Accelerating Industry 4.0 with Nokia CEO Rajeev Suri
Podcast episode 28
As COVID-19 turned a local epidemic into a pandemic, the spotlight was trained on an industry known as a “dumb pipe”. But the global telecommunications industry proved quite smart thanks to its evolution towards 5G.
Nokia President & CEO Rajeev Suri says that the lessons learned from the continued roll-out of the next-generation wireless technology under the coronavirus will help prevent future global pandemics from turning into global recessions.
Michael Hainsworth: Over the last decade, the telecom industry has been trying to shed its reputation for being an old fashioned business, just a dumb pipe compared to those buzzed-about tech companies. But as a local epidemic turned into a global pandemic, suddenly our communications networks were in the spotlight. I asked Nokia president and CEO, Rajeev Suri, to look back to the end of 2019 through to now, to give us a sense of what was happening behind the scenes, as the networks were stress-tested like never before.
Rajeev Suri: That's a great question. And first of all, if this pandemic had happened even 10 years ago, I can't imagine the impact. The global economy would probably have come to a total shutdown. And now indeed, it's been severe, but millions of businesses have at least been able to keep some of their operations going.
Look at our own company. The majority of staff are working remotely and same goes for many companies. And that's only because of connectivity, both fixed and mobile networks, and more and more smart workplaces. So this crisis has made it crystal clear that connectivity keeps society functioning. Because whether it's hospitals or logistics hubs or even factories, governments, public networks, they've all relied on these networks to remain operational. And it's not just big businesses. No, we're talking about small traders, the self-employed, students, teachers, friends and family, all of us are relying on networks more than ever before.
If you look at the numbers, we've seen up to a year's worth of growth in network demand in just a few weeks, and the demand has not just increased, but it's also shifted from workplaces to homes because traditionally the busiest hours used to be in the evening, but that's now moved to the middle of the day because everyone is either video conferencing or streaming or gaming or just plain using the network for email and other routine tasks. And in some telecommunications and video conferencing applications, we've seen growth of 700 percent to 800 percent in just a matter of days after the pandemic broke out.
The other thing that we expect will accelerate demand is that businesses, as a result of this and partially even before this, have started to speed up their digitalization plans. The latest research shows that three-quarters of manufacturers are planning to upgrade their networks within the next two years. That means that digital transformation, whether it's factories of the future, logistics hubs, energy companies, whatever it takes in this Industry 4.0 are gonna be crucial to driving a global economic recovery. On our part, we feel a sense of duty to support our customers and the communities they serve, along with our customers to keep the world online at this critical time for everyone.
MH: What was fascinating to me was that while we haven't landed in the 5G world yet, the infrastructure over the course of the last few years has started to be built out. And if, to your point about had this happened 10 years ago, if the network infrastructure as we even know it already had not been in place, I can't imagine we would have had the flexibility to deal with this from an infrastructure perspective.
RS: Yeah, very difficult to imagine. It would just not have been possible. We needed strong networks, both fixed and mobile. Because there are many countries that do not have a strong fixed infrastructure, that are relying on mobile. There are many countries where fiber isn't that strong, and then they need to rely on copper infrastructure as well as mobile. But yeah, it was unimaginable and it's still gonna be a big deal for 5G.
Connectivity improves quality of life significantly.
MH: Many experts though warn that we're going to see a second wave in the near future when the pandemic makes a resurgence. But at the same time, some behaviors we've adopted are expected to stay with us for quite some time. What are some of those lessons that we've learned at the network level that will help those in the space prepare for that second wave?
RS: I think one is resilience. It's vital. This gives networks the capacity to deal with unexpected challenges. And that means investing in network capacity upgrades, continuing 5G rollouts, and the private and public sectors working together to speed up digitalization across industries.
Another key lesson that we've learned is that good dialogue is crucial between businesses, between businesses and governments, and between everyone in the public. So for instance, we are working with a number of governments to evaluate if we should bring forward fiber build-outs in many countries that need it because that need is now clear. But also, between everyone and the public, we have to have this dialogue.
What are the pressure points highlighted by the crisis?
How have priorities changed now and for the future?
What more can we do to support our customers and help individuals and societies?
No one has all the answers or can solve these problems alone. But as a multi-network society, good dialogue makes it very important. At Nokia, we've made short term adjustments so that we can be there for our customers and keep our long term plans on track. It's amazing that when we went into this, we were not sure if we would see losses of productivity across the company, especially in R&D, where traditional wisdom is that teams have to work closely together in the same office, in the same setup, in the same labs. But our R&D is going ahead. We've not seen any productivity impacts to the negative, in fact, some to the positive. We've not seen any roadmap delays. Some releases, I would suggest are even ahead of schedule. Our global supply chains, fortunately, we're already diversified and resilient. So we know the crisis is far from over but we have found a way of working during this new normal, and we'll continue to adapt as the situation evolves.
