Cindy Lu summarizes Digital Transformation webinar Coming of the Digital Age from a webinar by MIT Sloan and Professor Gerald Kane, Boston College.
Source: Webinar - How Do You Lead Digital Transformation?
Based on book: Digital Fallacy - People are the Real Key to Digital Transformation
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Transcription below by rev.com
Hi there. This is Cindy Lu, founder of HR Mastermind Peer Advisory Boards. You know, recently I've been doing a ton of research and watching a ton of webinars and reading white papers, books to learn as much as I can about digital transformation and what it means for HR. We're preparing for the 2019 Big HR event on September 13, 2019. After watching a lot of these webinars and reading white papers, honestly I felt a little bit more confused than I started, and wondering where does HR fit into this? How does HR help drive innovation and drive digital transformation or support it?
I think perhaps I'm not alone. I surveyed probably 30 HR executives, just asking them what does digital transformation mean to you? The responses were all over the board. So I believe many businesses are really struggling with trying to understand what does digital transformation mean? I finally came across a webinar that really provided some clarity for me, so I wanted to provide the Cliff Notes version for you today, so that you come to the Big HR event, you have some foundation of understanding this whole digital transformation topic. Or even if you're not attending, perhaps it'll provide you some clarity and some useful tips.
We are also interested in hearing back from you and understanding what your questions are and concerns and just thoughts about digital transformation and HR. Feel free to fill out the form below, for two reasons. We'd love to get a feel from you on what you're thinking, as well as make sure that you're on our list to receive special discounts or offers to some of our events, as well as a notification about our CHRO blog posts and video blogs.
All right. I'm going to quickly summarize this webinar I watched today. This was from the authors of a book called The Technology Fallacy: How People Are the Real Key to Digital Transformation. So Technology Fallacy: How People Are the Real Key to Digital Transformation. This is with Professor Gerald Kane from Boston College and Ahn Phillips from Deloitte Services. This was a MIT Sloan webinar titled Coming of the Digital Age.
They conducted research for five years and discovered that people are the real key to digital transformation. In fact, they surveyed 27,000 people and interviewed over 150 senior level executives in the digital space in 61 countries, covering 28 industries on a global basis. They had companies self-identify whether or not they were in what they called early stage digital transformation, developing stage, or mature. So early, transforming, and digital. Remember as I'm talking about early stage, it's not startup necessarily. It is about the stage they are in with digital transformation or their maturity. So early stage, developing, or mature.
In this study, they found 25% of the companies were in early stage, 44% in developing, and 30% in mature. They talked about the top challenges of being in the digital era. Number one was experimentation, so getting employees to take risks. Two, ambiguity and constant change and finding the right technologies to invest in. And finally, having distributed decision-making. It wasn't just these four, but these were the top challenges. Having distributed decision-making. For example, they talked about GE being a very Six Sigma type of culture and how that's challenging when you're trying to work in more of an experimental type of culture, and how GE had to make modifications.
They also asked, "What is the main difference between working in the digital environment versus a traditional one?" At the top of the list was the pace of doing business, culture mindset, flexibility, and once again, distributed decision-making. They also surveyed individuals on how often they need to update their skills to work effectively in a digital environment, and over 73% said at least every six months, and 44% said continuously. But they also found that employees are not at all satisfied with the learning opportunities they're receiving from their organizations, and this is across industry, where there was a huge gap between what they need as far as skills to succeed in a digital environment and how satisfied they were with how their companies were developing them.
For example, in CPG, in that industry, only 14% said that they were satisfied at how their companies were developing them for the digital age. And even in technology and IT, it was only 50%. They went on to talk about how to close this gap and really rethink learning and development. For example, classroom training, online courses, and training programs have been historically what companies have focused on. They found that these methods don't change behavior. The study went on to show that the on-the-job training was actually the most important. That was followed by training programs and having a supportive work environment. Having development programs where you have a chance to learn about the information, then you get to apply it, and then actually do the work, is when true behavior changes happen, and results.
Then we get to the whole concept of being able to truly experiment, and the digitally mature companies do this much better than the emerging companies or the early stage companies. And remember, when I say early stage, that doesn't mean startup, that means companies that are less mature in their digital transformation. The more mature companies are also very supportive and have continuous feedback and have a high degree of transparency with what worked, what didn't work. I think that really speaks to the culture that you create.
