ANNOUNCER: Welcome back to the Augmented Podcast. Augmented is a podcast for industrial leaders, process engineers, and shop floor operators, hosted by futurist Trond Arne Undheim and presented by Tulip.


TROND: Efe, it's a great pleasure. Thank you, and welcome to the podcast.


EFE: Thank you, Trond. Thanks for having me.


TROND: So, I'm super excited to have this discussion because you are in such an interesting region of the world with this pivotal role in many, many issues and with a lot of challenges, and certainly an enormous amount of opportunity. 


Efe, let's first start with you because you've traveled, harvested experiences in many different places. I know you actually have a master's degree from London School of Economics, but also industrial engineering from Turkey. You're currently the Executive Director of the MEXT Technology Center. Why engineering and why manufacturing? And why London School of Economics? What brought you on this path? 


EFE: Yes, yes, I have been a firm believer of creating value, tangible value. And from this perspective, manufacturing has always attracted my attention when I was studying at university. And that was the reason for choosing engineering, so to create something tangible. I think this is typically what motivates engineers. 


And then, why economics? Why blend it with economics? I really wanted to put it into a larger perspective of creating value for a greater system. So, I wanted to blend it with a little bit of macro perspective from economics. So, I ended up working for auto industry, where I was able to achieve both, I think, to create tangible value for society, I would say.


TROND: That's great. We'll talk about some of the initiatives that you've taken and that you're a part of. Obviously, this center that you lead in Turkey, but also the center that's affiliated with the World Economic Forum, everything circling around the notion of a fourth industrial revolution, which, by the way, is a buzzword. And I think both you and I have a little bit of a healthy skepticism towards these buzzwords; you know, they can hurt more than help sometimes. But anyway, let's dig into it. 


Let me try to just characterize the situation a little bit, and then please then shoot it down because I'm by no means an expert on Turkey here. But just from my reading, I mean, we're 2023. That's the 100th year anniversary of the Republic of Turkey. It's kind of a milestone year in many senses of the word. I know there was an industrial strategy that has been in place where there were a lot of targets, obviously, for 2023. The IMF calls Turkey an upper-middle income, mixed market emerging economy. But I know perhaps internally you have other ambitions and getting into a very interesting position. 


There are some very interesting opportunities if you compare to Germany, for example. I just now immediately thinking of same population but much younger population. I think Germany's average median population is something like 47, 48, and Turkey is 32. So, that is a very, very interesting and very different context. 


You know, if you were to describe the biggest kind of opportunity that Turkey is facing...and then let's also talk about some of the challenges. Why don't we just kick it off with that? And then we can dig into kind of the details of how your center got started and everything. But at just very, very high level, we're talking about a part of the world where manufacturing...but also R&D and things like that. 


So, manufacturing, obviously, has been a big part of the economy, and it seems to be growing. But innovation and technology and sort of digital skills have perhaps historically not been strong points. Would you agree with any of what I just said? And what else is there in terms of the very, very sort of high-level context that your center finds itself? 


EFE: Yes, I think it's a very fair representation of our reality. Manufacturing has always enjoyed a high reputation in Turkey, I would say. It is still regarded as a good profession frontline employees as well as engineers. There is no shortage of, I would say, workforce, and it is certainly seen as a sector which creates value for the country. 


Turkey has had this tradition of producing with quality, in time, and has been well integrated with Europe. Europe is and remains a key trade partner for Turkey. Therefore, I would say, as an advantage, Turkey has been well-aligned with European regulations, knows the European markets very well, has the flexibility and agility to adapt very well to changing conditions. 


And it is also widely known Turkey has seen ups and downs in the economy. Therefore, the Turkish manufacturing sector, in general, is very nimble and resilient, I would say. So, we are able to cope with crisis in a very well situation very swiftly. And, you know, the world has been suffering from supply chain resilience issues in the last couple of years. But Turkey has this tradition of adapting to such ups and downs very quickly. 


And there is this flexibility which would characterize the Turkish manufacturing sector, I would say, adapting to customer requirements quickly, adapting capacity also in a flexible way. So, those are the main advantages that will bring Turkey as a manufacturing location and certainly the young workforce, as you mentioned.


