Competing in a Digital Age

Organizations must rethink how they organize, operate, and behave.
Competing in a Digital Age

DIGITAL TRANSFORMATION CAN be a misnomer. This idea became clear to me as I led a Deloitte research project on digital transformation in collaboration with the MIT Sloan Management Review. People often equate digital transformation with digitization of their organizations and the implementation of advanced technologies and tools. And while implementing technologies is part of navigating digital disruption, it’s not necessarily the biggest or the hardest part. In fact, in our research we found that business leaders cited internal problems as their biggest barriers to integrating technology. They frequently said, “We’re not agile enough. We’re too complacent. We’re risk-averse.”

To overcome these challenges and to better compete in a digital age, organizations should rethink how they organize, operate, and behave. To accomplish this, their leaders should focus on developing talent and building cultures of experimentation and learning.

In our research, we’ve found that people want to work where they can learn and continue to develop their skills in a digital environment. In fact, we discovered that people were up to 15 times more likely to want to leave an organization within a year if they were not getting opportunities to grow. But to provide these opportunities for their people, organizations should recognize that learning is different today in three primary ways: what is being learned, when learning takes place, and how learning is done.

What: Over the past two decades, we’ve seen increased investment in science, technology, engineering, and mathematics (STEM) education. In the future, everyone might need technical competency in using tools, as well as technical literacy in understanding the implications and capabilities of emerging technologies. Our study shows that, in a digital age, technical literacy is among the top four skills valued in leaders.

At the same time, as the nature of work becomes more collaborative, organizations are also looking for people with soft skills. The World Economic Forum predicts the following competencies will be among the most valued in 2020: managing people, coordinating with others, negotiating, displaying emotional intelligence, and being oriented toward service. (View the top-ten list.)

The result is that more companies are trying to fill hybrid roles in which employees will need strong technical abilities as well as strengths in communication, emotional intelligence, and creativity. It might not be enough for data scientists to be skilled in data analysis; many also will need to identify the meaningful insights presented by the data and then communicate those insights effectively.

When: It used to be that our lives were divided into three distinct phases: education, which we undertook from kindergarten through university; work, which occupied the middle part of our lives; and leisure, which came with retirement. But that model no longer suffices when technologies evolve at a rapid pace, jobs and work are frequently redefined, and few people spend their lives in a single profession. Learning should be continuous, and much of it happens on the job.

How: When we think of learning, we typically think of structured, institutional situations: classrooms, training courses, online programs. But today’s learning should go beyond the classroom and include new opportunities, new experiences, and new ways to access knowledge. People learn informally through books, articles, podcasts, webcasts, and conferences, as well as through interactions with mentors and coaches. But they also learn through experiences: by taking on new roles, projects, and challenges, and by being exposed to different people, problems, and cultures. In fact, some organizations enable this broader exposure through job rotation and tours of duty.

Finally, there are some things that can’t be taught or learned because that knowledge has not yet been created or discovered. This type of learning happens through exploration and experimentation, which involves discovery of the previously unknown.

Employees need strong tech skills and strengths in communication.

While it’s important for organizations to better support individual learning, it’s critical for them to recognize that learning also should happen at the organizational level. But many companies were not designed to allow employees to learn well.

Twentieth-century companies were built on an industrial-age model of reducing variance and increasing productivity and efficiency. But the 21st-century model requires more experimentation, exploration, and creativity—things that increase variance. Technologies from AI to quantum computing are all at various stages of maturity and application, and they are all still evolving rapidly. Yet none of these new technologies comes with a field guide that tells managers how to use it to disrupt competitors or to break into new markets. People are discovering new capabilities and applications for these technologies through exploration and experimentation, which means companies should encourage such activity. This can require a pretty big shift in the corporate psyche, as experimentation means a certain amount of risk-taking and a certain amount of failure.

In our research, we found that one of the biggest hurdles organizations face in becoming more digital is overcoming their aversion to risk. In many established companies built on productivity and efficiency, failure and deviation typically have been punished. It takes time and considerable effort to shift that mindset.

There is much talk these days about testing and failing. But a more effective way to think of this process may be in terms of testing and learning—whether from successes or failures. Organizations should figure out how to extract the learning derived from every test and feed it back through the next iteration of the product. They also should share the lessons learned across the organization so that others can learn from them as well.

Because ongoing education will be one of the keys to the success of tomorrow’s workers, business schools can do their part by producing graduates who are lifelong learners. In addition, providing exposure to the latest technology trends will be important for all business programs, even those that are not tech-related. Schools won’t necessarily need to offer specific courses about emerging technologies, but they should introduce students to the tech and provide access to excellent sources of information about it. Business programs also might collaborate with tech companies, professional services firms, or innovation labs that can give students a grounding in technology.

Just as important, business schools should offer courses in change management, organizational transformation, leadership, and even ethics. These can help prepare students to lead companies that adopt agile mindsets, develop cultures of learning, and successfully navigate digital transformation.

Anh Nguyen Phillips---Competing in a Digital AgeAnh Nguyen Phillips is a senior manager with Deloitte’s CIO Program, where she studies the evolving role of the technology leader and the impact of emerging technologies on an organization’s leadership, talent, and culture. Along with Gerald Kane, Jonathan Copulsky, and Garth Andrus, she is the co-author of The Technology Fallacy, which is based on four years of research into digital disruption. This article contains general information only; Deloitte is not, by means of this publication, rendering any professional advice or services. Learn more.

This article originally appeared in BizEd's January/February 2020 issue. Please send questions, comments, or letters to the editor to [email protected].

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