They then talked about how there's quite a bit of untapped talent or potential with the early stage companies, citing that there's really a lack of digital talent as their biggest challenge or struggle. Yet they weren't really using their existing talent or re-skilling their existing talent. Whereas the digitally mature organizations or companies did a much better job with this, providing their employees with resources and development opportunities to really thrive in a digital world.
They also shared how mature and developing companies tended to look inside first, by developing their current employees, versus organizations that are in their early stage of digital transformation tended to hire more contractors. They used external relationships, and lastly, they developed their own employees. As I said, the mature companies, the companies that were more digitally mature, developed their employees first. They then took a look at recruiting outside digital talent, and that's also easier for them to recruit digital talent, because most people want to work for companies that are digitally mature. Then third, they took a look at external relationships and lastly, recruiting digital leaders.
Now, what was interesting to me is that the companies that were in early stage and the companies that were in development stage didn't even have that as a category. I guess it's not surprising, because they're still emerging, but quite frankly a little scary. If they're not developing their existing employees, and they're not recruiting leaders from the outside that have this digital background, that could be a little bit scary for these organizations.
Now, as I mentioned before, the lack of digital opportunities definitely led to attrition for employees. Employees want to work for companies that are digitally mature. In fact, at that VP and director level, they are 15 times more likely to leave in year one if the company is not digitally mature.
They then talked about digital leadership and creating conditions to enable success. They wanted to know what the differences were in working with a digitally mature business versus a traditional one. The top three responses were, number one, increasing the pace of business, so things are just moving so quickly, two, cultural mindset and values, and number three, flexible distributed workplace structure. They asked what they wanted to see from their leaders. They asked the employees, "What do you want to see from your leaders?" And the top three responses were direction, meaning vision and purpose, two, innovation, meaning creating the conditions where people feel free to experiment and take risks, and three, execution, empowering people to think differently.
They went on to talk about digital culture. First, digitally mature organizations have a culture of agility, experimentation, recognize and reward collaboration. They accept risk of failure and increasingly organize really in cross-functional type teams. Two, the digital culture is intentional, meaning digitally mature companies are actively implementing initiatives to strengthen their culture by promoting risk-taking, agility, and collaboration.
They showed some alarming numbers of companies that were older, meaning 50 years and older, and how they only had 24% of companies of this age group, 50-plus, categorized as digitally mature. Only 24% were digitally mature, which I guess tells you why there have been so many Fortune 500 companies that have gone under.
They then talked about how just having a culture of experimentation is not enough and how these companies that were digitally mature would then do something about what they learned from the experiment. They would drive the change across the organization. The key that really separated the digitally mature organizations from the rest of the pack was their ability to put cross-functional teams together and empower their employees to make decisions to implement digital, versus a management structure that interfered with the ability to change digital transformation. That gives you, from an HR perspective, a lot of food for thought.
Some of these digitally mature companies actually measure the rate of failure, and if they didn't have a high enough rate of failure, they felt like perhaps they weren't taking enough risks. They found that there was a disconnect in the C suite, versus lower levels within the organization, and the disconnect was not that the C suite wasn't willing to give up control, but that the employees were hesitant to step up and take responsibility and accountability. They talked about how it's so important from a leadership perspective to empower them to do that and that this is a big leadership question that needs to be addressed on how to inspire people to step up.
The last finding they presented in this webinar was who is actually leading the digital process. In the early stage companies, it was led by IT, followed by the CEO's office, marketing, and lastly operations. Compared to digitally mature organizations, where the CEO's office led the transformation, followed by IT, marketing, and then finally product development.
One of the points they made during the Q&A session was that in order to give clear direction and provide vision, that senior leaders need to have better digital literacy, and that's something we can control in HR, and that if you don't really understand the new world technologies, whether it's AI, blockchain, autonomous vehicles, virtual or augmented reality, that you won't be able to effectively give clear direction. And that makes sense. Organizations really need to focus on making sure their senior leadership has this digital literacy training, and that doesn't necessarily mean that they have to be coders, they just need to understand the concepts and the business strategies and be able to think critically about how digital impacts their business, the society, the world. And if they don't have a good understanding of emerging technologies, it's going to be really hard for them to set a path or vision for their organizations.
So I hope this summary has been helpful. You have to excuse me having to look down at my notes frequently, but in any case, I thought it was really insightful information and gave me some clarity around digital transformation. In any case, please fill out the form below and give us your thoughts about digital transformation as well. Take care now.
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