Daphne Luchtenberg: In this new world of work, the impact of technology means new skills and new roles are emerging as fast as other roles change.

David Goeckeler: You know, change can be opportunity for everybody. So I think we look at it through that lens. Change doesn’t have to be a threat; it’s just the opposite.

Daphne Luchtenberg: I’m Daphne Luchtenberg, one of your hosts for McKinsey Talks Operations, and that was David Goeckeler, CEO of Western Digital.

His comments were part of a conversation about the use of digital technologies in manufacturing and production, and how there is a need for training and development programs to teach workers the skills to use [these technologies].

So while there is a common perception that digitization and automation are a threat to the world’s workers, companies at the forefront of the technology frontier have actually created jobs—different, new roles that are much more high tech than the roles of the past.

And with the current labor mismatch being felt in many countries, the time is now to further engage workers for a digitally enabled future.

This focus is backed by growing research proving that workforce engagement is key. Over the last several years, research with the World Economic Forum, in collaboration with McKinsey, surveyed thousands of manufacturing sites on their way to digitizing operations and have identified about 90 leaders. These are the lighthouses—sites and supply chains chosen by an independent panel of experts for leadership in creating dramatic improvements with technology. Together they create the Global Lighthouse Network, committed to sharing what they’ve learned along the way. A common theme among these sites is their worker centricity—they are supporting the frontline workforce, upskilling, and making jobs easier and more interesting.

In this special edition of McKinsey Talks Operations, we’ll hear from the CEOs of a few of these leading companies about how they are engaging their people and putting technology in the hands of the workforce. The conversation originally took place during Lighthouses Live, a recent event of the Global Lighthouse Network. The discussion is led by Francisco Betti, at the World Economic Forum.

Let’s listen in.

Francisco Betti: I am delighted to be joined by an impressive group of leaders from our Global Lighthouse Network: Revathi Advaithi, chief executive officer of Flex; Robert Bodor, president and CEO of Protolabs; and David Goeckeler, chief executive officer of Western Digital.

Revathi, Robert, David—a very warm welcome, and thank you for joining us today. We have an exciting conversation ahead of us. We will discuss how you are shaping the future direction of your companies by leveraging Fourth Industrial Revolution technologies and empowering and engaging your people.

Revathi Advaithi: The most important thing is that we’re a company of people. We’re 165,000 people in 30 countries. And I’m a big believer that culture is at the forefront of everything we do. And great manufacturing comes because you have a great culture.

My belief is that the recognition of [the Flex factory in Althofen, Austria] as a lighthouse site is because they have a fantastic culture—a culture that’s focused on innovation, that is very ready to embrace change, is willing to learn from other companies across the world. So it’s such an amazing recognition for that particular site. And it really opens up the avenue for every Flex manufacturing site to really strive to be at the level that Althofen is and to be at the level of the other 90 manufacturing sites that are lighthouse-recognized.

So we are very, very excited about it. We think that this is the start of using the Fourth Industrial Revolution to really build on the capability of our sites, and just build a sustainable manufacturing legacy for Flex.

Francisco Betti: Western Digital has also joined the Global Lighthouse Network with two sites this year—one in Penang, Malaysia, and the other in Prachinburi, Thailand.

In your lighthouses, we have seen success driven by a combination of technology and people. Can you share how Western Digital has been keeping people at the center of its digital transformation journey to realize its full potential?

David Goeckeler: Keeping people at the center is actually pretty straightforward because people are the number-one priority in our operations. We work in a very dynamic market, and we know that our teams, and the skill of our teams, is really what’s going to define our success in the future. So keeping them at the center is critical. And it’s not just the operations team; it’s everybody in the company. We have over 60,000 employees—from the people in operations all the way to the executive team—and everybody is involved and behind this exciting effort. So keeping our people, reskilling our people, building that future-ready workforce, is what’s critical for us, but also for our employees.

Any time in life when you learn new skills, when you educate yourself, I think you have the opportunity to live a better life. It’s not just about our company being better and us being prepared for the future; it’s about all of our employees being ready for that future—keeping them at the center, having them highly engaged, all of the reskilling, getting them excited about what the future holds.

This isn’t some kind of executive mandate; it’s the employees leading it, pulling the company to it. Keeping them all deeply engaged keeps them directly at the center of what we’re doing. And, as I said, having our employees fully engaged, really building that future-ready workforce, is going to be what defines the success of Western Digital.

Francisco Betti: Thank you very much, David. It’s great to hear about the importance of culture and people from both you and Revathi.

Let me ask you a follow-up question. What advice you would give to those companies that are still stuck in pilot purgatory and are trying to scale digital transformations?

David Goeckeler: First of all, what we just talked about is workforce engagement. It’s got to be a pull, the workforce has to be fully engaged, you have to take the time to train and explain all the things about what success is going to mean for everybody. And you have to get that alignment from the shop floor all the way to the executive team on what going to a new model is going to deliver. And, as I said, not just for the business, but for all the individuals.

Then I would point people to infrastructure readiness. This is a new world. In manufacturing, there’s going to be a lot of fast and big data. Make sure you have a scalable industrial IoT [Internet of Things] stack that’s going to be able to handle that and be ready.

So first make sure the workforce is engaged. Make sure the infrastructure is ready so that you don’t run into roadblocks. And then really prioritize. Pick use cases that are going to have a big impact. As the team says, “Think big, start small, and then scale fast.”

We’ve had a lot of success doing that—picking use cases that are going to have big business impacts. People see the value. You start to build momentum. And once you get some momentum going, it’s easier to keep it going and build faster and more of it. So, again, workforce engagement, infrastructure readiness, and then start with some prioritized use cases. Start small but think big. And then scale as fast as you can.

Francisco Betti: That is great advice, David. Thank you.

Revathi, let me come back to you now. Flex’s lighthouse in Austria was facing tough competition from lower-cost regions. However, your teams were able to leverage technology to build a more attractive product lineup. What are the key lessons your company learned from this? How does it inform your future strategy?

Revathi Advaithi: When you walk into our Althofen site, the first thing you notice is the “can do” culture. As the world went through labor arbitrage and manufacturing moving to more competitive regions of the world, Althofen has been a thriving site that has focused on using technology as a competitive advantage.

We have a site that is very well trained in terms of skilling. They’re able to skill and reskill, like David talked about, at an amazing pace with really good change. And the second is, tremendous resiliency. They’re able to bring up new products at a fast pace versus any other site that I’m aware of just because they have that spirit of innovation and the focus on technology.

Pretty much any complexity of product, they’re able to bring into their facility and scale up for a customer, and really respond to any of the market dynamics present. All of this has resulted in a site that’s having tremendous rigor—operational rigor—lots of agility, in terms of how they operate.

The results have been incredible for that site. They’ve had tremendous revenue growth while improving margins. But most importantly, they’ve made some sustainable change, which I really love. CO₂ emissions have improved significantly for that site. And we have driven reductions, in terms of our travel costs and those things in that site, just by use of technology—whether you’re thinking about simulation or any of those other technologies that have been used.

Francisco Betti: Thank you, Revathi. Amazing achievements.

Robert, this seems like the perfect opportunity to bring you in. Firstly, many congratulations for the recognition of your Plymouth site as a lighthouse—Protolabs’ first lighthouse in our global network.

As a medium-size enterprise, you embarked on an amazing journey to transition from providing prototypes to becoming an at-scale production supplier—and you did that by incrementally developing new digital capabilities.

What did you do to further accelerate your 4IR journey, considering your company was already a digital native?