On October 16th, we saw the inaugural II4 conference take place in the bustling hub of Tel Aviv. Accurately billed as the most prominent Industry 4.0 event in the Middle East, the conference played host to a broad spectrum of industry mavens, with various fascinating topics discussed and major insights emerging.

Under Starter’s Orders

Opening the conference with some intriguing insights were Guy Hilton, General Manager of Start-Up Nation Central and Dov Moran, Managing Partner of Grove Ventures and inventor of the USB flash drive. Noting how the growing trend of investments in the Industry 4.0 sector indicate the state of its flourishing health, Guy pointed to the substantial crossover activity between the various subsectors of Industry 4.0 as consistent with the significant growth of companies across the sector as a whole. Dov then very astutely pointed out that while some might consider investment in semiconductors, AI, sensors and so on somewhat “boring”, he was proud to “invest in the boring stuff” since our lives are dictated by it and eventually it provides us all with an easier, healthier and better life.

Insights on Israeli Industry 4.0

II4 was the first and most prominent Industry 4.0 event to ever be held in the Middle East and Israel and its Industry 4.0 potential was unsurprisingly a topic incorporated many times during the course of the day. Almost every speaker and panelist referred to this, including Honeywell Ventures Managing Director and Head Murray Grainger, who spoke of how exciting it was to come and see what was happening in Israel.

Taking this one step further, the willingness and adaptivity of Israeli start-up companies to listen and adapt solutions to fit the pain points of their customers was noted by Dr. Phillip Ulbrich, Vice President Innovation Scouting and Co-Investing of E.ON and Managing Director of  E.ON :agile, who said how this entrepreneurial and innovative spirit was truly appreciated.

In addition, when asked the question that was on everybody’s tongues (why Israel?), Anton Papp of Rockwell Automation explained how Israel is a one-stop-shop with all the right “ingredients” – the ecosystem, the innovation and the business models and how people, his organization included, want to be a part of that.

Industry 4.0 and Niche Technologies

II4’s keynote speaker was Grant Allen, Head of Technology Ventures at the ABB Group. In a fascinating and insightful discussion with Lotan Lefkowitz of Grove Ventures, he discussed how there were two different approaches: the one-size-fits-all approach and the broader concept of the niche market. While the latter appears to resemble more of a smaller business opportunity, he wisely pointed out how a tiny niche can be an $10 billion earner and that since niches very definitely exist, there is a high likelihood of more and more large exits. He also suggested that he doubted that the one-size-fits-all approach was appropriate, as an innate sense of understanding was required for most massive industrial platforms. 

According to Mr. Allen, there is a growing readiness on the part of the industrial companies to work with start-ups, now more than ever before. These companies are now able to pinpoint and identify the gaps in their field of industrial vision that start-ups are able to envisage filling, by pulling together existing assets, and on top of that adding a layer of IoT and AI.

He also acknowledged that while the Industry 4.0 space is not new, it is now gaining momentum at a far more significant rate. About five years ago, there was much talk of large sums of money just waiting to be made and while the industry is not quite there yet, this is definitely the vision on the horizon. He stressed the point that the market is taking longer than expected, but also reiterated that while it’s slower than some might have hoped, it absolutely has not been derailed. He also echoed his previous statement with the fact that the sector is a veritable teenager and that over the next ten years, the industry would probably move from CAPEX to OPEX, likely seeking more recurring models where it can match expenses to revenues.

Successfully Collaborating

In an animated discussion about how to build a successful collaboration, several points came out that really took the discussions about Industry 4.0 to a new level.

Following a question regarding whether large corporations have the mechanisms to process collaborations with start-up companies, Steve Miller, Director of Product Owners for Software and Automation at Merck, made a clear point that if a company does not promote innovation internally, it certainly won’t promote it externally.

Collaboration for manufacturers and large industrial companies and plants was unanimously agreed upon to be an essential part of moving forward, a crucial element of which was to embrace innovation. Amos Dor, CTO and Pharma General Manager at Applied Materials AGS Automation Products Group, stressed how there the need to pick the right partner was critical, and to make sure that there were not too many partnerships. At the same time, start-ups should engage business model collaboration as early as possible, according to Murray Grainger. Technology is only half the story – start-ups need to have a full understanding of what the market wants and must look carefully for the signals as to the best way to apply the technology. It isn’t that this would be perceived as putting the cart before the horse, as it’s less about providing answers and more about listening in order to be able to properly answer the pain points and the needs of the market.

Start-ups need to listen to feedback, and take it into account, which is not to say that any given company would need to necessarily change its offering significantly; rather just to keep an open mind. Another significant point was mentioned by Yogev Katzir, the Managing Director of Infralab, which is that start-ups need to match the pace and be ready on the spot as much as possible – big manufacturing corporates are large, slow and heavy, so it’s the start-up which needs to compromise. In fairness, he added, the corporates need to adapt more to the ways of the start-up, although this is more likely a reality of the hopefully not-too-distant future.

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Read more information about the Industry 4.0 ecosystem and its growth in our latest report

Irit Avni leads the Industry 4.0 sector at Start-Up Nation Central. Irit is a highly creative and results-driven manager, with more than 16 years’ experience and expertise managing different projects and products for multinational customers in Israel’s high-tech scene. Ms. Avni holds a BA in Statistics and Operation Research and Political Science from Tel-Aviv University and an MBA from Tel-Aviv Open University. Irit served as Systems Analyst in the Center for Systems Analysis in the Planning Division, and is a captain in the IDF reserves.