Indiana's Manufacturing Future: A Panel on Leadership, Digital Transformation, and Culture
Manufacturing Happy Hour
Recorded live in Indianapolis for Episode 229 of Manufacturing Happy Hour, this panel asked what it takes for a manufacturing region, and the companies in it, to keep thriving. Host Chris Luecke framed the answer as a combination of three things: digital capability, the right leaders, and the right involvement from the surrounding ecosystem. Three panelists, each with a different vantage point, took up that question:
- Kathy Miller is a returning guest. Their career began at 17 as an industrial engineering co-op student at a vehicle assembly plant and went on to leadership roles at Delphi, Parker Hannifin, Rolls-Royce, and Vertiv. They co-wrote Steel Toes and Stilettos, have a second book due later in the year, and now work as a coach, consultant, speaker, and board member. They call this stage "Kathy 2.0."
- Null Hopkins of CliftonLarsonAllen (CLA), whom the host described as a digital transformation expert, works with manufacturing leaders on business challenges and opportunities involving technology. They said digital technology and AI are becoming "ever more critical."
- Steve Martin calls themself a retired "private equity mercenary." They spent much of their career helping private equity firms buy manufacturing companies, which they say showed them how investors perceive value, "or sometimes incorrectly perceive value." They now work in economic development with the Indiana Economic Development Corporation (IEDC) and sit on the board of Elevate Ventures, which they described as the state's public-private investing arm for venture development.
The event was co-hosted by CLA and the Association for Advancing Automation (A3) as part of a live tour.
Why Indiana's economy rises and falls with manufacturing
Luecke opened by asking Martin what manufacturers elsewhere could learn from what Indiana does right. Martin started with a point about scale. People tend to associate manufacturing with Michigan, Ohio, or the automotive industry to the north. By Martin's account, however, Indiana probably has the most manufacturing-centric economy in the country, "by almost 10 points." Martin said that manufacturing and the economic activity tied to it account for about 48% of the state's GDP.
The conclusion Martin drew was direct: "as goes manufacturing in the state of Indiana, so goes our economy." For them, the question of how Indiana's economy can thrive comes down to how the state encourages manufacturing.
Technology is now accessible, and Indiana has a tech hub
Hopkins was asked what role digital transformation plays in that. They described the present as "a really important inflection point for technology and specifically AI." What has changed in the last few years, in their view, is accessibility. The barriers to entry have largely been removed, so any business, large or small, can now use these technologies.
Hopkins sees a particular opportunity for Indiana. The state combines the manufacturing heritage Martin described with what they called a thriving technology center in Indianapolis and across the state. Hopkins argued that putting the tech hub and the manufacturing base together positions Indiana well to thrive at this inflection point.
Leaders who bring people along
Miller was asked to name the missing piece of the puzzle. The answer was strong leadership. Miller said every company will go through some level of digital transformation, "or they're probably not going to be a company anymore." Leaders therefore have to know how to drive transformations. That means being willing to embrace new technology, and also knowing how to bring along people who have done things manually for a long time and may feel intimidated by what is coming.
Miller listed several things this requires:
- equipping leaders to communicate effectively and to have "digital and difficult conversations" about upcoming changes;
- having a plan to upskill the workforce;
- explaining not just the what, but also the why and the how.
The goal, in Miller's words, is for employees to feel that they are part of the transformation, "doing it with the company," and that "the company's not doing it to them."
Luecke asked whether successful leaders share a common trait. Miller's short answer was optimism. They explained that optimism does not mean wearing rose-colored glasses. It means being able to embrace the future, see challenges as opportunities, and carry a vision through the organization. Miller added that there are "science-backed ways" to increase optimism, so leaders can be given tools to develop it.
Indiana's "front door" and "back door" problems
Luecke then asked Martin where Indiana could improve. Martin said their private equity background shapes their view, and they described Indiana as having both a front-door problem and a back-door problem.
The front door is about ideation. By Martin's account, innovation comes from people who create ideas and are then supported by the right ecosystem to turn those ideas into businesses. That requires both capital formation and talent formation.
The back door is about what happens after success. Martin said Indiana grows good private businesses and scales them to a certain size, but they then become "almost too big for the people that own them" and need institutional capital. If the state doesn't handle that transition well, Martin warned, "we lose control of some of our most important employers."
Martin's answer is to build what they call a "platform company." This is an organization structured so that it creates transferable value for an institutional owner and can also be scaled further. They described this as the challenge facing a manufacturer that has succeeded with a product-centric strategy and now needs to reach the next level. That transition, Martin said, is the point where the effect on the state's economy can be either constructive or destructive.
Start with the business problem, not the technology
Asked about the technical challenges companies face, Hopkins returned to Miller's point. With so much activity around AI, it is tempting to start with the technology and then look for ways to apply it. Hopkins said the businesses doing well are the ones that start with their business challenges, opportunities, and people, and bring those people along on "this journey of discovery." The answer may turn out to be fully or partly digital. Involving people from the start, Hopkins argued, gives the company the best chance to shape and manage the change.