MH: You mentioned the Fourth Industrial Revolution, one of the things that the pandemic is amplifying is digital inequality around the world. We're often fond, at Futurithmic, of quoting William Gibson, who once said that, "The future is here, "it's just not evenly distributed." How do we go about solving that?
RS: Yeah, connectivity can bring us huge benefits. It's not just economic ones, you're right, but also social and environmental gains. Connectivity improves quality of life significantly.
Let's take examples. Connectivity allows physicians to treat more patients more effectively, often in their own homes. And clearly, there'll be a lot more work that will move from the hospital to outpatients and what we call ambulatory surgeries, etc. So connectivity makes it easier for small businesses to sell their products. It makes it easier to farm at peak efficiency with sensors telling even small scale farmers exactly when and where to water their crops. So there's so much that can be done with connectivity.
But this requires that people have access to this notion of reliable and secure networks and the right skills to use the opportunities that connectivity brings. So 5G is a big part of that, but so is 4G and other earlier generation networks. We have about 125 private wireless networks, 95 percent of them are 4G, a lot can be done with 4G already.
So the full social, economic and environmental benefits of connectivity require robust and reliable networks everywhere, but it's not just about the network. Widespread equitable connectivity requires cooperation from multiple players. This is almost a horizontal. You want governments, regulators, industry players, NGOs, academy unions, other decision-making bodies, different ministries working with each other. Because like I said, it's not vertical silos that we have to work. We work in a sort of horizontal way. And all these groups need to recognize the importance of getting people online safely, reliably and confidently. We're not there in terms of still connecting the unconnected part of the world and there are many solutions we're discussing as we speak, including more usage of satellites. But connectivity in many ways can become a powerful tool for education, entrepreneurship, and delivering public and community services.
MH: Well, then what role would government play in this?
RS: The government’s role is about ensuring that we look more long term as opposed to short term. So when you look at spectrum, let's try to give spectrum at an affordable cost to service providers because then you invest in the consumers if you invest in the long term. If you take a view that we want to maximize gains for the country, for the budget by charging a lot of spectrum upfront, I mean, it's not gonna be pro consumer. It might seem pro consumer, but it's not.
Second, is there a way to start to advance the use and the deployment of optical fiber? Fiber to the most economical point, fiber to the home, etc. Because clearly a lot of the European countries, that is absolutely a requirement, but the problem is digging and trenching and so on, so how do we find economical ways to do that? Are there any subsidies that we can provide because these business cases can be challenged in the short term but not challenged in the very long term?
And then there's the idea of making site availability and access simpler. In many countries, there's a bottleneck. So there are a number of things that I think governments can do to work with industry to get innovation rolled out.
There's a huge productivity gain waiting to be had for countries that move into the Fourth Industrial Revolution first.
MH: So as we leave COVID-19 behind and move towards the Fourth Industrial Revolution, what kind of permanent change do you anticipate? There are been so many pundits pontificating on the long term impact of COVID-19 on society? What do you see that long term impact being as we move towards Industry 4.0?
RS: It's not a time to slow down 5G. I hear that there'll be some delays in spectrum options in some countries, but COVID-19 has shown that the strategy should be the opposite: Speed up rather than slow down. So if you were going to design a global test where millions of people will be forced to stay at home, use video conferencing for work, school, checking up on elderly relatives, online shopping for groceries, essential items, virtual doctor's appointments, we've just been through that global test and the value and need for Fourth Industrial Revolution 5G is clear.
People have also seen the difference that network quality makes to their daily lives. And that goes for both fixed and mobile networks. Our research has shown that those consumers who work remotely or want to work remotely in the future will prioritize connectivity and will switch providers to obtain reliable service, whether it’s 4G or 5G. And data from South Korea showed an appetite for 5G that surprised even us. What, 5 million subscribers in just around six months? And it's not just consumers. As I said digitalization is speeding up and even though companies can get a head start with 4G LTE, the full benefits of the Fourth Industrial Revolution will only ride with 5G. So if anything, the past few months have emphasized how important the deployment of 5G is, and I'm a big believer that the Fourth Industrial Revolution, with 5G underpinning that but also enabling analytics. Because 5G has been conceived for things to be connected. Think about consumer IoT, and machines, and of course, all of us as human beings to be connected. So it's the first time you have a technology that gets things to talk to each other, as well as valuable assets to talk to each other. Why do you want these valuable assets to talk to each other? Because you want the data from those assets to be able to predict failures of predict currencies before they actually happen. And there are numerous examples of these and usually, they are very mundane and very simple in terms of how you marry the technology with the industrial use case. So to me, there's a huge productivity gain waiting to be had for countries that move into the Fourth Industrial Revolution first.