TROND: At a high level, there are some challenges, like you pointed out. Turkey's economy has obviously been growing very fast but at the cost of inflation, for sure. And very recently, interest rates were raised, and other things. So, I guess that's partly what you're alluding to, that the industry has had to, and certainly now has to, be able to kind of adapt very quickly to really quite radical changes in economic conditions. 


And I'm curious about that because in many, many countries, this kind of inflation, you know, is obviously a massive, massive just public concern but also just very difficult to deal with industrially. How does that play out in the economy? So, you have a finger on the button with a lot of industrial companies, small and large. And how are they in practice, you know, reacting to this? And then, let's go into the heart of digital transformation in a second.


EFE: Many industry players have had to deal with some difficulties in pricing their goods and services. But now, with the restoring of the currency situation, I think this is playing out rather well. Turkey has this tradition of keeping a good cost control discipline. And so, with cost kept under control and with now reasonable pricing also in place, with recent adjustment in exchange rates, I think we are positioned quite well. It's on the right path, I would say, with that new adjustments taking place in the background. 


Again, with trade partners in Europe and in the Middle East, there are multiple opportunities in the horizon. So, Turkey has been enjoying good opportunities for new trade relations in the region. So, in general, I think we are quite optimistic for the future.


TROND: That's excellent. And, indeed, at the last count, I think Turkey had some 22 bilateral trade agreements. So, it's, you know, you're no stranger to trading with other countries. 


Let's talk about MEXT for a second. So, MEXT is this technology center that you run, which, from my understanding, started out of the Turkish Employers' Association of Metal Industries, which is one of some very strong industries traditionally, I guess, in Turkey. 


I wanted to understand a little bit about the context of this initiative because all around the world, manufacturing, you know, by most countries, you know, is a meaningful industry that the government cares a lot about, right? It's part of creating value at a very fundamental level. Many countries have also tried to create centers of excellence, and they are not always terribly successful, to be honest, right? Because it's expensive. Tasks are sometimes really broad and hard to execute. 


Can you tell us a little bit about...I guess it was 2018 that this started. What was the thinking behind this? What's different? What's the same? The scale, for one, seems pretty large, 10,000 square meters, your actual facility. Although I guess several countries have these large demonstration facilities but perhaps not at that scale. What was the thinking? What are the main activities? What are you up to now?


EFE: Sure. I mean, the main motivation behind this was to combine this long tradition of manufacturing with quality with technology. And I think in the meantime, everybody realizes the importance of digital transformation and bringing new technology to our factories and value chains. But important question remains: How? 


And this has been the main motivation behind initiating MEXT. We realized...the association realized that the industry needed help to figure out where to start, what to prioritize, and how to accelerate this journey. I think there was a lot of confusion, as you said, the buzzwords around Fourth Industrial Revolution, Industry 4.0. Everybody knows this, but the question is, what should we do, and how would it add value to our manufacturing and value chain systems? This was the motivation.


We set out to establish a technology center, which would guide the industry in tangible terms about what to do in their respective factories and supply chains and also upskill people at a large scale because, in absence of trained people, we won't be able to utilize any of those super-efficient software and technology on the shop floor. So, we need people, at the end of the day, who can use this technology. So, those were the two main motivations to that. And, as you said, end of '18, the whole planning started. We inaugurated the center August 2020, roughly two years ago.


TROND: In the middle of COVID, I might say. [laughs] 


EFE: That's exactly right. 


TROND: I saw the picture of the opening with Erdoğan, and he was the only one without a mask. I'm guessing everybody else was told to mask up or stay home. [laughs]


EFE: There was proper testing, as you can imagine, with appropriate masking and all measures in place. But it was not the best fortunate timing to inaugurate a center. Nevertheless, we have kept centers open with all the appropriate measures in place. 


And so we have hosted here C-suite management teams every day. We've been actively going out to the field to factories to diagnose their current level of digital maturity and help devise roadmaps for our industrial companies. COVID-19 has not prevented us from doing what we set out to do in the first place. And what we are doing, in essence, we are providing that consultancy service as a trusted advisor, as a non-profit organization. 