Because CLA works in many states, Hopkins said the firm sees where this is done well and where it isn't. They called this approach the big differentiator today. As companies try to scale and deal with supply chain problems, material costs, and labor shortages, the key in Hopkins's view is to use technology "not to replace or displace people from the workforce, but to elevate and empower them" to do more valuable work.
Miller added a caution about intentionality, using augmented-reality glasses that display work instructions as an example. The glasses are impressive in a manufacturing demo, Miller said, but "may not be so cool to the guy who has to wear them eight hours a day." Sometimes companies have a cool technology and go looking for a problem to solve with it, instead of the other way around.
Miller then suggested a better use for the same device: training new employees during their first 30 days. Younger workers would feel they are working with cool technology. Workers of any generation would gain confidence that they can master a new environment, and they would see that the company is investing in training them and connecting them to a bigger purpose.
Is "technology for technology's sake" fading?
Luecke asked both Miller and Hopkins whether companies are becoming more deliberate about adopting technology. Miller said things are "definitely going in the right direction." According to Miller, companies have learned from a few miscues, such as deploying robots without asking why. They are now more intentional, especially around safety: they look for tasks that are repetitive, monotonous, ergonomically difficult, or hazardous, where automation would be better for people.
Hopkins pointed to a larger trend. They described the present as "the largest transfer of wealth ever," with many generational businesses changing hands. Some pass to younger family members, and others are bought by private equity or other companies. Hopkins said there is "a lot of pent up energy to adopt change and innovation" during these transitions. New leadership sees efficiency and growth potential that may have been held back for years, and Hopkins believes this is accelerating adoption and sharpening its focus.
What Florida's growth might teach Indiana
Luecke brought up a recent CLA report on Florida manufacturing. It found that manufacturing GDP there grew by roughly 66–67% over the eight years from 2014 to 2022, which Luecke called a relatively astronomical and consistent increase.
Hopkins suggested that part of Florida's advantage may be that many of its businesses are newer and look at things with fresh eyes, without as much history "to dwell on." According to Hopkins, the fastest-growing states share several traits:
- They use a dynamic model rather than a stagnant, rigid supply chain.
- They understand forecasting and can project future demand and changes in material prices.
- Their workforce is there by choice and is empowered by technology.
Hopkins stressed the last point. These companies aren't recruiting top graduates to enter numbers into spreadsheets or inspect parts by eye. They give them more interesting and valuable decisions to make. Hopkins described a snowball effect: technology underpins the business, which attracts the best talent, which drives innovation, which fuels further growth. Indiana, they said, can learn from states like Florida.
People, optimism, and relationships
Asked what lessons other manufacturers could adopt, Miller named three.
First, whatever the technology, "manufacturing is about people." Companies must help employees see meaning in their work and a connection to a bigger purpose beyond their role.
Second, optimism: treating setbacks as challenges to overcome, which can even spark innovation.
Third, relationships. Miller noted that the four people on stage "don't know everything there is to know about manufacturing." They encouraged listeners to get to know others in the industry, saying that people are very generous "unless they're a direct competitor" and want everyone to succeed. Relationships where each side can help the other, Miller said, speed up everyone's progress.
Private equity's systematic thinking, without its impersonality
Martin chose to look past geographic borders and draw on private equity. While joking that private equity people are "worthy of making fun of," Martin said they think very systematically about markets. Any technology or innovation initiative, in Martin's view, should be examined in those terms: how large is the market you're pursuing, how can technology help you scale, and how can changes in your cost structure become a competitive advantage?
Martin reduces strategic planning to two questions. First, what is the total addressable market for your capabilities? Second, what is your core competency, or in their words, "know thyself"? Private equity thinks in terms of capturing market share. When Martin works with a private owner, they ask what the business is truly great at and how new technology can help optimize around that. Martin summarized this as looking both inside and outside the company.
Martin said they have a "love-hate relationship" with private equity: it taught them a lot, but it is very impersonal, while Martin values personal relationships in running a business. They quoted It's a Wonderful Life, paraphrasing George Bailey's line that the people running the machines "do most of the living and dying around here," and added that those people are also "where most of the good ideas come from, too."
Two uses of AI: automation and captured knowledge
Luecke asked Hopkins for a story showing how digital technology differentiates manufacturers. Hopkins described two main ways they see it being used.
The first is automation. Many tasks in the back office and on the shop floor are necessary but not high-value. Hopkins said these tasks are increasingly practical to automate with AI. Removing mundane, repetitive work frees people for more valuable and, ideally, more rewarding roles.
The second is knowledge. Many companies depend on individuals who have built up deep expertise over 20, 30, or 40 years. Those people will eventually leave, and Hopkins said companies are realizing this creates a business-continuity risk. It is also already a problem today, because the business can't scale while that knowledge sits with a few people. Hopkins sees a strong use for large language models here: large amounts of company information can be gathered in one place and queried through an interface similar to ChatGPT.