MH: Well, heavy industry is often seen as a laggard in the adoption of new technologies but that doesn't seem to be the case for Industry 4.0. The port of Hamburg is doing some remarkable things with technologies 5G enables, so is the mining industry.
RS: Absolutely, it's across harbors, mines, it's port of Hamburg, it's port of LA. It's factories. Our own factory in Oulu in northern Finland, which is already a factory of the future and increasingly getting more and more connected, has provided us with huge gains across a number of key performance indicators.
MH: You said that the digitization of industry doesn't need to wait for 5G. How so?
RS: Well, because you can actually do a number of things with 4G. Because what is 5G about? It provides you latency, it provides you massive amount of capacity and it provides you reliability. So whether it's a factory or logistics hub, there are many use cases that actually do not need this ultra-low latency that 5G provides. And so you can do a number of things with 4G. The factory of the future we've set up in Oulu in northern Finland, it's based on 4G at the moment, then we are moving into 5G. A number of use cases can be driven by 4G. The common denominator is advanced connectivity and 4G provides that.
Then there are some use cases, such as cloud gaming, digital twinning of your factory plant in the cloud and remotely managing things from there, that need ultra-low latency and so 5G then comes in. My advice is always to start with 4G for your digitization needs, and then move into 5G. Don't spend a lot of time doing proof of concepts. Get into the action, trial the real thing.
WiFi won't cut it because WiFi doesn't give you the reliability and security that you need in a factory of machines that have to be untethered. And this whole notion of cables in factories or in hubs won't cut it either, so you need wireless, but you need, 99.999999 percent reliability over time. Essentially, you can start with 4G and move to 5G just as service providers do, just as operators do.
MH: You touched on quality of life outside of Industry 4.0. The self-driving car, augmented reality, edge gaming, as you point out, seem like the big ways in which 5G will shine. How will 5G shine in the way people work and what quality of life tangible ways?
RS: So for industry, it's very clear. It's all about savings underpinning your business case, or it's about getting more digital that gives you productivity advantage. For us as consumers, of course, we benefit from some of this. If you have a connected hospital or you get remote services or this surgery that you physically are not going to be able to reach in an emergency situation, and that needs to be done virtually, that's done through 5G.
Through other industrial applications, of course, we also benefit as consumers, but in terms of real consumer-led services, first of all, it's hard to predict what there might be. There could be plenty of new application services that will come. Just like we couldn't predict the sharing economy when 4G came along, we couldn't predict the App economy. So we can't predict everything. There will be new services that'll come off the advanced connectivity we need to put in place.
But what we've seen from South Korea is that there's of course cloud gaming, there is dual screens, and you're seeing VR-based services. And then in the future, of course, augmented reality-based services or the form factors of these glasses will become simpler over time. There are a few services that have been identified, but usually, they are in the realm of either virtual entertainment, virtual gaming, stadium solutions, etc, related to VR and AR.
And on the industrial side, there'll be thousands of applications, thousands of use cases. We just have to go and start partnering with key industrial players. They know the problems they want to solve. And then you bring the technology, you marry the technology with the problem case, and you get your use case.
MH: So it's not just about faster TikTok videos.
RS: No, far from it.
MH: You mentioned new services, the ability to network slice and build private networks feels like a transformational technology for telecom. Suddenly, anybody can be a network operator for either public consumption or for that private Industry 4.0. Where do you see the greatest adoption of that?
RS: Network slicing is going to be fantastic. Of course, it needs to be done with a common orchestration, zero-touch automation. You don't want to make it complex. You don't want it to be complicated to the point that you have to do a lot of local systems integration. So think of it as just multiple MVNO type slices. You have your SLAs with different enterprises. It will be used in driverless cars, it will be used in cloud gaming, it will be used in multiple enterprises. So for example, I'm an operator, I have 1,000 slices and I'll just choose multiple enterprises. I'll strike SLAs, but it's all of the examples we talked about. It's factories, it's logistics hubs, it's cloud gaming, it's in fact even driverless cars. A car might need three slices, for instance, to be autonomously driving. I can't think of an industry that would not benefit from a network slice. The key is, how do you provide that slice in as autonomous a fashion as possible so that SLAs can be struck, and they're easy and they're done in an automated way, and secure too. You want to be able to guarantee that because if you're an enterprise, you'll probably ask for those guarantees.
