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operations from the ground up. As Ray Wang, CEO of Constellation Research, explores in his newly
released book, Disrupting Digital Business, the leaders in this new economy have moved from selling
products or services to focusing on experiences and outcomes.
We recently asked Ray a few questions about why digital transformation is an urgent priority, and
what strategic HR professionals and other business leaders can do to thrive in the age of Digital
Darwinism:
Visier: You define digital transformation as the methodology in which organizations transform
and create new business models and culture with digital technologies. Why should digital
transformation be an urgent priority for almost every company in every industry?
Ray Wang: A digital divide has emerged among global organizations. With 52% of the Fortune 500
either merged, acquired, gone bankrupt, or fallen off the list since 2000, almost all organizations in
almost all industries are focused on identifying, testing, and executing on disruptive business
models. Technology serves as an enabler, but the shift to digital business models is whats creating
this disruption in the marketplace.
In addition, the top three companies in most fields have at least 44% of the market share, and 40 to
77% of the profits. Market leaders in this marketplace have built digital business models that have
disrupted not only their industries, but adjacent industries. In fact, this digital Darwinism has been
dire to those who wait.
Visier: How can a digital mindset help any company become a disruptor rather than the disrupted;
the next Uber instead of the next Blockbuster?
Ray Wang: The digital mindset starts by thinking not only outside the box, but by looking at how
other industries and other models can be applied to ones own space. What we traditionally view as
innovation is almost an incremental process of continuous refinement until we reach a Eureka
moment. The disruption required today is transformational innovation which can impact many
business models at once. For example, weve identified that the iPhone has disrupted at least 27
business models. Products such as navigation devices, cameras, camcorders, music, personal digital
assistants, film development, compasses, and even flashlights have faced the assault of such
disruption.
To get to this mindset, organizations have to build a digital DNA. This requires the promotion and
support of digital artisans. Digital artisans can balance the science, technology, engineering, and
math skills with the design aesthetic, anthropology, philosophy, and systems thinking required for
business model design. In essence, this is right brain meets left brain. You want balance on the team
in order to achieve this level of competency.
Visier: How have formerly old-line companies evolved with digital disruption and what benefits
did they reap?
Ray Wang: A great example is at GE, where power and water has used great math and design to
tackle the issue of power generation. The metric that matters most for them is uptime. They now
have the ability to predict from 8 to 10 days when a power line is going to go down based on a
number of factors such as temperature, wind speed, ground vibration, tensile strength, humidity,
etc. This is a great example of how sensors and analytical ecosystems can help GE deliver on new
business models and address complex industrial internet issues.
Another example is Marriott. Theyve pioneered a customer experience culture through their
Marriott Rewards program where the spirit to serve goes deep for Marriott Rewards members.
This ability to create not only a consistent experience across all properties and brands, but also find
ways to surprise and delight customers is key to building the advocacy required in a digital world.
In this digital, on demand world, we no longer sell just product or services, we deliver on brand
promises. This requires a focus on experiences, and outcomes.
Visier: How will this disruption change the way we make decisions about talent?
Ray Wang: We need to search for digital artisans. HR managers will need to balance out right brain
and left brain folks; the big thinkers and the doers. But in the end, the goal is to create a culture of
Digital DNA across all organizations.
Visier: What are some other key takeaways for strategic HR leaders and people managers?
Ray Wang: One of the areas where we have to develop is the on-demand talent pool. The
recognition that the expertise no longer lies within the employee base but inside the P2P (peer-topeer) networks of employees. If employees can recommend their companys product or service,
you have employee advocates willing to share their personal networks for the companys gain.
Visier: What are networked economies and why will they be increasingly essential?
Ray Wang: Individuals and organizations can massively influence the market on their own, but until
they plug in to networked economies, theyre not going to realize their full potential. Its happening
right now. Were just at the beginning of the chaos and the craziness of what will happen when we
connect 75 or 80 billion devices by 2020. Well be seeing almost three billion people on social
networks by 2020. This massive hyper-connectivity is driving what we predict to be somewhere
between $70 trillion and $80 trillion in commerce by 2020.