Hopkins, a former engineer who said they "just wasn't a very good one, so I went into digital instead," joked that engineers love data because they like being the smartest people in the room, and "without data, we're just guessing." They said engineering and manufacturing companies hold enormous amounts of data. The problem has always been getting value out of it, because the data is usually siloed, unstructured, and spread across paper and electronic documents. According to Hopkins, LLMs can now read and sort that material, greatly expanding what companies can get from it.
Luecke tied this to the most common theme on the show, the skills gap and the retiring workforce. He said so many guests bring it up that he now asks them for a new angle on it. He saw this use of AI as a concrete answer that also fits the panel's earlier theme: don't adopt technology for its own sake, but use it to capture the tribal knowledge "that's about to walk out your door."
The three Ps of scale
Returning to scale and transferability, Martin offered a framework of three Ps:
- People. This is mainly about skills. Martin said businesses evolve in stages that are essentially about span of control, and the challenge is building leadership that can take technical talent and scale it across the whole organization.
- Planning. This means creating a strategy that takes advantage of the company's skill sets.
- Process. Martin calls this "method." It means integrating technology, systematizing processes, and aligning physical assets so that the data systems generate can inform strategy.
For Martin, scale "is all about doing more with less." The only way to achieve it is through talent, a clear strategic vision, and processes that can be repeated across the organization.
Vision, adaptability, and teaching people skills
Miller described the leadership needed to achieve that scale. It starts with vision, because it "doesn't happen by accident," and then requires people who can execute on that vision. Leaders also need flexibility and the ability to pivot, since change is accelerating at unprecedented rates.
Miller emphasized that growth can't come at the expense of basic human needs. People want meaning, want to be part of something larger than themselves, want to feel good about what they contribute each day, and want community. Miller also noted that the best technologist is not necessarily the best people leader. Leadership skills can be taught, though, and Miller argued that upskilling should include people skills alongside technical ones, or companies will "fall short of the visions we want to enjoy."
Does new technology give work more meaning?
Luecke asked Hopkins whether AI and LLMs are helping people find more meaning in their work. Hopkins didn't answer directly. Instead, they drew on experience working both inside and alongside many of the state's largest manufacturers and engineering firms. The common thread they saw was a willingness to move quickly and occasionally make mistakes, since "this is not like a well-charted path."
That is why the cultural factors Miller described matter, Hopkins said. Companies will have to accept discomfort and processes that change often, and engineers in particular must get used to making mistakes along the way. Hopkins's view was that "the most dangerous thing manufacturers could do right now is pause or wait or be overly cautious and risk falling way, way behind." They said they hope CLA's clients, the people in the room, and Indiana manufacturers more broadly will lean into the opportunity.
Closing: psychological safety and "playing well with others"
When Luecke asked what he should have asked, Miller joked that they were shocked no one had brought up the impact of psychological safety on innovation. Miller said it is a chapter in their upcoming book. Building on Hopkins's point about mistakes, Miller noted that making mistakes is especially hard for high achievers and for technical people who rely on precision. It is therefore important culturally that people not fear the consequences of mistakes or of trying new things, and that mistakes become learning opportunities, "not punitive circumstances."
Martin gave the final answer, drawing on being raised by a kindergarten teacher: "it's all about please and thank you." In Martin's view, that upbringing holds a real lesson about playing well with others, which they said most unhealthy corporate cultures fail to do. Martin urged leaders to give people room to make mistakes, to show them grace, to let them think outside the box, and not to judge before understanding where they are coming from. Martin concluded that a culture which penalizes thinking outside the organization's usual doctrine limits innovation, and that such a company is "never going to get any new ideas."
We're about to get into podcast mode. And first and foremost, the only way to start a proper Manufacturing Happy Hour episode is with a cheers or a prost since we're here at Googman House. So, cheers. Prost, everyone. Welcome to Manufacturing Happy Hour.
And we have a very, I would say, unique range on our panel here tonight. We have, to my left, Kathy Miller, who is actually an alumni of Manufacturing Happy Hour from way before we'd even done 100 episodes. So, it's been a long time coming to have you back on the show. A wealth of experience in the manufacturing industry from leadership roles, Rolls-Royce, Parker Hannifin, the co-author of Steel Toes and Stilettos, and a new book coming out later this year as well.
We have on the far left Niall Hopkins from CLA. Niall, great to have you here. And I would describe Niall as a digital transformation expert. Then finally, we've got Steve Martin, who has history in private equity. You're a board member at Elevate Ventures right now, which I believe was created by the Indiana Economic Development Corporation.
So, we're going to be having a lot of conversations around topics and exploring the impact of leadership, digital transformation, as well as a local ecosystem on how that all evolves. We'll talk about that in the context of Indiana, but also broader topics as well. So, that's just my intro really quickly. I'm going to have each of them introduce themselves real fast.
