Digital transformation is a top priority for any organization trying to position itself for future success. The latest CEO survey by Price Waterhouse Coopers shows digital transformation is impacting the way CEOs prioritize.1 Gartner's research reports 42% of CEOs are working on a digital transformation.2 Harvard Business Review, an indicator for leadership priorities, includes a steady stream of articles about digital transformation (including this interesting one).3 Real-world examples of digital transformation provide lessons for organizations looking for best practices and pitfalls to avoid as they begin or seek to accelerate their journey to digital.
What's fascinating, amidst all the discussion of technologies powering digital transformation, is the growing realization that leading this transformation is the least digital part of every organization: people. Here are three ways human capital is leading digital transformation:
Innovation requires people thinking, creating and being supported by digital technologies. Sure, today's prognostications suggest that artificial intelligence is about to create a world where machines run everything and humans sit back and simply enjoy it all. But we're not there yet. So, behind every innovation and organizational change are people doing work. And the more talented those people, and the more relevant their skills are to the task at hand, the more successful the transformation.
77% of CEOs worry that skills shortages could impair their company's growth. And they say it's the soft skills (people who are creative, innovative, and with high emotional intelligence) they value most that are hardest to find.5 For a small handful of “born digital” companies like Google, Amazon, Netflix, or AirBnB – there's an easy recipe for digital success. Hire the best and brightest new digital talent, pay them a ton of money and excite them with the chance to be part of “insanely great” work. The same might, might be true of a few traditional companies like GE going through high-profile digital transformations.6
But what about companies that aren't necessarily at the top of the most sought-after employment wish lists? Banks, hospitality, industrials, brick-and-mortar retailers, etc. The skills these organizations consider most important are those that can't be replicated by machines. These organizations must make digital transformation work mostly with the people they've already got, while doing their best to attract top digital talent. This means talent development, engagement and retention are more important than ever for the average organization.
Organizations leading digital transformation are also posting higher profits. “Leading digital companies generate better gross margins, better earnings and better net income than organizations in the bottom quarter of digital adopters, according to Harvard Business School.7 We know the move to digital is leading to higher profits but what are the effects on human capital? Common perception is that digital transformation leads to job loss. A recent survey shows 79% believe technology will cause job losses over the next five years.8 However, the rise of digital transformation is leading to increased need for human capital. Only 16% of CEO’s plan to cut headcount over the next 12 months – and only a quarter of them say it's primarily because of technology. Conversely, 52% plan to hire more employees. Clearly, CEOs see the value of marrying technology with uniquely human capabilities.9
HR sits at the heart of any digital transformation and it takes the right technology partner to power HR’s success. Learn why SumTotal’s Talent Expansion Suite is the right partner for your organizations digital transformation.
1“20 years inside the mind of the CEO... What’s next? What’s on the mind of 1,379 CEOs around the world?” PwC, 2017.
2 “Gartner Survey Shows 42 Percent of CEOs Have Begun Digital Business Transformation.” Gartner, April 24, 2017
3“To Lead a Digital Transformation, CEOs Must Prioritize.” Laurent-Pierre Baculard, Harvard Business Review, January 2, 2017.
4“An inside look at 10 real-world digital transformation success stories.” Clint Boulton, CIO, June 27, 2017.
5“20 years inside the mind of the CEO... What’s next? What’s on the mind of 1,379 CEOs around the world?” PwC, 2017.
6“GE’s Digital Transformation Journey.” Linda Boff, The Wall Street Journal, February 28, 2017.
7“An inside look at 10 real-world digital transformation success stories.” Clint Boulton, CIO, June 27, 2017.
8“20 years inside the mind of the CEO... What’s next? What’s on the mind of 1,379 CEOs around the world?” PwC, 2017.
9“20 years inside the mind of the CEO... What’s next? What’s on the mind of 1,379 CEOs around the world?” PwC, 2017.