TROND: So, Efe, this is important because you're not just showing off technology. You're actually going a little bit deeper. This was one of the points that impressed me quite a bit because demonstrating technology is one thing. You know, you can bring in executives or any level for a day and show them shiny objects, but you're doing a lot more than that.


EFE: Exactly, exactly. It is still important to convince the key decision-makers and make sure they are onboarded and embrace the whole vision to mobilize the rest of the organization, so this is still important. But you are absolutely right—we pinpoint what needs to be done through diagnostic services, digital maturity assessments on the ground. We devise solutions and exactly describe what should be done with which partner. So, we are also playing the role of ecosystem maker by bringing the right technology partners with industrial actors. 


And we provide the upskilling service that is needed to make sure the people on the ground who will be using this technology are literate, proficient with the technology. This is the distinctive feature about MEXT. So, this is unlike other centers in the world, which either showcase technology, or which provide just training services, or just start-up incubation programs. We are doing all of those, but also, on top of it, provide hands-on implementation service on the ground, as you said. I will say the 360 service offering that differentiates MEXT. 


And in terms of showcasing technology, in most of the centers in the world, you typically see a collection of loosely stitched demonstrator booths, which is very unconvincing to the user of the technology. So, here what we have done differently we have basically designed a real production environment with real processes, where industrial employees at all organization levels can see the added value of the application in very tangible terms, in metric terms. And they are convinced that this can be done; this can add value to their factories. And then jointly undertake projects with them for their transformation.


TROND: So, I have some questions now because you said in the name, actually, in the MEXT, you know, technology appears very prominently. And I know you started out with a focus on some 20-ish technologies. But then, very quickly, you corrected that approach and said, you know, it's about people, and skills, and training. I'm wondering, is that also something that you think distinguishes your center from many others? Because clearly, technology is left front and center here, and I guess the demonstration part is that.


But when you think about training, and when you think about operators on the shop floor, which is what you're trying to make more efficient and effective, how do you exactly go about? Can you give some examples of how you've done this differently? And what is the move that a typical Turkish employer would take when they engage with you? What does it involve? 


EFE: Yes, the typical customer journey we have been seeing in the first three years of operation is that, first of all, there is some curiosity from the top decision-maker about what we could do and deliver to them. So, we showcase and try to inspire them. And if we manage to create enough attention and inspiration, then we try to convince them to have a quick assessment on the ground, the Smart Industry Readiness Index typically. And we go to the factory. We identify the current level of maturity. And more importantly, we design the roadmap of prioritized projects that the company should undertake to get the most value out of digital technology. 


In the ideal sequence, we offer training as a group of people-employees from different layers of the organization: mid-level management, engineers, and shop floors-who will be speaking the same language with us who would be knowledgeable enough about the technology to do the projects together with us. And so, we offer that training service. 


And afterwards, if the company would like to still get help, seek help from us to deliver the project, then we also help with project management side of the things and also designing more technical implementation plans as well. This whole end-to-end offering, I think, is what is quite attractive to most of the industrial companies. 


You said it is important to address the needs of the people. I fully agree. When we deliver training programs, it's not just about new aspects of technology but also about new ways of doing things and approaching things. And typically, we also give the message of agile working. We also help establishing digital literacy on the shop floor employees. 


So, it is really important to onboard people first before really picking a project. So, everybody from shop floor operators to engineer levels should be onboarded also psychologically to make sure they appreciate the value of technology. And then, we start doing work with each other. So, I would say, in addition to technical aspects, also opening new ways of doing things also is what is distinctive about MEXT.


TROND: Great. So, here on this podcast, we think a lot about augmentation and how some technologies aren't just replacing humans, but when they're used really well, they're augmenting humans. Can you talk a little bit about that, and especially your work with the startup ecosystem, and how some of the partners you have there are helping in bridging this gap between technologies and skills on the shop floor and basically augmenting the industrial manufacturing process?


