations
[00:01:32] Daniel, how are you today?
[00:01:34] Daniel Szabo : Yeah, very good. Trond, how are you?
[00:01:37] Trond Arne Undheim, host: I'm fantastic. I thought we would talk a little bit about the, you know, how your company and you have digitized pretty drastically over the past few years, so that's exciting.
[00:01:47] Daniel Szabo : Yeah. It's quite excited. Great idea. Let's do that.
[00:01:50] Trond Arne Undheim, host: [So Daniel, you are a, an entrepreneur and you've worked across a bunch of different industries but also you know, and always very [00:02:00] interested and you know, tuned to kind of digital problem solving and improvement. I wanted to ask you first off, what is it that got you into, I guess, engineering and then into Manufacturing?
[00:02:15]Daniel Szabo : I think like that as an interesting story so by education, I'm actually an economist and I buy coincidence started in the life science industry in the beginning of my career. Had no clue about the industry and had the first part of my career dare and it is a, basically a similar story of how I got to be CEO of Körber digital which is the digital arm of a large industrial goods company came basically through my experience around digital, in the pharma space, because originally I started as chief digital officer for the pharma machinery business of Kröber and then for that, I basically came into a heading global digital business area.
[00:02:57] Trond Arne Undheim, host:] And Körber is interesting because they were, of course, like most companies a while back that were in You know, in engineering and manufacturing they were, of course, you know, mechanical company, they had factories, they had products, but they weren't necessarily a digital company. It is a bit of a conglomerate, right? It's now, you know, involved in a bunch of different business areas from pharma to various sort of supply chain. And and then, you know, in involved in manufacturing and production of various goods with a, I guess, a focus on both hardware, software, and IOT, now you have transformed it and you're leading a digital arm of Kerber.
[00:03:39] Can you tell me a little bit about how this transition happened at Körber? What instigated that transition? And I understand part of the transition wasn't just to create. This specific digital entity that you're heading up that we'll talk about, but it was also a bunch of acquisitions. So you know, as much as you know about this story, it's just an interesting story in, I guess, a, an industrial company transforming over time.
[00:04:06]Daniel Szabo : Certainly. So maybe let's go a little bit back because I think it's relevant for the discussion. So Körber was created by an entrepreneur by heart, a guy called Kurt Körber seventy-five years ago. And at that time he was really one. Today you would call him a visionary tech entrepreneur at that time think of what's called a little bit different, but he has, he started doing most unique goods and for the tobacco industry, that's where the company started and it was very early on investing in technology, investing into digital product chip design, and so on for us serving that industry with machines. And then a while back, basically a decision was taken by the board to say, okay digital, if you want to have be a technology leader, we need to lead for digital technology. Right. And the company is growing since since years of through acquisitions, right. They created new industry arms. So we [00:05:00] also active in the supply chain, field pharma space and tissue and Manufacturing. and we grow by buying entrepreneurial organizations largely and both on the machinery side, but also on the software side. So there's a very strong. Will an appetite to become a digital leader in the manufacturing space and you see does not only with Körber digital, I'm sure we're talking about that a couple of minutes later, but also with some of the businesses we're having in our business areasso we are the market leader for MES systems in the pharma space. For example, we referred largest warehouse management software provider globally and we always have this combination of hardware and software and the IOT space. And that is basically going through the strategies since I would say about five years and very consistently. So the, these acquisitions that were made were all happening, I guess, over the last, [00:06:00] at least what I have in front of me here over the last five years.
[00:06:02] Trond Arne Undheim, host: So there were, you know, back in 2016, Kubica logistics and then a company called MTC, big rep and then SIS tech and commune and centric cohesion. I don't know if I have covered all of them, but. Do you know what instigated that, that sort of acquisition spree was? It, was it really a Kind of a cohesive strategy into, in terms of kind of building out the digital footprint or is it a little more complicated than that to preserve? And then secondly, I was just curious, how have all of these acquisitions being folded into your digital company or are they all all around the company now, are they all around in different business units?
