The Future of Industry Conference

Industrial enterprises, but also the state will have to undergo a major transformation to succeed in new conditions. Large multinational corporations have experienced similar radical changes several times, and the successful ones have adapted themselves. For the Czech medium size companies, which were created in the 1990s, the upcoming technological change will be the first such test. The industry still has about five years to use the time for fundamental innovations. The state must contribute by changing the education system and by providing meaningful support to long-term research. These ideas were echoed at the Future of Industry conference organized by the Confederation of Industry on the occasion of its 100th jubilee.

ARE WE READY FOR THE TECHNOLOGICAL AND DIGITAL TRANSFORMATION OF INDUSTRY?

The medium size industrial enterprises are preparing for digital transformation. However, the changes they will have to absorb will be fundamental, although it will not be a revolution but rather a relatively rapid evolution. "A number of companies, originally making their living as "assembly-only businesses", are now developing and manufacturing their own products. However, they still lack capital and serial type of production for an increased use of existing industry 4.0 tools, " says Zbyněk Frolík, CEO of Linet and vice president of the Confederation of Industry of the Czech Republic.

The Czech Republic is reaching the limits of its economic potential. In order for the country not to be caught in a middle-income trap, industrial enterprises must come up with their own end-products with high added value. "We have to use the last four or five years of the low wage window for major innovations to boost productivity, which is poor across the country. Imports of foreign workers will not solve the key problem of Czech industry, i.e. low labour productivity compared to required wages. We need to develop our own branded products and establish a direct relationship with the end customer, not to be the subcontracting base of others, " believes Jaroslav Řasa, Chairman of the Board of ABRA Software and member of CI CR.

Better ability to use information will help enterprises leap to the production with higher added value. "Companies need to be able to analyze data and use it for business decisions, to replace recurring activities with automation, and to shift free resources to more sophisticated, higher added value operations. It is clear that data and artificial intelligence will transform society as a whole. The arrival of artificial intelligence brought one of the deepest transformations in history also to IBM. We have substantially transformed our offer of products and services, we have changed the structure of our corporation as well as the way of its entire internal functioning. IBM employees had to adapt their knowledge and skills portfolio to better fit the new world of business, " says Zuzana Kocmaníková, CEO of IBM CR.

For more than twenty years, IBM has been working on the development of an artificial intelligence system, called IBM Watson. Thanks to the local development centre, Czech companies also have better access to advanced IBM technologies. It is just one of the examples where the presence of large multinational companies can help the smaller ones with their transformation. "Without large companies, many new technologies or drugs would never be invented, and Internet would not have been developed into what is now considered the cornerstone of democracy. The pace of technological change is so fast that small and medium businesses often do not have enough of their own resources to keep up with them. And this is where solutions developed by large companies in cooperation with academia and the state, can become helpful, " says Eduard Palíšek, CEO of the Siemens Group CR.

While medium size enterprises face immediate competition on the market, Czech subsidiaries of multinational corporations must also defend their position within these corporations. If the environment is not favourable enough in the Czech Republic, they will not be able to convince their parent companies to move production activities with high added value to this country or to maintain them here. "One crucial question always comes with growth - to what extent can a global company like ŠKODA Auto continue to grow in its home country? The company's management strives to keep what is possible in the Czech Republic. So, we need to work together on setting the right framework conditions, structural reforms and digitization support. With record level of employment, a conservative labour market, and a rigid investment environment, it will become increasingly difficult, " says Michal Kadera, Director of External Relations at ŠKODA Auto.

WILL WE GET THE CZECH REPUBLIC AMONG THE TOP 20 MOST DEVELOPED COUNTRIES OF THE WORLD?

The Czech public sector is not yet able to meet the needs of companies that need to prepare for digital transformation. In the Doing Business ranking, which evaluates the business environment quality, the Czech Republic ranks 31st. The Czech Republic also finished 31th in the latest World Economic Forum Competitiveness ranking. It lags behind, above all, in the quality of public institutions, innovation and maturity of the business environment.

The Czech Republic has the highest share of industrial production on gross domestic product in the whole European Union. "In order to maintain our position as an industrial power, the state will also have to contribute, in particular in the areas where it has failed to do so for the time being. In the education offer for the twenty-first century, in the development of transport and technical infrastructure, in the digitization of state administration and self-government, which will free tens of thousands of people from administration to a productive economy, and in extensive deregulation of work and business, " says Pavel Kysilka, founder and chairman of the 6D Academy.

Innovations that will shift the industry to the high added value production cannot be done without quality research and development. Here too, the role of the state is irreplaceable. "The state should strategically invest in long-term science and technological research that creates unique know-how in areas that are key to industrial practice over the medium to long term horizon. This will help create a competitive advantage for Czech industry, " says Professor Michal Pěchouček, Head of the Centre for Artificial Intelligence, FEL of the Czech Technical University.

Changes in industry will also force the transformation of the labour market and the education system. The importance of general transferable skills such as comprehensive problem solving as well as searching for and finding contexts, will be enhanced. Workers of the future will have to be able to think across fields and technologies. "That's why education has to change significantly. Kindergartens and primary schools must focus on personality development - openness, responsibility, creativity, our own path. Secondary schools then need to improved the general knowledge base. At the same time, we need to make a real reform of the tertiary education, " says Miroslava Kopicová, director of the National Training Fund.