From IoT to AI: Exploring Manufacturing Trends with CEO Danny Yu

Danny Yu has been the successful CEO of two industrial technology companies that have been acquired, one an Internet of Things company for building automation and the other a 3D data machine learning company for additive manufacturing.

Recently, Greg Selker, Regional Sector Leader for Technology in North America, and Stuart Glassman, Global Subsector Leader for Engineering, Construction, and Building Materials, sat down with Danny to discuss the present and future state of the industrial world and the role technology plays in it. 

According to Danny, the ‘core trends’ that are currently prevalent in the manufacturing sector are workflow automation, resiliency, clean energy integration, decarbonizing heavy production processes, and application-specific additive manufacturing. And of course, the most profound cross-cutting technology driving transformation in his view is artificial intelligence, which rides upon prior waves of the Internet of Things and cloud computing. 

Digital Transformation in the Manufacturing Industry

“In many ways, industrial digital twins are the ultimate vision for digital transformation in the manufacturing industry,” Danny said. “Very simply, digital twins are virtual replicas of physical assets, systems, or processes.” 

This specific burgeoning technology offers manufacturing companies “various optimization benefits at different stages of the product lifecycle, whether that’s the engineering phase, the manufacturing production phase, the operations phase, or all the way to product retirement.” Digital twin technology allows a business to fine-tune operations at every step. 

But data is a sticking point, Danny explained. “You can’t apply analytical algorithms unless you have the data.” Acquiring the necessary data, and ensuring it’s of usable quality, will be one of the challenges manufacturing companies face on their digital transformation journeys. 

And Danny didn’t mince words about the needed approach to ensure overall digital transformation success: “All companies need to think about the importance of data and technology impacting their top line and bottom line.” It’s not only about the ‘what’ but also the ‘how’ of embracing technology. 

The Advent of AI in Industry

When it comes to AI in the industrial sector, Danny painted a picture of its influence: “Artificial intelligence, and specifically machine learning, has been a driver of industrial productivity. This will accelerate for the next 15 years as technology becomes democratized. Plus, as sustainability and workforce collaboration become part of the overall equation for industrial success, AI will help fuse those applications together.” 

He pointed out how AI’s ability to sift through large data sets and uncover patterns can lead to greater efficiency and strategic breakthroughs. Machine learning can (and will) overcome the limitations of past methodologies. In particular, he sees rapid advances in “physics informed” machine learning and generative AI as game changing capabilities for all workers. These enable optimized system design and manufacturing for engineers and workflow simplification for factory floor operators and technicians. 

Machine learning’s potential to shape the future lies in its ability to analyze and optimize complex system operations beyond human capabilities. But that doesn’t mean humans will no longer be needed or necessary. 

The Imperative of Balancing Technology with Humanity 

Despite the increasing centrality of tech, Danny mentioned the irreplaceable nature of the human component within industry: “Manufacturing is incredibly bespoke, and humans are still the most flexible labor force.” 

Danny advocated for a future where the presence of technology is seen not as a workforce replacement but rather as an asset to human workers. 

He noted that while there are many advantages to automation, it isn’t a silver bullet. Tech adoption faces real barriers such as costs, workforce adjustments, and downtime. Plus, many tasks are still best suited to human employees than they are to machines. New human-machine interfaces will allow everyone to work smarter. These include conversational AI and visual AI that will fuse the activities and wisdom of individual frontline workers with a company’s shared knowledge base. 

Transitioning Mature Industries into the Smart Era

For more established industries considering embracing smart manufacturing, Danny explained that transformation should be both top-down and bottom-up. In other words, innovation should come from both a strong vision and practical applications on the ground. 

He hammered on the importance of clear KPIs and well-defined goals that can resonate at every operational level. “Start with just one or two, like yield improvement or NPI time reduction.” Danny advised. “That way you utilize data and technology purposefully.” 

Sustainability as a Key Driver in Future Manufacturing

“Manufacturing is the world’s largest industry by far, and 25% of it is waste. The industry itself is responsible for 30% of global emissions, and two thirds of industrial companies rely on fossil fuels,” Danny said. 