Massive change is happening, and a lot of it is because everything we touch, everything we connect,
everything we create results in digital exhaust. This digitalization of everything we touch changes
the way we interact, because we can connect with a level of efficiency that we couldnt before, and
we can easily bypass any unnecessary friction. These networked economies are disintermediating,
or cutting out the middleman, in every market they enter. Were moving from experiences toward
more personalized interactions than weve ever had before.
Visier: Why are the common customer relationship terms B2B and B2C giving way to a new
model of P2P or People to People networks?
Ray Wang: The world can no longer be defined as business-to-business (B2B) or business-toconsumer (B2C).
The power of digital has enabled a better P2P or people to people movement that eliminates
middlemen and all the transaction costs that sit between you and a product/service or someone
else. This P2P movement is driving the on-demand economy for services such as Task Rabbit, and
for goods such as Etsy, and for room nights such as Air BnB. P2P is happening as well in lending and
in payments and this is a growing trend because we are now dealing with individuals and the
networks they belong to. This is different than just servicing a single individual with no
consequences.
And when that middleman and other barriers are taken away, you can connect with individuals who
actually know what theyre doing and avoid a middleman. You can connect with systems that have
better pricing information. This is the transformational power of digital that organizations can now
unlock.
Visier: When we hear buzzwords like the cloud and big data are we missing the main big
picture point of the full power of digital?
Ray Wang: Definitely. The cloud and big data provide powerful digital technologies but they are
only enablers. The cloud provides unlimited access to storage and compute power. Big data helps
brings insights to bear and helps identify patterns we may not have discovered. The full power of
digital is far broader. First, it comes from creating a business model that provides an on-demand
service at not only the lowest increment, but also enables bundles across many outcomes. Second,
the full power of digital comes when we have direct to the consumer or even people to people
models which strip out the middleman and the friction of transaction costs. With a people to
people model, each person can go direct to each other with as little interference as possible.
Visier: Why cant digital transformation be outsourced or delegated to a programming team or
department?
Ray Wang: Digital transformation has to come from within the company. This is a business model,
and a cultural, and technology shift. Theres no way to outsource that.
While digital may be applied as an adjective to every movement or trend, I define digital
transformation as the methodology in which organizations transform and create new business
models and culture with digital technologies.
Digital Transformation is the methodology in which organizations transform and create new
business models and culture with digital technologies
To elaborate, transformation arises when organizations apply a design mindset to craft new
experiences and outcomes. As organizations move from selling products and services to keeping
brand promises, the digital era requires a high degree of trust and transparency that supports and
augments brand authenticity. Digital technologies provide rich data sets which can be analyzed to
surface up patterns of insight. That insight enables organizations to easily deliver on mass
personalization at scale (i.e. segment of one) by improving contextual relevancy. Contextual
relevancy (i.e. right time relevancy) built on roles, relationships, business process, location, time,
and sentiment provide a foundation to create intention driven experiences and outcomes.
Success in digital transformation requires organizations to build a culture that supports a digital
DNA and development of digital artisans who can navigate between the right brain and left brain
world. The result is the organizations capacity to create new business models or augment existing
business models that disrupt the status quo; and sense and respond in real-time to market shifts.
until recent years that workforce predictive analyses were first conducted,
and have now become generalized in companies.
Analysis of information about the various aspects of an employees lifecycle
provides a response to one of the historical demands of HR managers: to be
able to justify decisions to improve people management with quantitative
data. Having appropriate Analytics enables us to leave aside suppositions
and offer precise, intelligent solutions to problems facing organizations,
and at the same time reinforce the employee behaviors that make it
possible to achieve business objectives.
Increased confidence in Cloud Solutions
Cloud Computing is now a reality. Organizations do not consider if they
should work in Cloud or not the question is "when to do so. 35% of
companies already have their HR application hosted in an external server
and work with a SaaS (Software as a Service) solution, against 33% that use
licenses.
Working on the Cloud not only enables the application to be accessed from
anywhere with an Internet connection, but makes it possible to connect
instantly with the rest of the corporate applications.
A commitment to gamification as a source of motivation
and retention of the best talents.