But first, I want to thank a couple groups that have made this event possible. First, let's give a round of applause for CliftonLarsonAllen, CLA. This is Leslie Boyd's home game here tonight here in Indianapolis. So, round of applause for them. Leslie had approached me about the idea of doing a tour, collaborating, I think late last year, and this was just the perfect opportunity to make it happen. So, thank you all for being here.
Also, shout out to the Association for Advancing Automation, another great partner. Let's give them a round of applause as well. We've had a lot of presence from A3 member organizations and we're just two dates in the tour so far. I know Wauseon Machine is represented here tonight. KUKA Robotics is here tonight. Anyone else I'm missing? Feel free to shout them out. Okay, so I caught the two member organizations that are here right now. Well, hey, thank you to A3. Thank you to CLA for making all this possible.
Now, in the true spirit of Manufacturing Happy Hour, I'm Chris Luecke. I'm the host of the show, but the way we start off any of these podcasts is people describe what they do as if they're having a drink with one another. So, let's go down the line. Niall, we'll start with you. Steve, we'll go to you, and then Kathy, we'll finish with you. So, when you're having a beer with someone at Googman House Brewing, how do you describe what you do, Niall?
Yeah, thanks for having us on, Chris. So I work with manufacturing business leaders to help them overcome business challenges, realize opportunities with technology, and technology's played a role in manufacturing for many years, and we're at a point now where digital technology and AI is becoming ever more critical. So looking forward to the conversation today.
I don't know exactly how to introduce myself. I always describe myself as a private equity mercenary, but I spent a good deal of my career helping private equities buy manufacturing companies, which actually gave me a vision on how they actually perceive value, or sometimes incorrectly perceive value. I am a former mercenary, as I'm a retired person, but most of my time now I'm spending around economic development with the IEDC and also, you mentioned Elevate, which is our public-private investing arm for venture development here in the state of Indiana.
And I'm Kathy Miller, and I am in the Kathy 2.0 stage of my career. Kathy 1.0 started at 17 years of age as an industrial engineering co-op student at a vehicle assembly plant, and since then I worked at Delphi, Parker Hannifin, Rolls-Royce, Vertiv Corporation in leadership roles, both of the business and manufacturing. So now I'm a coach, a consultant, an author, a speaker, a board member. I just have a whole range of fun things I do to help manufacturing these days.
So, we have a wealth of experience. I would say also a wealth of local experience up here tonight. And the way Manufacturing Happy Hour works is we want this to be a little celebration of Indiana manufacturing here. But folks across the country, across the world are going to be listening to this episode. And there are a lot of things that this region is doing right, and a lot of things that Niall and Kathy and Steve have seen not only here but throughout their careers they can talk to, on how it takes a combination of digital prowess, having the right leaders, having the right involvement from the ecosystem, and that's what we're going to be exploring tonight. So let's go really Indiana-centric at first. Steve, this first question is for you. You know, what can manufacturers learn from the things that Indiana is doing right as a region to thrive as a manufacturing ecosystem?
Well, I think the first thing you have to understand with Indiana is how manufacturing-focused this state is. And when people think of manufacturing, they may think of Michigan, they may think of Ohio, they may think of, you know, automotive and big four that comes north of the border of the state of Indiana. Indiana probably has the most manufacturing-centric economy in the country, I think by almost 10 points. So if you look at the GDP of our state that's driven by manufacturing and/or all the associated economy that's driven by manufacturing, it's about 48% of our economy. So as goes manufacturing in the state of Indiana, so goes our economy. And so if you think about how our economy can thrive, it's how do we incent manufacturing in our state.
Niall, I'm going to pass this to you next, and a slightly different question, because you're speaking with a lot of organizations on digital strategy. When it comes to continuing to thrive, what role does digital transformation or digital in general play into that? I'd love to hear your take on that.
Well, I think it's critical, especially right now. We're at a really important inflection point for technology and specifically AI. The thing that's changed in the last few years is the accessibility, the ability to adopt digital technology and AI. The barriers to entry have really been removed because today any business, large or small, can leverage technology. And what's exciting, I think, about Indiana is that we've got this wonderful manufacturing heritage that Steve described, but we also have a really thriving technology center here in Indianapolis and in the state of Indiana. And the ecosystem of the tech hub combined with that manufacturing heritage gives us a really great opportunity to thrive at this inflection point.
And Kathy, I like how you described that you're in the 2.0 version of your career, because you've been leading these manufacturing companies in the past. Now you've been writing about them. You're consulting with them. What are you seeing from your perspective? What is another piece to this puzzle, maybe from the leadership perspective, that these organizations need to thrive? You've got the heritage, you've got the technology. What else do you need there to complete that puzzle?
