In one of his last keynote speeches before his retirement, John Chambers, Cisco’s CEO of 20 years, predicted that more than one-third of businesses today will be dead in 10 years. “The only ones that will survive will turn their companies into digital, techie versions of themselves, and many will fail trying.” This apocalyptic message is cushioned by one truth: We are all capable of operating digitally.
It’s why even the most analog of businesses are working to become digital; sometimes, by choice; and other times, by force.
For human resources, organizational development and talent development leaders, this looming digital inevitability raises two seminal questions: “what does it mean to be a digital business?” and, “how ready are we to move decisively to align technology and digital with strategy and culture?”
Being a digital business goes beyond using email and spreadsheets and connecting to the Internet. If that were all it took, even the smallest mom-and-pop operation would be considered digital. Today’s most successful companies are closing the digital gap by introducing new technologies, acquiring new talent and upgrading existing employee skillsets. At the same time, they are reinventing, eliminating, digitizing and automating products and services as well as business processes and even entire business functions. Companies leading the digital evolution have embraced the following operating tenets:
- Respect data and use it to drive short-term feedback loops. Digital companies spend more time doing than planning, reporting or documenting. They invest in enhanced external data and nurture internal feedback loops that provide the data to inform incremental change. This methodology enables more consistent tracking of employees’ wins, losses, strengths and areas for improvement, supporting better informed performance reviews.
- Organize around products and objectives, not functions or geographies. Digital pioneers are reducing the need for inflexible hierarchies and titles. Instead, they marshal resources around work that supports the value chain, and avoid activities that don’t. A digital business like Uber illustrates this principle: By not categorizing drivers as employees, the company can redirect investments toward areas that add competitive edge, like R&D. In the HR practice, this approach may lead to more diverse candidate pools when recruiting and seeking new talent.
- Design the organization for continuous transformation. Digital businesses loathe complacency. They know that other companies can and will develop the same agility and lean operations that fuels their success. They are bold in their organizational strategy, embracing a mission that requires persistent, nimble transformation to move toward the goal. Consider Elon Musk’s SpaceX and its aim of enabling people to live on other planets. Or Uber’s intention to operate flying cars by 2020. Or Apple driving deliberate product obsolescence every few years. These “always transforming” concepts should also apply to ongoing professional development for employees.
- Travel light. Being digital means finding ways to be nimble and unburdened by unnecessary assets and liabilities that lock the business into a fixed revenue model. The largest hotel company in the world, Airbnb, owns no hotels. Uber owns no cars. Facebook doesn’t create content; it just brokers it. They own only what they need to delight customers and drive employees toward greater levels of excellence.
Being a digital business does not look the same across every industry, and within industries, no two companies will follow the same roadmap in their digital transformation. That said, examining successful digital transformations reveals a short list of absolutes that can provide a framework for digital achievement. All of these can be empowered through employee development and change management support:
- Get comfortable with discomfort. Organizations that do it right are able to get the journey underway and power through the organizational changes required for success.
- Build up your immune system with the right team. Disruption can been seen as a threat to some and it is a natural response for them to fight digital transformation. Acknowledge that some once-valuable leadership traits are no longer relevant and should be replaced by diversity, resilience, and the capability to transform. Help your leaders decide which of these capabilities they should grow versus buy. Outsource every capability that is a commodity.
- Start small and prove by doing. If a large team isn’t working, recommend that the team leader reduce it to a small team instead of trying to fix it.
- Launch and learn. Don’t get bogged down by too much research.
- Recognize that digital transformation is a whole enterprise undertaking. Business units responsible for products are more open to change than those responsible for operations. Line of business leaders are incentivized to achieve transformation; the IT department is incentivized to keep the lights on and the servers running.
Digital transformation has no end state. It’s an ongoing endeavor that combats business-as-usual and seeks continuous improvement, agility, automation, and transparency. Today’s successful HR leaders adopt many of these same operating parameters when recruiting, developing talent, and determining the best uses of human capital across departments and organizations. The end goals are to make organizations stronger, products better and both employees and customers happier. This transformation cannot happen without training and workforce development led by a strong HR team.