Gamification is becoming positioned as a different way of motivating
employees and bringing them closer to the companys objective, all through
an instrument that until now was discarded in an employment
environment: gaming.
iginally appeared on the American Express OPEN Forum, where Mashable regularly
contributes articles about leveraging social media and technology in small business.
With technologies evolving every day, human resources professionals are realizing that
the fast-paced, ever-changing digital world impacts their jobs and workplaces not only
today, but in the future.
Bersin & Associates, a global research and consulting firm focused on learning, talent
and human resources strategies, recently published a report on the Top Best Practices
for the High-Impact HR Organizations. The report noted that overall budgets,
organizational structure and department size have less impact on business performance
than the skills of HR professionals themselves. The research also outlined the key
competencies driving results today familiarity with integrated talent management,
understanding of workforce planning and comfort with social networking and HR
technology.
As organizations and business leaders position themselves for the future, the following
five workplace challenges will continue to change human resources.
Executive magazine, explains, HR loves talking about social media, but so far has done
very little with it. Fears emanating from the legal department have stuck HR in its tracks.
While some people will try all of the latest and greatest options, others will want to wait
until platforms have been proven. Being on either extreme could be detrimental. Its
important to evaluate each and sometimes take a chance.
Kutik says, Just like the introduction of all new technology from the telephone, to email, to the Internet which have all scared HR to death, it will eventually come
around.
One early trend Kutik believes is gaining traction is mobile. Every vendor has either
released or is about to release a mobile application for smartphones and soon for the
iPad. While much of it is a nice to have, mobile apps will get most traction in workforce
management the nuts and bolts of time and attendance and absence management
where they perfectly meet the needs of a distributed, mobile workforce.
Being able to recognize the need for a technology solution will be a significant business
advantage. HR will have to evaluate what functions can be automated and still provide
desired levels of service.
Naomi Bloom, managing partner at Bloom & Wallace, a consulting firm specializing in
the application of HR technology, shares how companies are evaluating digital solutions.
Increasingly, HR leaders are starting with the desired business outcome and working
backwards from there to answer questions, rather than starting with the question of what
to automate.
Bloom cited the investment that Kronos has made in going mobile as an example of
meeting a growing need by both the business and its employees. If your business
results are driven by optimized workforce scheduling, as is absolutely the case in most
retail businesses, then you must focus some of your automation investments right there.
And since the retail workforce may be young and used to communicating via their
smartphones, youd better consider delivering most of the transactions and analytics that
your employees and even those first line managers use, directly to their smartphones.
3. Information Curation
Kutik says it best, We are all desperately in need of a good editor.
HR is experiencing a flood of information. It will be critical to have an effective means of
filtering necessary and relevant information. The new term in the digital space
is curation.
While Kutik labels curation an awfully fancy word he does acknowledge the necessity
for picking and choosing among various information sources. Few people remember
that Yahoo began by having human editors read and evaluate sites for their quality and
determining how they would appear in searches. No more. Relying on what our friends
link to on Twitter is not going to solve the problem. Happily, people are working on
technologies to solve the problem.
For recruiters, the ability to sort through loads of information including applications
from various platforms and employment data will be a skill worth honing.
considerable resources integrating social networking that can be used for development
and knowledge transfer, with learning curriculums, performance management tools and
competency maps.
"Organizations such as Triple Creek provide competency-driven mentoring programs
over the web," continued Harris. "Plateau has built on an integrated architecture
introducing integrated and highly-scalable solutions for career development,
compensation, pay for performance, and employee profile management all which are
used in line manager support."
Bloom says, When it comes to metrics, the easiest to do are very rarely the most
valuable!
Theres no question that HR needs to create data structures that will deliver information
on business goals not only to help the company understand their workforce, but also to
optimize their talent-related processes.
Bloom notes, The most important metrics for any business investment, including those
in HR technology, are the business outcomes that the investment is intended to achieve.
If were trying to speed up and improve the selection of quality hires, then wed better be
looking at elapsed time to productivity and quality of hire.