[00:06:42] Daniel Szabo : So let me try to answer the first question first. So I'm not in all the details because it just joins in 2019 organizations, but it's basically from my understanding the result of a strategy planning out to become leading players in the industry World builds of your playing and these companies are basically contributing to that and a lot of those software products. And to the second question, so they're not all folded into Körber digital. It is basically acting as a company builder that builds stand alone own companies, software companies, and these larger companies are then folded into the corresponding business areas. So for example, the MES leader is called available and the company originally, but it's not a Körber company. and that is part of the business area of pharma because we basically Go industry by industry. If they're a full solution suite being at software and hardware, and that's how we structure it for the moment.
[00:07:42]Trond Arne Undheim, host: So tell us a little more, sorry about how the digital unit that you run, the self-standing curb digital unit. What, what goes into the thinking there? And is it so that you were there from the beginning, from the inception of this entity?
[00:07:59]Daniel Szabo : No. So I wasn't there from the inception. So that inception was somewhere in 2017 and one of the companies that you mentioned before calling you and was basically basically the starting point of one of the starting points, busy to integrate it in there. So did business area digital. So Körber digital is basically a standalone business area that really focuses basically on two roles.
[00:08:22] Number one is we help and enable our system business areas to enhance the core offering with digital products. So these are basically then natural extensions to machine businesses. Most of the time and dare, we basically helped them. They have technology capabilities and a developer teams to do that efficiently. And then the second role is really focusing about creating new, sustainable. Business for the future. And then we're focusing on a powered AI powered Manufacturing solutions. And every, basically I have an approach where we run structured ideation in order to identify customer problems that fall in the category of we can use data.
[00:09:07] AI to create solutions that can help users to create value through optimizing Manufacturing and dairy basically work closely together in core development approaches with customers. And when we see that we have strong enough potential, which means typically that we have a proof of concept that we can create value that is significantly enough that we have to potential to build them.
[00:09:34] Industry solution that is machine agnostics. So we don't build software products that optimize Kerber machines, but we build software products only that optimized entire fleet installed in industry. And that's what I called machine agnostic, which is a little bit untypical. If you come more from their machinery space and firstly, when you go for big ticket items. So we only look at opportunities. Where we do believe that they have unicorn potential, even though scaling takes a little bit longer, typically in the industry space and then we create standalone entities, hired dedicated management teams, and we're basically working along the lines to build a portfolio of successful software service companies that increased production efficiency through AI with the goal to have two to three companies per year excepted, and then over the years to have a portfolio.
[00:10:26] With the overall goal to become a leader in AI powered, Manufacturing, efficiency across industries. even though we start today mainly for leveraging our unfair advantage of having close relationships with industry customers in certain industries, having a lot of trust and a good way to commercialize, but then in the next step we also have is, look, how can we go in other industries once the product is proven and has shown value.
[00:10:52] Trond Arne Undheim, host: And Daniel, where are you on this journey today? Because you know, if you said it started around 2018 that's not a long time ago. It's basically two years. It's not a long time to create a portfolio of digital companies that are transforming the, in the industry in a unicorn way. So I was just kind of curious, where are you?
[00:11:15]Daniel Szabo : It certainly feels much longer, right? So it really here in in the race. So to say it's crazy, a lot of things are going on, but at the moment we have one where a successful IOT company called factory Pell that is basically bringing up to 40% productivity, increase to manufacturers of tissue materials. Tissue materials is typically napkins, paper towels toilet paper, or these kinds of products and de every basically show very strong results, strong uptake, and be basically scaling this company now. So we going to the, yes right nowand we really investing heavily to scale this into the market.
[00:11:52] So this is our, let's say our front runner. Then we have one company which is in the pharma space to [00:12:00] basically disrupt and optimize what is called visual inspection. So for all the vaccination shots that are now produced globally, each of these little vials, do you know from TV needs to be inspected before and here we are developing along the lines as I mentioned, machine agnostic for the full industry software as a service product AI based solution that transforms how it, this has done and significantly increases efficiency there and DFO also can increase speed to market for drugs, especially in those crisis situations that we're facing right now.
[00:12:34] And then we have a fruit company which is currently closed to be ready to spin out, which is going to use success, psychology and gamification features to increase engagement or manual workersand with that increase efficiency and with that create value for the industry. So I would say we are quite advanced.