You really need leadership that's very strong. All companies are going to go through some level of digital transformation or they're probably not going to be a company anymore. And so it's really important as we look at this new technology to have leaders who know how to drive transformations, right? So they have to be willing to embrace it, but they also have to know how to bring people along, people that have been doing things manually for a long time and may feel intimidated by the technology that's coming. So I think it's really important to have strong leaders, to equip our leaders to know how to communicate effectively, how to be able to have digital and difficult conversations with people, right, about what's coming up. We have to have a plan to upskill our people, right? And just make sure that we are constantly explaining to them not just the what but the why and the how, and making them feel like they can be a part of that transformation, that they're doing it with the company, that the company's not doing it to them. And I think that's very important.
You don't have to answer this right now, but I do have a follow-up question on that, because you've gotten to see this from a lot of different organizations that you've worked with, people you've consulted with and spoken with. I'm curious what that characteristic of those leaders is that gets them to get people to come along with them, if there is a common thread that you see. We're going to cover this topic a little more down the line. So, if you have an answer now or a story that backs that up, great. But if not, you can think on that for a little bit as well.
Okay. I'll give a little answer and then I'll expand upon it, right. But I like it. You got to have optimistic leaders, right? An optimist isn't about, you know, just wearing rose-colored glasses. It's about someone who can embrace the future and sees challenges as opportunities and can help drive that vision through their organization as well. So, you know, there are really science-backed ways to increase your optimism. So we can equip leaders with those tools to help them get there.
I really like that answer because it's almost a too perfect segue into my next question, which is going to be a bit of a downer. So, you know, I wanted to start off with, hey, what are the things that Indiana is doing right? And Steve, I know you've seen a lot and you can kind of share, hey, what are areas where maybe we're on the right track but we could start to improve a little. I believe you described it as maybe a front door, back door problem at one point.
Well, by saying I've seen a lot really implies that I'm old, which, I tell people I'm a retired mercenary in private equity, which actually is a filter that is probably something that's really formed my worldview on how business actually could thrive, but what are the downsides of it? And I always describe Indiana as having what I call a front door and a back door problem. The front door is that we need to create ideation business in our state. So innovation is really driven by people that create ideas and then are encouraged through the proper ecosystem in our economy to create businesses out of those ideas, and that's both capital formation and talent formation. But then I say that we really as a state have a back door problem. And through the lens of private equity, often what happens is that we grow these wonderful private businesses and we scale them to a particular size, but then they become actually almost too big for the people that own them. So they need institutional capital. And unfortunately, if we don't do that as a state properly, we lose control of some of our most important employers. And so one of the back door problems I describe when I'm thinking about this is how do you create what I call a platform company? How do you take the organization that you're building and create the pieces that can create both transferable value to somebody who's an institutional owner but also can be scaled on? And so that's the challenge of the manufacturer that has been successful at a product-centric, you know, strategy that needs to go to the next level, and that is the inflection point where we can have either a really constructive or deconstructive effect on our economy.
We're going to get back to that scalable ownership towards the end. Niall, I'm going to send the next question to you. We were just talking about one of the challenges at a state level, for example. What are the challenges you're seeing at a technical level at companies, whether it's here in Indiana or elsewhere, that you're seeing right now?
Yeah, I think it comes back to what Kathy was saying, which is that there's a lot of curiosity around technology at the moment, because we all know that there's a lot of activity in the world of artificial intelligence, and sometimes it's tempting to start with the technology and figure out how you might apply it. But the businesses that are really thriving in this environment are the ones that start with the business challenges and opportunities and the people, and bring them along on this journey of discovery. And the answer may well be a digital solution or partly a digital solution. But by bringing the people along with you, you've got the opportunity to shape that change and to manage that change most effectively. And at CLA we have a very unique opportunity to work in many different states. So we see how this is being done well, and we see where it's not being done as well. But I do think it is the big differentiator today, and as businesses look to scale and grow and overcome challenges like supply chain issues, material costs, labor shortages, how to leverage technology not to replace or displace people from the workforce, but to elevate and empower them to be doing more valuable activities, I think is key.
I'm going to ask you about other states here in a second, but Kathy, I saw you nodding along. I'd love to hear what you would add to Niall's answer.
Yeah, it's just when we are implementing technology, we need to do it with intentionality. You know, I have the wearable glasses, right, where you've got augmented reality and instructions on. They're really cool in a manufacturing demonstration, right? They may not be so cool to the guy who has to wear them eight hours a day, right, and has been doing it. So sometimes we have this cool technology and we're looking for a problem to solve with it, versus, you know, the other way around. But if you can stay open to that, you know, think about when you have new employees and are training new employees: can you use that application for the first 30 days, so they come in and feel like, first of all, for the younger generation, I'm working with really cool technology here, but also, for all generations, I can master this. I can do this. I haven't worked in an environment like this, but they're investing in technology and training me, to make me feel connected to the bigger purpose.
