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Not Changing Is Not an Option

No cambiar no es una opcion 1005x523

Today, technology is advancing at an unprecedented rate. The digital transformation has generated an environment of uncertainty, in which we need compasses to chart a course and determine which skills and abilities are essential to leveraging business success.

New technologies hold the key to solving the great global challenges, and all businesses will feel their impact, whether through advances in robotics, genetics, artificial intelligence, or digital devices. What is not yet known is how. Most analysts place the tipping point in about ten years, a prediction based on the speed with which exponential innovations are dissolving boundaries, combining new categories of technology, such as molecular biology or materials science. This reality translates into improvements and breakthroughs in an increasingly wide range of industries, functions, and disciplines. By way of example, it is estimated that by about 2027, around 10% of cars will be self-driving, with the consequent changes in fields such as insurance, accident rates, or traffic management. Similarly, the implementation of 3D printing will lead to decisive changes in the means of mass consumption, some 30% of audits will be performed using artificial intelligence, and robots may even come to sit on boards.

Exponential technologies entail a paradigm shift, and their potential is amplified when they interact and are combined in innovative ways. The impact grows when they are brought together on open platforms and in ecosystems that reduce the required investment and lead times, when they converge in entirely unexpected ways. This “not knowing” is characteristic of the so-called “fourth industrial revolution.” At the same time, digital transformation clearly involves disruption. In other words, an industry or product works normally until something comes along to break the revenue stream. This is what happened with telephony, when the arrival of WhatsApp blew the telecoms’ text-messaging (SMS) services out of the water. And it may happen again in the car insurance industry with the rise of self-driving cars.

Digital-native businesses, such as Apple, Google, Amazon, and Facebook, do not need to transform. They have subsidiaries in telecommunications, IT, healthcare, retail, and energy that allow them to break into those industries and compete with non-digital groups there based on a different way of working. In this regard, failing to grasp everything that technology entails, whether due to inability or a lack of time to research the issue, means becoming obsolete and losing your competitive edge.

Change is an imperative and it affects the entire company; it cuts across all business areas due to the emergence of a new kind of digital consumer.

The New Digital Consumer

Digital transformation is a winding road. To smooth out the curves, it is necessary to stay abreast of the latest developments and constantly update your data on the environment, so as to act accordingly once the situation is understood. Change is an imperative and it affects the entire company; it cuts across all business areas due to the emergence of a new kind of digital consumer. Today’s products and services have to be different, and companies have to change how they work to maintain their competitive advantage over new players on the market. Furthermore, any strategy must bear in mind that not only will all industries be impacted by the digital transformation, but the skill sets and jobs of the future will change too. Some 50% of the first-year courses for different technical degree programs may be meaningless four years later, when the students graduate. However, the statistics and many studies show that the transformation will not destroy too many jobs; instead, new roles will need to be defined. This will result in uncertainty, since it is always much easier to plan a path when you know both where you are and where you want to go.

A better understanding of technological disruption and a commitment to preparing for the future lead to a new way of looking at skills and abilities. The three main pillars are: learning, or the ability to draw lessons from past experiences and apply them to current challenges; transformative capabilities, or leadership skills and traits heavily oriented toward ensuring successful change; and the adoption of technologies, which does not mean frenetically posting on Facebook but rather knowing how to harness the full potential of such tools and using them daily, whether with a consulting team or a factory line.

The ability to keep learning is the most important pillar, since 65% of the jobs that will be relevant ten years from now have not yet been invented. Mastering new skills fast is vital to staying competitive in such an environment. It is necessary to be able to grasp new knowledge in order to apply it in uncertain situations. This skill can be developed, gauging progress against indicators of learning ability. From there, the profile can be deployed and improved as a formula for increasing mental agility in interpersonal exchanges.

65% of the jobs that will be relevant ten years from now have not yet been invented.

With regard to transformative leadership, it is worth noting that 70% of the skills companies recruit for are related to change. In other words, when an area is looking for a manager, seven out of ten times it wants to find someone who can help it modify a given situation or unit. This means that much more value is placed on the ability to negotiate uncertain environments, change, and transformation today than in the past. Key digital skills for leaders include the ability to learn and the ability to quickly draw and apply lessons from previous experiences. As a result, they must both be willing to leave their comfort zone and seek to develop their team’s digital talent, nudging it toward new technologies.

The third pillar, the adoption of new technologies, is associated with major drivers of the transformation that lie just around the corner and are sure to have an impact, such as artificial intelligence, robots, 3D printing, or biotech. It is estimated that, in just a few years, around 20% of companies’ corporate innovation will no longer come from R&D departments, but rather online communities, outside the company, a situation that is still remote today.

Another aspect to be considered in a digital transformation process is that everything can be developed, albeit with different time horizons. One thing that is always present from the start is proactivity. The goal is to maintain the company’s competitive position in the market and to grow; what remains unknown is what is needed to tackle the transformation and whether or not the company has it. It is necessary to combine data and business strategy to work on specific challenges, drawing on market studies, trends, and information. The first step is to work out the company’s vision, with constantly updated research on the competition, the market reality, and the company’s strategic needs. This will result in the configuration of a skills-based profile that, following an assessment, can be used to identify opportunities and development needs. Such an initiative grows out of a desire to improve, not to evaluate; the aim is thus to offer guidelines, ideas, that compass we need in order to know where to steer development.

In just a few years, around 20% of companies’ corporate innovation will no longer come from R&D departments, but rather online communities, outside the company.

Size and Agility

Agility in processes and speed in decision-making are key factors in an environment of digital transformation. While the goal may not be to turn every company into the paradigm of a purely digital organization, which is very fast, speed is nevertheless one of the variables that must be taken into account to remain competitive. A competitor cannot be allowed to launch a product first simply because it has faster processes and beats you to it. While there may be some correlation between company size and agility, it is not direct, as digital giants such as Google are still fast decision makers. In short, the ability to react is not directly related to a company’s size, but rather to agility and speed.

For the new generations, it is more important to realize the need for transformation, to help management understand and internalize this need for change in order to capitalize on the resulting opportunities. The idea is that all experience is still useful; however, to survive and stay competitive in today’s world it is necessary to cultivate a new mindset. The solution does not lie in handing over management to millennials, because there is a middle path they still must travel to develop the necessary leadership skills.

 

Lucía Crespo, Head of Digital Talent Recruitment, Development and Retention at Telefónica and Professor at IE Business School.

© IE Insights.

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