MH: You mentioned that as we continue to deal with the quarantine life around the world, some restrictions are easing in some parts of the world, others are going back down into lockdown mode. But you say that R&D is going ahead. You haven't seen any productivity impacts to the negative at Nokia, no roadmap delays, and some releases may even be ahead of schedule. Tell me though about the chief executive officer. How are you managing this massive company yourself under this environment
It's in times of challenge that our true character is shown and I couldn't have asked for a better team than the one we have at Nokia.
RS: Yeah, my number one priority throughout this crisis has been keeping staff, customers and our partners safe while keeping connectivity on the road. And that's been based on listening. Listen to your customers about what they need, listen to your employees about how we can adapt. And times of crisis require clear thinking and calm decision making, not just for the CEO, but across the company. It requires a lot of communication and adapting to different ways of doing things. We were fortunate to always have been a, I call it a remotely integrated company. So we were comfortable with remote operations because that's how the company's been set up culturally over many years. That helped us as we had to adapt to this change.
Our customers told us about problems and concerns in accessing sites, for instance. And so we found new ways for our essential workers to access sites as safely as possible. And we have listened to our employees. They told us that they were proud of their role in supporting critical connectivity. Our mission is to create the technology, connect the world, and our people have not been prouder of the situation that we're in and helping the world keep connectivity alive.
But they also wanted to support the people working on the front line in the fight against COVID-19. So we set up a global donations fund of half a million euros, employees could nominate the community groups near them to receive grants of up to 10,000 euros. We've distributed about 90 percent of it so far, to causes ranging from personal protective equipment in Bangladesh to Meals on Wheels in Ireland. I'm really very proud of my team. They have responded very well. And I'm also very proud of how resilient they've shown themselves to be. It's in times of challenge that our true character is shown and I couldn't have asked for a better team than the one we have at Nokia. It's been tough for everyone. None of us has ever experienced anything like this before, professionally or personally. And we've been learning as we go along. We've had to make adjustments to our daily lives. People are trying to balance work with childcare. They may not have a dedicated workspace or any outdoor space where they live. We're all concerned about the safety and well being of our friends and family. I'm fully conscious of all these things when I ask my team to do something, or go that extra mile, and believe me, they have. And I think the main reason for that is that we all know we're doing something of great value, not just for our business, but for the societies and communities around us.
We've adapted with analytics, different tools. For instance, we manage over a billion subscribers from our remote operations and our people have had to do this not from global delivery centers, but actually to do it even from homes, but then you have to use your secure facilities analytics, and they've done that. So every step of the way when this thing really accelerated back in Q1, our people that have been innovative and come up with new ideas, whether it's R&D, whether it's services operations, whether it's maintenance, whether it's just how to get along with each other, and they've done a remarkable job.
MH: And if I had to ask you to look back 10 years from now, what do you think the biggest indelible mark COVID-19 will have had on society?
RS: There are two major things happening for businesses at the moment that will likely have long term implications. First, you have workplaces being redesigned to allow for more social distancing. Second, you have employers finding new ways to keep their employees working effectively, remotely. The net result is fewer people coming together in one place. And so how and where we work is changing, and I think some of those changes will be permanent. This notion of work from anywhere will be permanent. This notion of the chief executive becoming the chief empathy officer is going to become even more important.
This crisis has increased the need to accelerate the technologies at the heart of the Fourth Industrial Revolution as we already talked about, automation, AI, IoT, driverless food trucks, drone deliveries, AI machine learning to process medical test results, help scientists searching for a vaccine. I mean, companies working together, competitors working together to search for a vaccine. All of these have taken on a new urgency. So the real question is, how do we prevent a once in a century global pandemic from leading to a once in a century global recession? It is gonna take something transformative to prevent it. And it could well be this Fourth Industrial Revolution.
This revolution will be a local revolution because it will drive localization of data, localization of services, and expertise. It has the potential to re-empower local communities and re-invigorate areas that have suffered over recent decades because the past industrial revolutions have provided a lot of productivity boosts and other benefits. But then we've also left a number of people behind. This particular one has the potential to bring that power back to local communities.
What we need to sort of look back and then predict in the future is we need to make it happen faster. Because better collaboration and coalition-building is going to be important. Governments and businesses must think internationally in order to empower locally, we need international collaboration between governments to address privacy concerns, security concerns. It is not an option, it's something that we have to start thinking more and more deeply about. We need national collaboration between governments and businesses and investment into next-generation networks and research because only then can we create an environment that is conducive to innovation and entrepreneurship so that we are becoming more and more long term focused as opposed to being short term driven.