Kathy and Niall, I'm going to ask you both this question. Whoever wants to go first, kind of raise your mic up once I start asking the question. But the way I want to ask this is: are you seeing fewer companies do the technology-for-the-sake-of-technology approach now? Is that an increasing trend, a decreasing trend? Because I've been in the industry for a decade and a half now, and I like to think, you know, as more leaders start entering the industry, they're not looking for, you know, technology for the sake of technology. They're very deliberate about the things they're evaluating. But from your conversations, from your experience, would you say leaders are finally evaluating technology when it makes sense, or they're still evaluating technology just for the sake of it? Kathy, you raised your mic first, so you're up.
No, it's definitely going in the right direction. I think people are really starting to understand from a few miscues, right? Like, we can use these robots to do all these things, but why, right? So I really do see people and companies being more intentional, particularly in the safety arena. You know, what are things that we're asking humans to do that would be better for people? You know, the repetitive, monotonous, ergonomic challenges, or hazardous jobs, right, where there's risk. So as people are understanding the technology and the capabilities of it, I definitely see a good trend. I think the other macro thing that's happening right now is we're living through the largest transfer of wealth ever, where a lot of generational businesses are transferring to new ownership. Maybe it's the family transferring to younger
generations. Maybe it's private equity or other businesses being bought and there's a lot of pent up energy to adopt change and innovation as that change happens. So I think that's just accelerating this adoption and I think it's helping to focus attention of these businesses who see a lot of potential to drive efficiency to scale and grow that maybe has been pent up for many years but now the generational leadership is there that's going to drive the change.
I like both of your answers to that. Steve, you've been like leading off most of our questions so far, so you're going to bat cleanup on this next one. And Nol, you're actually going to go first because you brought this up. You know, CLA works with clients from across the country, so you see things in a lot of other regions. And before we jumped up on stage, we were talking about the report that CLA recently published on what Florida manufacturing is doing, right? For example, like between I think it's 2014 and 2022, like an 8-year period, their manufacturing GDP increased something like 66, 67%. Like a relatively astronomical consistent increase number right there. So this question is, we were talking about Indiana for a bit. What are some lessons you've learned from other areas particularly on the digital front?
Yeah, I think when we've witnessed that firsthand at CLA, what we're seeing is some of what we've already talked about. So maybe in some ways having a lot of newer businesses with a fresh set of eyes has helped states like Florida be more forward-thinking. So, there's some lessons that we in Indiana can probably learn from states who don't have as much background to dwell on. Those states who are seeing the most growth are absolutely leveraging a dynamic model. They're not tied into a very stagnated rigid supply chain. They've got the flexibility to be dynamic. They understand forecasting. They can project into the future demand and pricing changes of materials. They've got a workforce that is there because they want to be there and they're empowered by technology. So they're not bringing in the best graduates from the country to have them enter numbers in a spreadsheet or inspect components visually, manually. They're having them make more interesting, exciting, valuable decisions. So it's sort of a snowball effect. You know, you set the business up to thrive with technology underpinning a lot of what you do. It attracts the best talent that drives innovation and it continues to grow. So, I think there's some lessons that we can learn here in Indiana from states like Florida who are doing a great job of that.
Kathy, you've co-written one book, you have another coming out later this year. What are some lessons you've seen from, let's say, outside of your past experience being at Rolls-Royce, being at Parker Hannifin, things that you've seen recently that you think other manufacturers could emulate anywhere across the country?
Yeah. Well, I think what's really important is that no matter what technology we're working with, what inventions, manufacturing is about people. And so, we can't lose sight of that. And being able to work with people and help them see meaning in what they do, right, beyond that role that they have, that they're connected to a bigger purpose, is important. We talked a little bit about optimism and being able to see setbacks as just challenges to overcome and possibly even spark innovation. And the third one which you alluded to without saying it is relationships, right? The four of us don't know everything there is to know about manufacturing. So get to know other people. Realize that there's so much out there. And people when you approach them, unless they're a direct competitor, are very generous, right? They want everybody to succeed. And so just developing relationships with people that you can help and they can help you accelerate your journey are just so important.
Steve, looking across borders, what are some things you've seen other regions do well that would be worth emulating here in Indiana or for manufacturers listening across the country, across the world?