EFE: Yes. Startups are an integral part of the ecosystem, and they are the drivers of quick innovation. We believe that they're a great complement to the industrial R&D capability. A great example, I would say, in regard to augmenting workforce is the health and safety application that we scaled very quickly with a startup from U.S. It's a video analytics software that basically monitors the situation on the shop floor with multiple use case scenarios to identify hazardous situations and trigger preventive action. 


With the infrastructure, we've basically taken that solution and introduced it to the wider Turkish industry so that now it got implemented in almost 200 factories, helping out the workforce in very concrete terms. It's a journey to zero, as we call it [inaudible 18:15]. Safety is more important than anything in the workplace. So, it is a very great demonstration that technology can really create genuine value for the workforce itself. 


So, this has seen very good reception and uptake. And I think it's being further scaled in the industry. So, that is a great example from my perspective. I can name many more, but this is something which directly touches the operator's life on the shop floor.


TROND: Yeah. So, at Tulip, there's this notion of frontline operations as a specific kind of focus, where the company there is trying to enable individuals on the shop floor themselves to take a larger part of the innovation process and also basically take more ownership of the process itself, as opposed to having experts always design all the processes and then the operators not having any choices in the matter. What about that kind of approach? How does that work, you know, in the MENA region more generally?


EFE: Yes, in the MENA region, certainly in Turkey, the operators have the freedom to come up with new ideas, creative ideas. I think in the last three decades of Turkish manufacturing, we have seen huge productivity improvements, thanks to the ideas generated by the shop floor employees, frontline employees. It's really critical that they also have a good understanding of the new technology so that they can further contribute to this innovation process. 


And you are absolutely right—the low-code, no-code solutions, simple interfaces help them to bring that innovation and creativity further. This is some of the solutions that we display. Frontline employees can use that low-code, no-code systems to create quick applications to see quick value. We are a true believer of enabling people through such applications.


TROND: Yeah, because it seems to be a little bit of a missing link sometimes, right? Because you can get so excited about the value that technology might be able to bring, but if the implementation path is very long, then no matter how advanced it is, you know, the pain might not be worth the gain if it takes too long, and you run into all kinds of implementation obstacles. 


So, with that in mind, I just maybe wanted to bring us a little bit towards the future and to think about what's happening next. If you look at the MENA region and what you have accomplished so far, what seems to be happening there? Are we looking at bringing Turkey through, you know, digital manufacturing into a completely different sort of economic state anytime soon? What are some of the large-scale changes that digitizing manufacturing, you know, might lead to?


EFE: I think what we have seen recently is that the sustainability is appearing as a very critical theme nowadays in Turkish industries, like anywhere. But from a Turkish perspective, since Turkey is so well integrated to Europe and Europe is ahead of the game introducing the net zero roadmaps and regulation about that, so Turkish industry is clearly recognizing there is a need to decarbonize fast, and digitalization will only help towards this. 


So, as the EU calls this in a beautiful way, we talk about a twin transition whereby digital transformation enables green transformation and vice versa. The motivation to decarbonize quickly will further increase the realization that companies and factories will need to digitalize also quickly to establish this transparency and processes in energy and material use. So, I'm very hopeful with the advent of the sustainability wave and the need, clear need to transform quickly. And we will also see a huge uptake in digital transformation in the region in the near term.


TROND: Efe, are there specific sectors that are affected the most? I'm just thinking of traditional large sectors in Turkey like automotive defense but also energy, which I guess touches directly on sustainability just because it's so closely related. Are those sectors that you are forecasting being...and mining, obviously, also as well. There's also an electronics industry. There's textiles. There's plethora of industries. Are you now broadening your scope to touch on all those?


EFE: That's exactly right. You rightly mentioned the sectors that are affected the most: steel, first and foremost, cement. Those are the commodities that are Turkey's top five exporters to Europe. So therefore, those sectors will be dramatically impacted, but so will be automotive. And there is a great motivation in automotive OEMs to establish transparency of their supplier base. 


So, we see that Turkey has a good supplier base of automotive, which predominantly exports to Europe to European OEMs. So, there is this; I will say, pull from the OEMs towards decarbonization. Textile, again, from Europe, we see the consumer-driven trend to have this transparency and decarbonization. This is another sector where Turkey is a strong player. 