[00:12:55] I think we have like, a strong model that works very well and a [00:13:00] blueprint to do this as a traditional company, which is happened very seldom. So I would say we are in kindergarten, out of kindergarten, we are out of kindergarten. I would say of you're probably in elementary school. And we're working very fast indirection middle school
[00:13:15]Trond Arne Undheim, host: wow. Lots of things to pick up on here. First off, extremely fascinating story of kind of I guess, you know, a German industrial company really transforming and embracing some new approaches here. I don't know how much you can talk about the gamification company, it's all the rage right now to be worried about and try to solve this kind of workforce. Crisis, arguably, you know, which is a bit of a strange phenomenon in the world here, that there actually is a lack of qualified Manufacturing workers at a time where, you know, you're wondering, you know, are all the jobs gone for to automation, but the opposite is happening. So I was curious, you know, you may not be able to say much about it, but tell me a little bit about why you started this effort. Why do you think Manufacturing workers need to be more engaged?
[00:14:05] Daniel Szabo : So maybe let me pick up the topic because there's the addressed it actually on multiple sites and areas. But I also get a little bit back on the gamification piece. . In principle, all of our solutions are user centric and what we mean is that we basically have to have this dual role, which is very different from direct to consumer businesses. On the one side, you need to engage the user, which is typically the work on the shop floor. And on the other end side, you need to create value for the customer who's typically calling the owner of the company or somebody who is there to manage the P and L. So you need to keep both inside and you need to focus on the user and make him happy or her happy in order to change behavior. And that changed behavior triggers actions that create value. So all of our solutions are actually really centered around users and this lack of [00:15:00] qualified labor is actually a very strong point. For example, also for factory Powell. What we do there basically is touse the solution and AI engines to augment manual workers. You might have like a lot of these in this industry is very common. You have people who do this for 25 years, used to be two to do old education system, highly qualified, but didn't go to university and so on. So very smart, very skilled people who were able to run the machines highly efficient.
[00:15:32] This changed now a lot large part of this workforce is going to retire. The next generation is not as qualified and skilled or not interested to work in these roles. And it's very hard to keep up that performance level. And there, we basically also had factory augment the operators to basically be as good as Lee's to be as good as the best operator they're having on the shop floor.
[00:15:57] Who does that for 40 years and just feels it basically what he needs to wear sheets too and for gamification led it, getting more specific to your question is so what we see, especially in manual labor, which logistic a lot of people think and believe all this is all fully automatic. It there'll be all robots.
[00:16:14]I don't see that coming. I really think man humans have capabilities that are very hard to. Commercially viable, at least a user of robotics. And that's a big case in a pick and pack in warehouse situations. And there you have like the issue that people are typically poorly paid. They're really easy to exchange in a sense because the people go, they go to the next door.
[00:16:38] It's, there's not a strong loyalty. Lyft employer, but it's probably on both sides. And it's a big problem for warehouses that people don't show up. It's all about only a performance-based pay. And we think we need to address that topic because the key driver for performance in a warehouse where you have manual pickers is how motivated people are.
[00:17:01] So let's say if they walk faster, Your performance is higher and you might make your cutoff date and then you might be able to do next day delivery. But if you, if people don't show up and so on, you might not be able to make your cut off date for logistics, and then you cannot do the disservice that consumers are requiring or in demanding.
[00:17:21] And therefore, if we think that we need to find new ways, better ways to basically increase the performance and not doing despite brute force performance pay and sanctioning, but rather use methodologies that are quite common with white collar workers looking on engagement. So how can we get people happier?
[00:17:41] How can we show them that we care? How can we tell them? Okay. That was very good. What you did, people typically are more motivated if they get. If what they do is seen and they get acknowledged, and this is basically where we're focusing on, and that is basically then creating two key benefits. One is people are [00:18:00] happier at their job and at the same time for being happier and more motivated they are working, let's say more efficiently.
[00:18:10] And then you have basically happier worker who have a more fulfilling job. And at the same time, you'll have better results, which translates into value for the owner of the company, but also value for the customers behind it. Because a warehouse efficiency is a key driver for a service quality, especially in the e-commerce space.
