Brad Zomick

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Digital Transformation Is About Much More Than Technology — ‘No Industry Is Immune’

L&D

Imagine a future in which every company in the S&P 500 drops off the stock index within a few years.

That’s not as far-fetched as it may sound. Companies once spent an average of 36 years on the S&P 500. By 1990, that dropped to 20 years. Now, it’s dropping further.

“At our forecasted churn rate, about half of the S&P 500 will be replaced over the next 10 years,” Innosight found.

Why is this happening? The business landscape is changing at a faster pace than ever. To succeed and build longevity, businesses have to understand the digital transformation — and what it means for learning and development.

What is the digital transformation?

“A lot of people get it wrong,” says Gerald Kane, a professor at Boston College’s Carroll School of Management. “It’s actually not primarily about technology or implementing technology in companies. It’s about enabling your company to do business in an increasingly digital world.”

The transformation is “racing ahead,” DXC Technology writes in the Harvard Business Review. It “forces wholesale change to the foundations of an enterprise — from its operating model to its infrastructure, what it sells, and to whom and how.”

“No industry is immune,” the company says. The transformation will “introduce revolutionary change to even the most staid industries.”

Customers — whether they be individuals (for B2C) or other businesses (for B2B) — are flocking to companies that provide the best, fastest, smoothest, most holistic experience. As Pathgather CRO Nick Gidwani explains in his post on Mastering Talent Agility:

“We’re living in an era in which tech startups can supplant traditional businesses. It’s happening everywhere and to everyone. Airbnb is stealing even more business away from hotels than initially anticipated, all without owning a single room. Casper is overturning the mattress industry and doesn’t have a single showroom … Tesla is now valued at more than General Motors.”

In short, every industry is driven by technology these days — so every company needs to become a “tech company” to compete.

The transformation is also internal

Companies can’t simply change the customer’s experience without also transforming how internal processes work.

As Hu Yoshida, chief technology officer at Hitachi, writes in Digitalist Magazine, businesses are all too often “focused on creating this sort of digital facade where it appears to be a digital experience for the customer, but, in reality, the back office still has not caught up to support that level of digitization.”

That’s a recipe for failure, Kane says in an interview with Pathgather. “If there’s a weak link in the at chain and people aren’t up to speed, the whole thing falls down.”

For example, Kane says, a marketing leader at a major hotel chain developed an app for ordering room service. “The customer had a beautiful experience” but “it wasn’t integrated well” in other parts of the company. The result: Orders at first weren’t delivered to rooms in a timely manner, or weren’t delivered at all.

Break down silos to learning

To avoid these kinds of problems and take advantage of the opportunities offered by the digital transformation, organizations must constantly evolve the ways they operate throughout the organization. That’s why businesses such as AT&T are reinventing themselves through “a culture of perpetual learning.”

It requires breaking down the silos that have traditionally limited employee learning and prevented managers from discovering the reservoirs of knowledge among their staffs, Kane says.

“We’ve been talking about this since the mid-1990s — knowledge management, unlocking the knowledge of our employees,” he says. “Most companies are doing exactly the same thing they did today in 1995: sharing knowledge via email, having meetings and conference calls.”

The skills that businesses need to succeed “are changing so fast that the traditional method, whereby the company develops the content and then delivers it, is too slow. Because by the time you figure out what you need to teach and get content up and running, that skill is obsolete” and your industry has moved on to the next new technology, he says.

Now, platforms are needed to get employees sharing that knowledge with each other, and with the company at large. By using an open talent development platform, businesses empower their workforces to constantly to create and add learning content, as well as teach each other skills.

What the numbers show

Steadily, businesses are realizing that the digital transformation requires a new era of learning and development.

In a survey published by the MIT Sloan Management Review, Kane and a group of fellow researchers asked several thousand executives what their organizations are doing now to develop “leaders who have the skills and capabilities necessary to lead their organizations in a digital business environment.” The top answer: Giving them training.

When asked the biggest mistakes managers make with respect to digital business, “insufficient training” made the top five. The biggest mistake was “lack of understanding of digital technologies and their impact” — a problem that could also be solved by adequate workplace learning ecosystems.

What lunch tables prove

The importance of helping employees learn from each other has also been proven in perhaps the simplest, most non-technological of ways: through lunch tables.

At a major online travel company, the cafeteria happened to have some tables that fit four people and other tables that fit 12 people, Kane says. The company discovered that people who ate at the larger tables had greater productivity (in this case, code completions) and job satisfaction.

The reason: People at the larger tables were more likely to talk with various colleagues and share ideas, learning from one another.

This same principle fuels online talent development platforms. It’s why social learning is a centerpiece of Visa University. “The whole concept of social learning is peer to peer,” says Matt Peters, Visa’s director of technical learning and development.

Update the culture

Even if steps are taken to ensure agile learning is offered, broader changes must be made, Kane says.

“You need a culture of openness, and a willingness to take risks,” he says. “People must be encouraged to share their thoughts, including those that might be unconventional.” To succeed, businesses must “flatten the hierarchy, become more risk-tolerant, and become more agile.”

Kane calls on businesses to develop “digital maturity” because “maturity, from a psychological perspective, means acting appropriately in a given environment.” And for businesses, today’s environment is characterized by the digital transformation.

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