You know, I'd probably go beyond borders and I describe myself as a private equity mercenary. And while I make fun of the entire group of private equity people because they're worthy of making fun of, the other thing that I've learned is they think very systematically about markets and how to address markets. And so when we talk about innovation, we talk about integrating, you know, technology inside of an organization, you really need to look at it through the lens of what is the size of the market you're attacking? How can I scale that business using that technology effectively? How can I address changes in my own cost structure to make a competitive advantage? But generally when I'm working with companies, you know, I describe the strategic planning process quite this simply. It's like what is the total addressable market with your capabilities that you could pursue and what's your core competency, which is know thyself. And so when I look through the lens of private equity, they think in terms of capturing share. When I look through the lens of a private business owner, I ask the question, what are you really great at? And how can you use changes that are coming through new technology, innovation that are in front of you to basically optimize your business? And so it's inside and out. So, I always tell people I have a love-hate relationship with private equity because they've taught me a lot, but they're very impersonal and I'm very big on the personal relationship of running a business. So, running a business, running a manufacturer where you have people, I say you work with people that live and die. There's a famous line out of It's a Wonderful Life, which is the very people that we make fun of, the people that are running the machines are people that do most of the living and dying around here. And they're also where most of the good ideas come from, too. So,
I watch that movie every Christmas time. There's a nice theater in Milwaukee that's like one of those old school theaters that I do remember that line. It's a classic George Bailey line. Does anyone else remember that line here? Like, raise hand, raise your glass. Okay. All right. We got some Wonderful Life folks out there. All right. Well, we're going to come back to that topic that you mentioned around aligning business with your strengths. Know thyself. We'll get there during our last round of questions. Nol, I've got one more for you before we get kind of our wrap-up portion of this discussion. One thing we've talked about leading up to this is how are technology and digital specifically being used as a differentiator within manufacturers. You see this on a constant basis in your role. I'd love to hear a story that kind of illustrates that as we wrap things up to put, you know, a wrap around a lot of the great points you've made throughout this discussion.
I'm just wondering whether we're going to make Kathy's book. Do you think this will make it into a chapter, Kathy? This podcast.
There's still time. I got about a week left.
I better make this answer very memorable. Yes. So I guess there's a couple of ways that I see technology being implemented in manufacturing right now. And if you think about some of the things we've already talked about, the first one is automation, right? So there's a lot of things that we all have to do in our day-to-day role that we may consider necessary but maybe not high value. And that could be in the front, in the back office. It could be on the shop floor. Those areas for automation are increasingly more viable for leveraging things like AI. And by taking away that mundane repetitive task that Kathy mentioned earlier, what we're doing is freeing people up to do things that are more valuable. So automation, removing the mundane, elevating people to be more valuable and hopefully give them more rewarding roles is the first thing. The second one is more about knowledge. So in many businesses we work with today there are individuals who hold a lot of knowledge and in their experience they've gathered an enormous amount, a wealth of knowledge that helps the company operate. And what we're finding is those folks who have been there for 20, 30, 40 years, eventually they're not going to be there. And those businesses are realizing that without those individuals, they have a business continuity challenge and they already have a problem because they can't scale. And what we're finding is there's a great application of these things called large language models where you can take huge amounts of information, put it in a place where it can be queried in much the same way as like a ChatGPT interface and query this wealth of knowledge that exists within the business. And most engineering firms today have so much data because engineers love data. Do you know why engineers love data?
I could take a few guesses, but I feel like you have a punchline.
Well, I used to be an engineer. I just wasn't a very good one, so I went into digital instead. But engineers like to be the smartest people in the room. Did you know that? There's a lot of accountants here that would argue with that. But engineers like to be the smartest people in the room. Without data, we're just guessing, right? We don't have enough information to make what we call an engineering judgment. So, engineering companies, manufacturing businesses have enormous amounts of data. The challenge has always been how do you extract the value from that? Because it's probably in silos. It's probably unstructured. It's probably in a combination of paper and electronic documents. Today, we can gather that data. We can read those documents. We can sort that information using these large language models and suddenly we can expand the opportunity to get value from that data.
Well, it's also one of the things I like about being the host of Manufacturing Happy Hour. I get to hear stories and sometimes there's some like Venn diagram overlap between the morals of those stories. And you're maybe the second or third person, which is a good thing, to bring up the power of artificial intelligence and large language models in terms of being able to query all the data that's at a company, because if you think about it, like all the time on this show, the number one theme that comes up is the skills gap. The retiring workforce comes up all the time. So much so that I have to tell people, it's like when they bring it up, it's like, "Hey, did you know there's a skills gap going on?" It's like, "Yes," like our audience is all manufacturers, but if you can tell me like your unique perspective, your unique story on that, you know, give us a new way to think about that challenge and how manufacturers are solving it. I love that that's something that's coming up on a more regular basis as a real tangible, like kind of back to one of our earlier topics. Don't just go implement technology for technology's sake. If you can go implement technology so that way you can make use of the data that's within your organization, so that way you can capture that tribal knowledge that's about to walk out your door. I'm glad you emphasized that in this conversation tonight.
So we've got one more round of questions before we wrap this up. So Steve, we'll go back to what you were talking about earlier. How do you build scale and transferability within organizations? We're going to bring this home back to Indiana for a second. You mentioned that, you know, that's ultimately what you need to take that company to the next level. Can you share a little bit more about that?
I use the three Ps as it relates to scale. People, and that generally has to do with the skill set of the people. And so as you build a business, I always say businesses go through evolutions which are, in essence, span of control. And so how do I create leadership that can take technical talent and actually scale that to the entire organization? It's planning. So how do I create a strategy that takes advantage of my skill sets? And the last one is process. And I always talk about process as being method. And I think of that as being an integration of technology, but it's also an integration and a systemizing of the processes and an alignment of those physical assets so that we can actually use the data that our systems are generating so that we can actually inform the strategy. It's all about how do I make the processes easier and more efficient. And scale is all about doing more with less. And the only way you know how to do that is with talent, with a vision for what the strategy is, and having processes that actually can be scaled across the organization to basically produce more with less.