[00:18:31] Trond Arne Undheim, host: You know, it's fantastic to hear this very specific problem statement and it reminds me actually of, you know, very early on in our factory days, right. The whole entire kind of humid what's become named the human relation school in management arose out of a similar challenge. They saw that it in factories where there was a lot of manual labor I think it. It wasn't mainly packaging if we used this was earlier on, but it was more sort of [00:19:00] industrial factories, but anyway, it's a similar situation and, you know, famously right. One of the experiments at the Tavistock clinic actually. Discovered that even just turning on and off the lights at different times was enough variation that you could spot that people won't get, you know, got motivated in different ways. So anyway, we have come a far way since the 1920s, when we were turning lights on and off to see if that would motivate workers, it seems like. This is an interesting time with with kind of digital ways of observing workers of, I guess, counting and and measuring yeah. The impact of what people are doing, but then taking the psychological motivation factor seriously and finding some ways to insent them.
[00:19:44] Is it a group based approach as well? I mean, is this a, you know, it has it, does it have to do with motivating groups of workers or is it just an individual perspective?
[00:19:53]Daniel Szabo : I mean in principle. We want to structure the product that it's basically can do both but it is basically not. The intention is not to basically do what is common right now, also the careers and shipments company. Just to do forced ranking and give bonuses for the top 20% and do it with performance based piece. So it's really like a combination of trying to do a group based topics and individual performance acknowledgements, and also include in the whole offering that you see like the machine. I mean, a lot of people don't know, I didn't know before either this also.
[00:20:27] Know-how and tips and tricks tend to need in order to basically perform in a warehouse. This looks also simple, but if you don't all the tricks, it is very tedious sometimes. So to also say, okay, if somebody is not performing on level to basically say, okay to notch, somebody who is more experienced, Hey, I think you should talk to somebody in your team and he might need some help or to send training materials and then say, okay, See, you really takes really long time for you to pick rots.
[00:20:55]Do look at a video if you do it like that, it goes quicker and to basically [00:21:00] combine it and do like into individual. Gamification based motivation and but performance-based basically do that in groups and shifts and try to get basically this performance ranking out of the system, because that is existing and that is not really driving engagement and therefore.
[00:21:19] It's very hard to motivate people.
[00:21:22]Trond Arne Undheim, host: Well, the other thing that I'm thinking based on what you're saying is, you know, you and I were talking a little bit earlier about the World Economic Forum on the work that we're starting to do there regarding upskilling and training, but the challenge is enormous. Not only, I mean, arguably, do we need to train a billion? People over the next few years or maybe more, right. Everyone pretty much in the work place needs to train and retrain themselves continuously, but also the kind of training that's needed is very specific. It's not like set aside a year and go learn something. It's like, what you're talking about is. For one worker, it is how to place this particular thing and that's, you know, 70% of what they do. And they, there is a more efficient way of doing it. You have to figure out who does it best and recorded a training video essentially. Oh, that person doing it and the number of tasks that you actually need to train people on. I mean it's astronomical.
[00:22:15] Daniel Szabo : Yeah. And that's one of the reasons I think like one size doesn't fit all. It's the reason also why we see a lot of potential around this space, in this Manufacturing space for digital technology enabled solutions, because we do believe, for example, that. In the industry, it's, there's so many different things that you need, and there's not that many solutions out there.
[00:22:37] And therefore we believe the only way of doing that at scale is to empower people, Democrat, democratize the way of training other people. And automizing part of that, supporting that. And on the other hand side, it's also very important to do industry specific solutions because there's just it's like the combination right.
[00:22:56] Of industry and workflow specific know-how methodology and then technology to scale.
[00:23:04] Trond Arne Undheim, host: Well, I wanted to ask you about industry specific because I do understand the point industries are historically very different. Some people though would argue that in the digital age, a lot of those things can be seen in a different light that, you know, what's specific about an industry. Certainly isn't very obvious. So you may be right that there's something specific about tissue Manufacturing, and I would invite you to tell me, you know, kind of what that is, but I can kind of imagine what it is that has to do with, you know, how the supply chain is set up and how the actual factory set up just the is very different than from any other production and then conversely you know, in more organic Manufacturing it's again different, and the regulations of course make industry is different, whether it's a regulatory space or not. But also there are some sort of digital aspects that are also valid you know, across. Why is it that you still think that very industry specific approaches and, you know, for you pretty extreme because you're creating companies in these different verticals. That's a different view. I would say then certainly a lot of startups that come into this field, they take, well, they kind of have to take the opposite approach. They're sort of like our solution is one size fits all.
