Digital transformation is the change associated with the application of digital technologies in all aspects of society; the fusion of digital, biological and physical worlds is the essence of the 4th Industrial Revolution, as explained by Klaus Schwab, founder of the World Economic Forum. Digital is accelerating with unprecedented breadth and depth, becoming the key catalyst for new business models affecting all industries and governments.
In the past, traditional enterprises built multi-billion-dollar businesses over a long period of time, but in the new age “digital players” are creating highly valued companies faster and fundamentally disrupting traditional industries. Their secret for success can be attributed to their ability to think very differently – digitally – combined with a new palette of talents.
Some of these key principles for success have been described in the book Machine, Platform, Crowd by MIT’s Andrew McAfee and Erik Brynjolfsson, and Platform Revolution: How Networked Markets Are Transforming the Economy by MIT’s & Boston University's Marshall van Alstyne, Geoffrey Parker and Sangeet Paul Choudary. Using these principles, “born digital” companies create a platform-based digital business with an underlying technology platform that is unique. They successfully build a digitally connected ecosystem of customers, business vendors and partners, which helps to quickly drive intelligent decisions based on the data generated by the ecosystem.
To enable such a transformative approach to business, organizations need to identify and invest in a holistic talent strategy that embraces the new digital paradigm. But what kind of talent is required for companies to successfully embrace their digital transformation journey?
We believe that necessary talent it can be classified into the following three categories: leadership, technical and behavioral.
Leadership plays a very important role in setting the context of the organization’s digital transformation strategy. Thus, transformative leadership requires bringing people along on a new journey, one with unknown practices, risks and opportunities. Companies excelling in digital leadership share a set of common characteristics:
• Clarity emerges as a key talent for leaders in organizations and governments. Creating clarity is achieved by reflecting and synthesizing the environment in which organizations operate, encompassing their ecosystem. This results in clarity of vision for shareholders and stakeholders that can be translated into coherent strategy and plans.
• Agility. The ability to use various leadership styles as required by the fast-changing situations that will become the new normal in the 4th Industrial Revolution era. Probably the best work in that space has been done by Daniel Goleman, who defines six major leadership styles in his book Emotional Intelligence: Why It Can Matter More Than IQ.
• Grit. As defined by Angela Duckworth in her book GRIT: Perseverance and Passion for Long-term Goals. In a digital context, grit is about staying committed to the digital vision of your enterprise over a long period of time. In the digital-transformation age, talent needs to be multidisciplinary, combining business skills and good technological knowledge, plus how to apply them effectively and quickly to changing economic paradigms.
Because digital transformation is fueled by systems, talent in that category should be multidisciplinary, well versed with digital technologies and how they can be applied effectively for the organization in question.
• Ecosystem approach. If you look at native digital companies and the factors leading up to their success, you will find a common theme. They have all created an ecosystem. This is a significant shift from traditional business models, where the approach was more linear. The new digital enterprise rewards talents who can reimagine the business model to engage a network of value-seekers and providers, and create systems that enable value exchange between the participants by creating a larger ecosystem at play.
• Platform thinking mindset. To complement the ecosystem approach, the enterprise itself needs to reimagine itself as a platform business. DEFINE Amazon, Uber, Airbnb are all examples of platform businesses that serve the customer through the value they bring in with their model. This creates demand for a new breed of architects who can create a connected ecosystem of customers, business, vendors, and partners. They also create systems that leverage data generated from the ecosystem and drive intelligent decision-making.
• AI and cognitive services. These are algorithmic solutions that can sense, comprehend, act and learn, and they will be infused in all software and system solutions from intelligent agents to self-driving vehicles. Various levels of technical expertise will be required, whether you are a CEO, a CTO, or a programmer. As a CEO, you want to make sure your company defines and adopt AI principles to govern the acquisition and development of AI solutions. As a CTO, you need to understand the various technical specification, architectures and layout of the AI portfolio for your company. As a programmer, you want to master the various AI models in order to optimize the way you’ll write your solutions.
• AR/MR/VR. Augmented, mixed and virtual-reality systems are flourishing and bring unprecedented ways of learning, solving problems and entertaining. Some great examples of digital transformation in this field are 100-year-old company ThyssenKrupp, who equipped their field workers with mixed reality solutions; or Cleveland Clinic, to augment knowledge for doctors and surgeons; or Japan Airlines technicians, who can learn how to service a plane engine virtually anywhere.
• Data science. There has been a data explosion ever since digital has taken precedence. There will be newer data-science models as organizations continue to invest in analyzing the vast amount of data they generate. Slowly, the lines will blur between data science and other functions within the organization, using data for example in product development.
To able to handle digital disruption and adapt to change, behavioral patterns of thought and emotions will shape the way people work in the future. These can be improved through:
• Inclusive design thinking. A methodology, born out of digital environments, that enables and draws on the full range of human diversity. Most importantly, this means including and learning from people with a range of perspectives. In a highly connected digital world, designing for all of us should be the new norm and should be combined with design thinking, a systematic process that empowers even the most traditional thinker to develop new, innovative solutions to the problem at hand.
• Empathy. Digital technologies will have a drastic impact on current and future jobs and empathy will play a key role in how the organization talents can be reskilled/up skilled to new digital opportunities and how clear communication can be built around the same. There are three forms of empathy to draw on:
1. Cognitive empathy: the ability to understand another’s person’s perspective. Enables you to express yourself in a meaningful way.
2. Emotional empathy: the ability to feel what someone else feels. Enables effective relationships (clients, colleagues, suppliers)
3. Emphatic concern: the ability to sense what another person needs from you. Enables you to weigh the value of the solution
• Growth mindset. A passion to learn and bring our best every day to our work and life. Are we born talented, or are our abilities learned? We now know that we can learn, grow, and improve throughout our entire lives, and this is achieved through our mindsets. Mindsets are ways of thinking about the goals we pursue. Probably the most visible success story in applying the principles of Growth Mindset by Carol Dweck is Microsoft. CEO Satya Nadella’s book Hit Refresh openly share their transformation journey; the results have been well observed by the market, with the company’s stock tripling during Nadella’s tenure.
• Curiosity is the best stimulus to become a lifelong learner and innovator. How can you shape the future if you don’t understand what the present is capable of? Take AI, for example; for most people it’s mysterious, though everyone has been using AI-based solutions for years. From spellchecker to smartphone keyboards predicting your next stroke, to your photo app categorizing your pictures even though you never tag them. Be curious and ask yourself: how is this possible? It’s about investing time to acquire ideas from various sources and implementing them.
In order to be successful in the digital transformation journey, a new generation of multidisciplinary talent is needed; from visionary, hands-on leaders who understand the power of technology to create new business value, to a set of technical skills to harness the power of new digital technologies, to behavioral skills able to handle the disruption inherent to any transformation. Companies should focus on identifying and training talent with the above skills, both internally and externally, to create a growth mindset culture with innovation and design thinking to amplify and sustain their most precious asset: people.