Fostering the Industrial Internet to Accelerate Economic Growth and Transformation

Over the last few decades, the internet has been integrated into every aspect of our society, transforming how our industries and economies function. Sophisticated information technology systems have become a part of modern engineering, manufacturing and production processes. These connected systems, often referred to as the Industrial Internet of Things (IIoT), can push productivity and economic growth in the right direction with smart public policy and effective security. On Wednesday, September 13, the Information Technology and Innovation Foundation organized a panel discussion on “Fostering the Industrial Internet to Accelerate Economic Growth and Transformation.”

The event was opened by Stephen Ezell, Vice-President of Global Innovation Policy at ITIF, who spoke about the profound effect of this “integration and linkage of big data, analytical tools, and wireless networks with physical and industrial equipment.” According to Ezell, “[t]hese technologies will fundamentally change the competitive landscape of global manufacturing, increasingly enablingcompetitive manufacturing in higher-cost economies, in part by heralding an era of enabling mass customization and reducing efficient production lot size, which may enable more local manufacturing.”

Ezell also introduced the experts on the panel: Alex Dimitrief, Senior Vice President and General Counsel, General Electric Company; Rebecca Taylor, Senior Vice President, National Center for Manufacturing Sciences; and Andrew Bicos, American Society of Mechanical Engineers (ASME) Legislative Fellow in the Office of Congressman Tom Reed of New York’s 23^rd District.

A moderated discussion among the panelists followed Ezell’s remarks. Alex Dimitrief opened the discussion and talked about the exciting future that IIoT promises for companies like GE and their consumers. He said, “If we partner with our customers right, IIoT allows us to decrease unscheduled maintenance, operate factories more efficiently, improve health and safety, improve performance, lower greenhouse gas emissions, and basically improve manufacturing quality and efficiency. How can anyone vote against that?”

The potential of IIoT has piqued the interest of both industry and government. The involvement of governments can be a good and bad thing, Dimitrief warned. While governments are trying to find ways to harness the benefits of the IIoT for its citizens, their well-intentioned efforts to champion their own companies risks “squelching the benefits of industrial internet before it gets going.”

According to Dimitrief, there are six possible points of cooperation between the industry and government: coming up with open, responsible, voluntary, industry-led standards; regulating privacy on the industrial internet differently than privacy on the consumer internet; promoting industry-led, technology-neutral cybersecurity regulations such as the NIST framework; freedom of contract between parties instead of government regulation; encouraging free data flows over country borders; and lastly, development of the workforce to harness the full benefits of these technologies.

Next, Rebecca Taylor gave an overview of the four stages of technology adoption for the IIoT: the first was technology emergence; the second and current stage is innovation and scaling of these technologies which leads to the third stage, organizational and social transformation; and finally, in the fourth stage, the innovation will become self-sustaining.

Taylor stressed that for IIoT to reach its fullest potential, hesitant small and medium sized enterprises need to get involved. “We need to make the case to them that the adoption of this technology is going to go to their bottom-line,” said Taylor.

Andrew Bicos followed Taylor and gave a high-level overview of the priorities of Congressman Reed and the Manufacturing Caucus. He addressed the necessity of public-private partnerships among industry, government, and academic institutions to address issues such as workforce development and productivity enhancement. He spoke about implementing tax reforms that would help American manufacturers upgrade and ensuring that government regulations do not hurt American businesses. Bicos also argued that a revamping of the U.S. education system was necessary to make sure that skills developed by students remained relevant in the digital age. He agreed with Dimitrief that trade deals would have to facilitate the free flow of data over countries’ borders. Using his time at Boeing as an example, he said, “Airplanes fly across borders all the time. Any barriers that are put up would restrict [the collection of data for product improvements] from happening.”

The discussion that followed revolved around possible strategies that governments and industries can undertake to make sure that the potential of digital technologies is harnessed by businesses for maximum benefit. The panel argued that there exists a lot of space for the United States government to step up and take a leadership role in formulating collaborative strategies for governing the industrial internet. They warned that a vacuum would allow other countries to overtake the US in establishing ground rules and principles that may not benefit U.S. businesses and possibly hinder the growth of the IIoT.

The panel addressed questions from the audience on how other countries are asserting their thought leadership in IIoT policy, on standard setting processes and how US government agencies can best get involved in the process.

For more information, you can read about ITIF’s relevant work on the use of digital technologies in the manufacturing industry here and here.