[00:24:18] Daniel Szabo : Yeah. So I think like it's probably not as black and white, but I think like thatI mean, what if you look at least in this Manufacturing space, there's a lot of companies out there, right? So we screen it directly, but there's nobody really you who nails it and so there's a lot of companies I mean a few exceptions, but many startups around it. They all in the lowest thing on the Linder ditches annual recurring revenues, nothing really scales it's really hard to somehow get traction. And my hypothesis, there's a reason for it because if you need to understand how you really create value and not just fictive value, but a value that you can see in the PNL. And that is all in principle, 95% is private the same across industries, but you really need to somehow nail per industry this last 5% and this is more what it mean. Also our solutions are not, I mean, we start in one industry that we understand, well, we nail it there and then we want to scale it out to other industries that are similar structure and also dare we still believe we need to do adaptations to find those little and little nitty glute clues and those little things that really make the difference. So I think like you can use the tech stack quite widely, but you need to then to adapt and customized. And if you look at the consumer internet product, right? I mean, if you look how Facebook and Google work and like. In dare to power, a lot of powers of designers. Right. So how do we design it to notch to ride social behavior? How should the like button look like? So you could say the same. Yeah. It doesn't matter. It just like do something, but barely there goes hundreds and thousands of men, days, people, days development in that to [00:26:00] figure it out, to get it exactly right. And I think that is similar in the industry solutions, digital industry solutions, but you need to nail those little things that drive to difference. Therefore you need to embark in industry but then you can adapt it to the next industry. At least that's my strong personal belief.
[00:26:17] Trond Arne Undheim, host: Well, I mean, the way that I would think about it is certainly, you know, in each industry and perhaps even in each factory, and this brings us a little bit to kind of this concept dancing around the concept of lean, right.
[00:26:29] There was this idea at one point in time that everybody could adopt the, you know, the wonderful quality movement or the Toyota production method and it would all go smoothly all around the world, but it has turned out, I would say, right that in the 50 years and 60 years that have passed since these methods first were adopted. It's very tricky. And there is really no kind of one size fits all for adopting, you know, and we've been dancing around this topic a little bit, you know, how do you improve productivity? And the answer is [00:27:00] slightly different. Or even if there is one answer to, to try to understand how, you know, one particular factory or company did it and how you know, and tried to then copy that is, it seems to just be an elusive and hard thing to do. I wanted you to comment a little bit on sort of like digital lean, I mean, this idea that there is a way to implement these practices in a digital form. Is that essentially what your company corporate digital is trying to do digital leads.
[00:27:30] Daniel Szabo : So a very good question. Very few people, I think as a think along these lines, but I share your fault. Totally. So I think like lean. Digital lean is kind of what we're doing, but I think what comes on top of it, it's basically, you could say it's kind of lean on steroids because lean, as he said, as the issue is a little bit, it's a, I mean, it comes to personality topic in there. There's also then a regional culture schemes, right? I mean, this was invented in Japan, by Japanese people [00:28:00] who are they have certain traits, which are very favorable for running out like a lean system, for example. And it's not so easy to scale globally, you need to adapt it. And what we're doing though, is something like a Most of the products are like the new form of lean. So to say, I think it's a way of right way of saying it. And what is very interesting, what we can show, improve a factor bell, for example, is also the benefit comes from top. So did the increase productivity increase? You get free lean programs. Is basically the foundation and will added on top and really put it basically on steroids because a lot of people would drink.
[00:28:36] Yeah, I can get the same. It'd be at a customer where we had these discussions. But I do lean, I get as all out of lean and then they realized no, actually i get get maybe two to three percentage points out of lean. But I cannot get so many people on the science because if I don't have people on every line standing, it doesn't sustain.
[00:28:55] And the digital products, basically this sustained because of they automize it, they get into [00:29:00] the normal ways of doing. And I think that's one of the difference it could be a very well said like the next generation of lean movement in a Manufacturing or World pond.
[00:29:13] Trond Arne Undheim, host: This is you know, perhaps a difficult question to answer, but you know, you are selling these solutions to others and you have clients, but how has the road been for Körber internally to make this transition? In other words, you know, we talked about how difficult it is in fact to transform a workforce. Now, if you go back and sort of adopt that attitude and kind of look at your own company, how has this transition been?