He believes that sustainability is not just a trend but a corporate obligation. While immediate return on investment (ROI) based solely on sustainability might not be clear, he said, “If we can simultaneously increase productivity and reduce waste, it’s also great for the environment.” 

There are links between operational efficiency, environmental stewardship, and ROI. Because of this, in 2024, industry processes can and should be designed with both business and ecological outcomes in mind. 

The Complex Dynamics of Global Collaboration

When asked about the global aspects of industry and production, Danny noted the pitfalls of geopolitical tensions on cross-border collaboration. But he remains hopeful, nonetheless.  

“It’s important to recognize that with data-driven industries, collaboration is really the key to success,” he said. “What I worry about is that we’re going to start separating collaboration and limiting it, given the current trajectory of geopolitics. This is a case where we’ve sort of gotten used to optimizing supply chains just in time, so we focus on efficiency, but we sacrifice resiliency. Now the focus needs to be on resiliency and self-sufficiency.” 

He emphasized the importance of maintaining international ties for the growth and efficiency of the industry and asserted that industry strength comes from a combination of “local innovation and production as well as global synergies and shared knowledge.” 

In 2024, industrial and manufacturing companies need to work together—despite a world that seems intent on keeping us all apart and pitted against each other. 

Four Additional Takeaways for Manufacturing Companies from Danny Yu’s Interview

Here are four additional lessons manufacturing companies can learn from Danny’s wisdom: 

1. AI is Your New Best Friend: This isn’t sci-fi stuff—AI can find patterns and fix problems in ways we can’t even start to imagine. In 2024, manufacturing companies need to increase their investment in AI-driven solutions. Back in 2020, nearly half of industrial manufacturing leaders said that they were already using AI. If your manufacturing company hasn’t started taking it seriously yet, 2024 is the year to do so.  

2. Keep People at the Heart of Your Business: Remember Danny’s words: “Humans are still the most flexible labor force.” Don’t just buy gadgets for the sake of it; think about how they’ll help your team. In the USA alone, 75% of adults believe that AI will reduce the number of jobs available. If you give your employees the impression that you’re investing in tech with the goal of making your workforce smaller, you’ll immediately run into resistance. You need to foster a sense of psychological safety to succeed in your tech integration efforts. 

3. Smart Start from the Top-Down and Bottom-Up: Big changes need clear goals and input from everyone, from the boss to the person on the factory floor. More than a fifth of workers believe they are more qualified than their direct manager—whether this is true or not is certainly up for debate, but it does mean that simply passing commands down the corporate ladder won’t cut it if you want your team’s sincere buy-in. You’ll need to convince them that you know what you’re talking about—and the best way to really know what you’re talking about is by consulting with everyone in your organization before making a change. 

4. Go Green, Stay Keen: Sustainability isn’t just good for the environment, it’s good business. That mantra has been a core part of Stanton Chase’s beliefs for decades. And small steps toward being greener can make a huge difference. Take United Airlines, for example. They switched their in-flight magazines to lighter paper stock and consequently saved USD 300,000 per year in fuel costs. Being friendly to the planet can mean being smarter with your resources, and that’s something everyone can do. 

About the Authors

Greg Selker is a Managing Director at Stanton Chase, the Regional Sector Leader for Technology in North America, and the Global Subsector Leader for Growth Equity. He has been conducting retained executive searches for 33+ years in technology, completing numerous searches for CEOs and their direct reports at the CXO level, with a focus on fast growth companies, often backed by leading mid-market private equity firms such as Great Hill Partners and JMI Equity. He has also conducted leadership development sessions with more than 50 executives from companies such as BMC Software, Katzenbach Partners, NetSuite, Pfizer, SolarWinds, Symantec, TRW, and VeriSign.  

Stuart Glassman is a Director at Stanton Chase Baltimore and the Global Subsector Leader for Engineering, Construction, and Building Materials. Stuart’s extensive background in industry-related matters, combined with his expertise in strategic marketing and brand building, enables him to specialize in highly collaborative, consultative search efforts.