Kathy, I'm going to go to you next. What does that vision look like? Because Steve's been emphasizing how important leadership in all of this is. I'd love to hear maybe an example or a story or like a key takeaway for the audience in the context of what does leadership look like for having the vision that allows you to achieve that type of scale.
So it starts with having a vision. It doesn't happen by accident, quite honestly. And you've really got to have someone who has the vision and then you have to have people who can execute on that vision, right? But you also have to be able to have flexibility, adaptability, and pivot because all of these things are just accelerating at unprecedented rates, right? So you've got to have leadership that embraces the ability to change as technologies change. But when you look at humans, right, and what's important to them is they want to derive meaning. They want to be connected to something larger than themselves. They want to feel good about, you know, what they're able to contribute on a daily basis. And they want to be connected and part of community. And so as we scale, we can't forget about those basics. And it's really an exciting time right now. It's really an exciting time, but, you know, the smartest technology person might not be the best people leader, right? They may be, they may not be.
Except for Noah. Noah's the exception.
But we can teach people leadership skills. And so I think that's very, very important that we don't forget about that when we think about upskilling, right? We're typically thinking about the technical aspects, but there can also be the people aspects taught, and we really need to do that or I think we'll fall short of the visions we want to enjoy.
I don't know if this is the right takeaway I should have gotten from that answer, but Nol, I was just thinking with all these new tools, with large language models, artificial intelligence, are you finding that the new tech is allowing people to get more meaning from their work? And if so, how?
That's a great question. And I think I had the opportunity to work for and subsequently work with a lot of the largest manufacturers and engineering companies in the state, both from inside the companies and from outside helping them. I think one of the things that has been true in both cases is the willingness to move at pace and occasionally make mistakes, knowing that this is not like a well-charted path. This is an inflection point. It is a very fast-moving area of technology. It's having a huge effect on our industry. And so the cultural things that Kathy outlined are important because we've got to go through change. But we've got to be okay with being a little bit uncomfortable. We've got to be okay with our processes, Steve, changing regularly. And something that engineers aren't so good at is making a couple of mistakes along the way, because we're going to do that. But I think the most dangerous thing manufacturers could do right now is pause or wait or be overly cautious and risk falling way, way behind. And so my hope is that the folks that we get to work with at CLA, the folks who are in
the room here, and more broadly the manufacturers in Indiana just really lean into this and accept this wonderful opportunity we have to accelerate our growth.
I love the answers across the board tonight. Thank you for sharing your unique knowledge, unique experiences. Hey, let's give it up for Steve, Nol, and Kathy. Everyone, round of applause.
Now, we're not quite done. If you listen to Manufacturing Happy Hour, you know there's a way I end my episodes before my tagline. But to get there, I always say, "Hey, is there anything you wish I would have asked that I haven't yet?" So, if anyone has something else on their mind up here, or, the nice thing about doing this live is if you out there in the audience, you're like, "Well, gosh, Chris, this was an obvious question you should have asked the whole time." We can do a little Q&A if you want to come up here and take my seat and ask a quick question as well. So, we'll start with our three panelists. Was there anything I missed? Anything you want to highlight before we wrap this up?
Well, I'm shocked that you didn't ask me about the impact of psychological safety on innovation.
Let's talk about the impact of psychological safety on innovation. Sounds like a title for a book.
It is a chapter. But no, when you were talking about people making mistakes along the way, right? It's really hard for high-achieving people, for technical people who rely on precision and that sort of thing. And so it is very important culturally to make sure that people are not afraid of the repercussions of making mistakes and being innovative and trying new things, that those become learning opportunities, not punitive circumstances. I'm really shocked you didn't ask that, but I—
Hey, no, next time we do this in Indianapolis, I'll be prepared for that one.
So, that was such an open-ended question, I'll give you an open-ended answer. So, deal.
That's a fair trade.
And so, I was raised by a kindergarten teacher, right? So, it's all about please and thank you. And there actually is something informative in that process, which is playing well with others, and in most unhealthy corporate cultures, we don't play well with others, which is: give people room for making mistakes. Give people grace. Give people the ability to think outside the box. Don't judge before you actually understand where they're coming from. And it is that culture that actually limits innovation. So if we create a culture that basically penalizes thinking that's not just part of the normal doctrine of the organization, then we're never going to get any new ideas. And so it's all about how we think.
Excellent. One more round of applause for our panelists tonight, everyone. And a round of applause and a cheers to all of you. And I'm going to end with the tagline this time. Stay innovative. Stay thirsty. We still got a long party ahead of us, folks. Everyone enjoy. We'll talk soon. Cheers, everyone. Cheers.
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