So, you rightly named those sectors, pretty much the majority of the Turkish industry. And, as you said, MEXT has already broadened the scope to all of those. In fact, we have touched more than 300 companies with digital maturity assessments in 10 verticals, including textile, cement, pharmaceuticals. Chemical industry is another one which will be dramatically impacted through the Carbon Border Adjustment Mechanism in a couple of years in Europe. So, as you rightly say, we are trying to help out the wider Turkish industry, not only metal anymore. We have placed, positioned MEXT as a de facto transformation center for the entire Turkish industry.


TROND: Just a question on my end, is this mostly a domestic initiative, in the sense that you are training companies, large and small, who are on Turkish soil? Or is it also relevant for companies that might just want to partner and aren't necessarily directly, either not yet on Turkish soil, or perhaps more indirectly, either wanting to import from the region or perhaps just export? Is it mainly for companies with factories in Turkey, or is it broader than that?


EFE: I think, in the meantime, it's broader than that. Through our affiliation with the World Economic Forum, as you said at the beginning, we have established acquaintances with neighboring countries like Azerbaijan with, UAE, and Saudi Arabia. That network helped us to basically open up the services, the advisory services of MEXT, to those countries. In the meantime, we are developing actively business in that region. We see a lot of energy and enthusiasm towards digital transformation in those countries. 


I think they're also trying to position themselves as high value-add industries in the future. That is creating an extra demand that we frankly had not anticipated at the beginning. So, it was an interesting development for us. But it is also creating a good way of managing our capacity and utilization as well, in a tactical way. So, the answer is, we are already right now offering those services to the neighboring region. 


To me, a very exciting development will be, hopefully, the European Digital Innovation Hub concept. You may know Europe has a program called Digital Europe, to which Turkey has also been affiliated recently. In the near future, we hope that MEXT will be one of the candidates to be designated and established as a so-called European Digital Innovation Hub, which would then bring MEXT into a very valuable network of 100 and plus centers in Europe. It would increase MEXT's visibility on the European continent as well. In addition to Middle East, then we will also have further presence and collaboration on the European continent as well. 


So, first and foremost, the focus is on the Turkish industry clearly. And there is a lot to be done from both sustainable and digitalization perspective. But nevertheless, MEXT has been established with a vision of being a global ecosystem player and collaborating globally. Therefore, we are very open to collaborations with the wider geography I would say.


TROND: With that in mind, Efe, I was just going to ask you, so you are already collaborating, you know, in the region, but if you perhaps might have some advice for other countries that either already have centers of excellence or are trying to launch centers of excellence. You've now run this for five years. What are some experiences, good and bad? Would you have done something differently? Is there a template on how to do this, or is it really just very customized to the setting? Like, you feel like what you did is right for Turkey, but it wouldn't have been right for some other country in Africa or Asia.


EFE: Yes, I wouldn't say that there is a template for this. Maybe we will be able to write a playbook in general terms about what to do. But certainly, there is the need to customize for the specific context, especially with regards to the current skill set and motivation of the workforce, how they feel, what they know, and what needs to be done in terms of upskilling. That would vary from country to country. 


The most important thing is really to understand what the industry needs and feels. So, in our case, there was a lot of confusion about these hypes, and we had to demystify the concept. In other countries, this situation might be different. The decision-maker's stance towards sustainability and digitalization might be different. The sense of urgency might be different. 


So, I would say, depending on the overall awareness level, sense of urgency level, you would need to create different playbooks. But, in general, first thing first, one needs to understand the industry needs, how they feel, and what they know, and from that, I think country-specific tailored plans can be created.


TROND: Thanks. Well, there's a plethora of insight there already. Efe, I want to thank you for coming on the podcast. And I hope we can stay in touch. This has been great. I wish you best of luck on your next five years. Is there a five-year plan already?


EFE: Yes, we have specific stretch targets, yes, for the wider region, and we are very enthusiastic about this. And I would like to thank you for giving us the opportunity to talk about our journey and experience. Very much I appreciate this opportunity.


TROND: That was a pleasure. Well, thank you so much. 


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