Finding digital talent is one of the biggest challenges facing companies today. But it’s particularly difficult for large, traditional firms, especially those which operate in consolidated, non-growth industries and are often located away from the metropolitan areas where data scientists live. Many have had to get creative in their recruiting and employee development. But some of the common ways they try to increase the digital skills of their workforces — from creating accelerators to training internal talent — present their own difficulties. In studying a dozen industrial firms in Europe, the authors point to three big challenges: 1) integrating digital talent into the core business, 2) leveraging digital skills across the organization, and 3) seeing bottom-up initiatives through.
Finding digital talent is one of the biggest challenges facing companies today. But it’s particularly difficult for large, traditional firms, especially those which operate in consolidated, non-growth industries (think pulp and paper, steel, airlines) and which are often located away from the metropolitan areas where data scientists live.
Because these firms tend to have slim margins and cannot pay Silicon Valley salaries, many have had to get creative in their recruiting and employee development. In our work with a dozen industrial firms in Germany and Scandinavia, we’ve studied how they try to increase the digital skills of their workforces — from creating accelerators to training internal talent — and we’ve observed how some of these common strategies present their own difficulties.
These are the three biggest challenges we’ve seen:
Integrating digital talent into the core business
Many companies are creating accelerators or other separate units responsible for boosting their digital capabilities. For example, in Berlin alone, the list includes Axel Springer, Bayer, Lufthansa, McKinsey, Boston Consulting Group, EON, RWE, Deutsche Bahn, Metro and ProSieben — all have established accelerator programs that aim to cultivate an entrepreneurial mindset and disrupt existing business models. Even StoraEnso — the pulp and paper company founded in 1288 and widely regarded as the world’s oldest existing corporation — has a digital accelerator program.
Many accelerators are located where the digital brainpower resides — often in cities where the companies themselves are not located. For example, StoraEnso’s accelerator is run in collaboration with Aalto University and is located in dynamic Helsinki (the city that produced Angry Birds), whereas most of the company’s R&D and production is still located in its headquarters in the vast forests of Finland and Sweden.
Accelerators tend to have different cultures than their parent companies — they have different language and jargon, management techniques, tools, and office spaces. And they can create a lot of value by generating new business.
However, one serious challenge that often arises with accelerators is how to integrate new talent into the core business. The accelerators are created to spur digital innovation, but they can keep new hires distant from the company, making it hard for them to see how the code they produce interacts with the company’s core strategy and production. One reason this happens is because there’s often no one in charge of integrating the accelerator with the traditional part of the company. This critical task then tends to be left to senior managers who have a hard time prioritizing it within their busy schedules.
Leveraging digital skills across the organization
Another common strategy we’ve seen is firms rushing to train internal talent. Companies can benefit greatly from identifying tech-savvy and motivated employees and training them in new kinds of digital and data science tools. For example, one traditional Swedish steel company we worked with started training its younger generation of rolling mill operators to adopt a more digital mindset along with digital tools. This led to improved production efficiency, less variation in quality, and faster onboarding of new operators.
However, the problem arises when firms fail to leverage these new digital skills in other parts of the organization. Companies often underestimate the legwork necessary to craft mechanisms for sharing newly acquired digital knowledge and skills. In the case of the steel company, although younger workers in one plant were able to gain digital competence to improve production efficiency, their training didn’t ripple out to the broader organization. There were no processes in place to share the learning. When locally successful digital initiatives like this are not replicated, it can lead to a “mirage effect” — an illusion that the company is changing when it really isn’t.
Another issue we see with training is that many companies restrict it to IT departments that are only loosely connected to core operations. IT departments are no doubt critical for rolling out enterprise resource planning systems, but there is great potential for shop floor-centered digital competence as well. While the traditional industries we studied will need to up their customer interaction through digital interfaces, a smart, low-cost, and effective first step is to focus on data-driven production. And for that, companies need not only new sensors but operators who are trained to be data-driven as well.
Seeing bottom-up initiatives through
A third strategy for finding digital talent is through bottom-up initiatives. We’ve seen companies create suggestion boxes, hold brainstorming sessions, and host competitions to draw out high potentials and generate ideas for digital solutions.
For example, a traditional professional service firm we studied asked all their employees, regardless of function, level of experience, or managerial duties, to come up with new ideas for how to cope with digitalization. It then selected some ideas, supplied resources to move them ahead, and assigned a team to pitch the refined ideas to senior executives. This helped the company uncover hidden digital talent, greenlight a few promising projects, and increase collaboration across functions.
But this situation seems to be the exception, rather than the norm. In most companies, few employees engage in these initiatives, and among the ideas collected, only a few are ever turned into new products and services. Most ideas tend to be misaligned with the company’s strategy. And the results are often wasted resources and disgruntled employees.
This happens when managers view initiatives as a silver bullet for digitalization, when in reality, they need to explain the importance of becoming more digital, how the company plans to achieve this, and how people will benefit in the process. Without this communication about strategy and goals, few employees will be motivated to engage.
Successful companies have realized that these initiatives cannot be left alone, that managers have to be proactive in getting people to contribute by organizing events to generate awareness and by establishing processes to follow up with those who participate.
Digital transformation involves much more than adopting additional technology — it is a deeply rooted managerial challenge. To succeed, companies not only need to attract, train, and retain new talent; they must integrate those people into core business processes. Talent development also needs to be framed in terms of the overall business strategy. Firms won’t see results if there is no clear vision for how digital capabilities will improve operational efficiency and customer value.
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