[00:29:40] Because you're dealing with the same kinds of workers, right? You're in the same country. I'm sure that has been challenging as well. How have the employees handled this transition to digital and digital lead?
[00:29:52]Daniel Szabo : So I think it goes in waves, right? So I say we're now in the third wave, the first wave was really a lot in the beginning seeing is believing, understanding, getting buy in making clear this is not magic. I mean, it's basically about identifying problems, problems is a good thing. Talk to your customer, don't develop a product design thinking. So a lot of this foundational work that wasn't, let's say the first phase, a lot of MVPs work, a customer to cover, and a lot of foundation learning attention and I'm making it clear, okay, this is not going to go away. It's you have to stay. So you better accepted in a little bit. And then there was the second wave which was then shifting away from buying into proving that this can create commercial value because ultimately we're looking to create commercial value and it's super important for an organization to prove that this is not just fun talks, sneaker guys walking around in fancy offices, but just actually also value behind it because a lot of people have to of domain.
[00:30:54] Okay. All of these startups that don't make money, they have worth billions. They're burning hundreds of millions. Okay. I mean, and not up for that. We are not worth billions, but we make every year, a hundred million of if the machines. So I think we have a right business. So what are you doing?
[00:31:09] That was a little bit, the second wave where basically transformed current digital Maura to accompany builder that we can basically find a way to compete with external ventures and that was basically not a second wave. And since factory PO as a company is very successful. That helps a lot because this is. This is again, another form of seeing us believing is like, Proven ad that people say, okay, maybe there's a point. Let's do that. And now we're going to the friend waiver, it's really scaled the value creation and bring people along the lines. And what we're doing is really a lot on training capability, building and we have this luxury position compared to standalone companies. If you have best of both worlds, we have hundreds and thousands of years of industry experience on machines to run. Plus we have a incredible digital, the top tech talents, and that together is basically creating a lot of value, what I call unfair advantage.
[00:32:04] And the other thing is it also takes people along because when people work together, they solve challenges, they learned it adapt. And with that, we also basically upskilling the entire organization.
[00:32:15] Trond Arne Undheim, host: You know, you're forced shouted my question because that was going to be the other thing. I'm pretty interested in the fact that there's a lot of excitement around Manufacturing among a very small group of digital companies. And what that means is I guess, Also that if you are a digital engineer there is a bit of a learning curve. First of all, you have to be alerted to the opportunity that does exist in manufacturing and some young engineers only see that when they actually start working for a company and discover, wow, this, you know, it may look like we were working for an industrial segment of clients, but you know, these are very exciting challenges.
[00:32:54] How do you bring your own sort of digital workforce along, you are alluding to it. You're, you know, you have the best of both worlds. What kind of rescaling is needed for a software engineer to actually understand the true challenges behind the solutions they now have to build, because design thinking is all nice, but this is a serious specific industry that they're entering, which is quite different from this very generic, digital skillset that you learn in school.
[00:33:23]Daniel Szabo : It's I think there's like some principles that you need to understand. So for example, like I'm, sometimes I'm phrasing that five per worker provocative is to say, you know, in consumer internet, you say, okay, I just release it. If I burnt 10,000 customers who cares, I have another 5 billion.
[00:33:40] Yeah. In most of our industries would be maybe have only five or 50, let it be maximum for the customers. Most of the 100. So you can not just burn 10% of those because they know all each other and you don't. So this is one of the things that like this rapid prototyping. Yes, in a sense, but you need to adapt it.
[00:34:01] You need to stage, you need to test it. You cannot release weekly. If you put something on the shop floor, it really needs to work because otherwise also the Manufacturing, the standing still. So this is a little bit. It's agile, but it has a little bit different quality requirements. So quality assurance is a very big topic for us.
[00:34:17]Cybersecurity is tremendous topic for us. We cannot even enter the customer. So there are some aspects which is not necessarily re-skilling. I think the skill set is available. It's a little bit of mindset way and a way of working and you need to be sometimes a little bit more patient but this being said, I strongly and firmly believed that.
[00:34:38]Let's say the next big thing in digital will be driven around digital tools and Manufacturing because we're all consumers we need to somehow solve the sustainability issue is sustainability footprint. And by basically making Manufacturing more efficient, you significantly improved the situation.
[00:34:58] Did you have less waste? Do you have less resource need? You can give people a more fulfilling job. And I think that will be a big value driver and decode new stairs for old entrepreneurs out there. We're looking for it to years. It's these days, probably a little bit difficult to do the next the next bit contracting platform or the next niche e-commerce store.
[00:35:19] But in Manufacturing space, if you really get down to the problems there's still a lot of low hanging fruits are around there. We're just waiting, let's say for the first unicorns to come out, I think and then you will see like a tremendous movement people looking. What it can create there and what I observe at least would be curious to hear your opinion, just one Trond because you also very well connected.
[00:35:42] I see more and more VC money flowing into that space. I see. More and more consumer teams I know were exited saying, yeah, maybe I look at that space now. So I think there, it's just starting and that's a good new step. That field is not divided yet. It's still early days.
[00:35:58]Trond Arne Undheim, host: Well, well, I was gonna ask you since this is mostly me asking you I'll give you my opinion in a second, but, you know, so you were alluding to it in Europe, specifically where do you think that European manufacturing industry is heading?
[00:36:10] I mean, all right. Arrows are pointing towards a very sustained focus on sustainability, which is gonna, you know, have one you know, is driving in one specific direction, I guess. Although, you know, it's a multifaceted topic and there many things that arguably fall under that umbrella.
[00:36:29] But also, like you said, if that there is now it's sustained focus on Manufacturing and it becomes really recognized, which I think, you know, we are both, our companies are both members of the World Economic Forum, and you could arguably say that over the last year. The Manufacturing platform, you know, in that organization has taken center stage for fairly obvious reasons around the vaccine, but also around many other kinds of [00:37:00] Manufacturing, which we have, you know, we've even coined this phrase essential worker to be you know, very different and much more.
[00:37:06] All encompassing than many people who are not very aware of industrial work and of manufacturing, supply chains and how those work. So arguably, you know, if that's the, that becomes the sustained innovation wave, you know, where does that lead us? Where are we heading?
[00:37:24] Daniel Szabo : So I think we're heading to a timeframe in Manufacturing where engineering of the manhole will not be the differentiate anymore. I think that there's no need really to two more like faster and more powerful machines. It's much more about using the technology that is out there and engineering technology smarter and more wisely. And I think the value creation, the future will come through software products in all kinds of industrial spaces.
[00:37:57] So being it, I mean, it starts straight from MES systems, where you're more playing in. It goes to all of these kinds of applications in all of these steps. And there are hundreds and thousands of steps and industries. And I do believe that data will be coming that software. Companies will transform how manufacturing is done in the future.
[00:38:21] And robotic will play a role, but also the value creation in robotics is also for the software stack.
[00:38:27]Trond Arne Undheim, host: What alluding you to this idea of augmenting human operations. And I think we share the vision for what that space could become. And also it's a very positive vision, certainly in my mind, right. Because it takes all the negatives of automation and doesn't. Just put a spin on it, but literally just makes a more humanly aware. It creates a more humanly aware direction where productivity kind of goes hand in hand with improving, you know, what we talked about earlier, the motivation of human [00:39:00] workers, but also their efficiencies simultaneously. So I, so my answer to what you're saying is I see an enormous space opening up under the umbrella of augmentation and it is an augmentation to, it looks quite different from what the tech visionary itself, you know, a wired or, you know, that kind of a futurist would say, you know, augmented reality.
[00:39:22] So this is for me much more than, and certainly much more than VR. It's not just sort of headsets and, you know, complete augmentation and virtualisation it is actually very, I mean, some of it just doesn't even look very fascinating, you know, from a futuristic perspective, but it actually augments that worker by like, 5% and 10% or helps them out in ways that makes them tremendously more productive as individuals and as teams.
[00:39:51] And it adds meaning to the work, which, you know, was, I guess, under threat because when you're completely always asked to, you know, make PR incremental process [00:40:00] improvements and it all has to do with sort of like speed and stamina, at some point you tire from that kind of focus, but the technologies, you know, in the digital space, are enabling a completely new wave.
[00:40:12] And as you said, there are discreet problems on the shop floor today that if you solve each of them, they are all verticals of significant magnitude and Manufacturing is what we are, right. We are, we want to make things and we want to shop at the end of the day also. So you know I agree with you I think the Manufacturing industry. Is an essential industry and it hasn't changed for years. If it now starts to change, it could change in ways that aren't just going to turn into digital lean, but could actually turn into things that we can't even imagine today. And I think we are at the beginning rather than at the end of this journey.
[00:40:51] So I guess, you know, in closing, I just want you to. Think about and give us your best guess in sort of how do you combine agility and scale going forward. And what's your best advice, I guess, specifically to, to companies that are starting to embrace this idea that not only are they trying to digitally digitize, they're trying to digitize the right way and the right way for them.
[00:41:17] So kind of take ownership of which direction they want to go, because it's not like digital is like one, it doesn't take you in one direction. It takes you into direction. Presumably you want to go, but if you don't know where you re heading I, my, my fear is that a digital solution will, will simply, right. Worst case. Just give you a lot of headaches and even best case, we'll take you somewhere, but not where you want it to go.
[00:41:46] Daniel Szabo : Yep. Fully agree. So I think like the key point you need to keep in mind is think really about what problems you want to solve and where you have basically valuable city and then go step by step.
[00:42:00] What is really the benefit the problem you want to solve and what ways can you imagine? And then go application by application? I personally believe, eh, this is also one of the reasons why this was slow so far. The industry does concept of having one IOT platform that´s a solstice for everyone.
[00:42:16] You just need to connect all the data flows and then it's done. I think that is where, which didn't lead as far so far, you really need to go on the application case by case and start with two things where you have the feeling, at least that you have a lot of inefficiencies. And little things can make the difference and very important to use in mind at not the technology is just a means for an abling and equipping the user. It's not as no purpose by itself and data just for having data ghere's also no purpose in Novell. You really need to focus on application.
[00:42:53]Trond Arne Undheim, host: Daniel. It's been fascinating. I am so happy that you were willing to do this deep dive into, you know, the [00:43:00] experience that you have you know, through Körber but also status simply I think an experience that a lot of companies are going to have to go through into in the time ahead.
[00:43:08] I thank you so much for your perspective.
[00:43:11] Daniel Szabo : Thank you very much. Trond and a good rest of the day for you.
[00:43:15] Trond Arne Undheim, host: [00:43:15] You have just listened to episode 20 of the Augmented podcast with hosts on the topic was the digitalization of Körber. Our guest is Daniel Szabo# CEO of Körber in this conversation, we talked about transforming German, industrial company, digital acquisitions and spin outs.
[00:43:35] We discussed accessing customers to co-develop scale emotion. Industry's industries and how to combine a duvet and skin. My takeaway is that Körbers journey is still quite unique and also about to become to the at least Manufacturing engineering companies that want to survive. Embracing deep digitalization is a smart choice, but not easiest feat [00:44:00] to accomplish.
[00:44:01] Thanks for listening, if you like the show, subscribe, Augmented podcast.co for in your preferred podcast and rate us with five stars. If you liked this episode, you might also like episode 10 brief history Manufacturing software episode nine, the fourth industrial revolution, post COVID 19 or episode four of Renaissance of Manufacturing, Augmented upskilling the workforce for industry 4.0 frontline operations.
Daniel Szabo is CEO of Körber Digital, Europe's largest in-house spinout company builder, specializing in digital deep tech ventures in engineering and manufacturing and a member of the extended board of Körber AG. He is the founder of YOU MAWO, the leading eyewear start-up. He is a globally experienced CxO and entrepreneur with broad experience in the Life Science, Industrial Goods, IOT, 3D Printing and Eyewear industries. He has extensive expertise in designing and leading digital venture development and building global high performing teams that excel with a performance culture and strong results. Daniel has a strong track record in building high powered entrepreneurial organizations in the digital space across multiple industries. Szabo studied economics at the University of St. Gallen and at the age of 27 was divisional strategy manager of a DAX-30 company. Furthermore, he led the global digital transformation program of a DAX-30 company before becoming divisional CEO of a leading technology group at the age of 32. In his spare time, Daniel founded YOU MAWO, a company that became the global technology and market leader in 3D-printed eyewear within four years.
He is the author of Corporate Rockstar (German language, Campus Verlag, 2020). Daniel continues to act as an angel investor and lives in Hamburg with his wife Friederike.