Then the challenge, as Harris points out, is most companies dont have a single,
accurate database for storing and accessing relevant HR information. Data that is
scattered among multiple systems and acquired in varied formats can make it difficult for
most organizations to provide a clear picture of their current workforce. Many
organizations capture only limited employee details in master data systems.
Harris noted that SAP has made substantive progress in this area, pulling together data
from the HR and talent management systems then analyzing data with the same analytic
tools used in their other business intelligence platforms.
Additionally, SuccessFactors has similar analytics and planning tools.
While many advances have been made in the human resources digital space, there are
still new developments to look forward to. These advancements will bring greater
opportunities to align human resources with business goals. HR professionals will need
to remain aware of these challenges and develop their own strategies to stay within the
path of progress.
Yet the entrepreneurs dont fail with them. In the event that a startup
produces a minimal viable product, puts it to market and it doesnt
have take up, the learnings that are acquired allow the
entrepreneur, team and people to pivot, or reinvent into their next
iteration. By sharing amongst networks and crowds of people
looking to succeed and learn from each other, a pool of talent builds
and can become smarter, creating more relevant experience than
you might have had without the failure.
The start-up landscape is busy promoting, motivating, inspiring and
acquiring digital talent that most large companies simply cannot. It
is this talent that is taking stripes of the incumbents as they create,
innovate, explore, challenge and simply dont care too much for the
status quo.
Theres also a real sense of can do the entrepreneurs that I
meet on a regular basis in the digital and technology sectors largely
without exception think they might well be, with all confidence and
vigour, the next airbnb, netflix, basecamp and so on.
And bigco is sometimes sat there wondering what it all means and
how to keep up. Digital talent inspires change in the right structures
where new ways of working, leveraging technology to create and
innovate and increasing speed and agility differentiates. What,
therefore must HR consider and do in order to leverage more digital
talent along the digital transformation journey:
1- Create a contemporary culture
coming to understand not only how the natives behave but the
understanding of digital platforms, tools, techniques and means that
they utilise to connect, network and converse.
8- Celebrate the social qualities of digital
Its called social media for a reason; its about humans connecting,
sharing and being social with one another. Rather than preventing
these behaviours, celebrate their ability to bring people together for
business gain. Allow people to be social using digital, to chat
informally, to arrange social meet-ups, to connect and build friendly
and personable relationships with each other and the organisations
customers.
9- Inspire rather than bore
If comms, corporate events, email, process and structures feel
boring well lose our digital talent before we know it. Use their
insight into what works to improve communications across the
business by giving them space and impetus to inspire change. Add
a little fun, invite feedback, use it to improve and foster more agile
and iterative improvement.
10- Lead from the front
Old world HR portals, holiday booking, contract provision? Become
digital leaders ourselves to inspire the journey by becoming
advocates for new and improved digital ways of working. Introduce
them from induction through to the way the c-suite
Grasp strategies for utilizing digital and social media effectively for management, collaboration,
hiring and recruitment requirements.
Learn where digital media is going next and how we can be prepared for the next wave of change.
Understand what digital media is truly all about and how it is changing the way we do business.
Absorb how to deal with this change and take full advantage of it.
Program Agenda
This program will cover unique digital and social media dynamics, key HR digital best practices, and a process for effective
utilization of digital channels. The following is an overview of the program agenda:
Digital Connections
It may be more or less difficult to admit it, but many businesses and
company areas are progressively directing their efforts towards assuming
this reality. Human Resources cannot be an exception to this natural
evolution.
The companies that have boarded the train that is making this journey
towards digitalization encounter the following milestones as the main
stations:
More investment in Analytics and use of the information
offered by Big Data
Big Data is without doubt the most current trend in HR. The first Human
Capital indicators were already being talked of in the 70s, but it was not
until recent years that workforce predictive analyses were first conducted,
and have now become generalized in companies.
Analysis of information about the various aspects of an employees lifecycle
provides a response to one of the historical demands of HR managers: to be
able to justify decisions to improve people management with quantitative
data. Having appropriate Analytics enables us to leave aside suppositions
and offer precise, intelligent solutions to problems facing organizations,
and at the same time reinforce the employee behaviors that make it
possible to achieve business objectives.
Increased confidence in Cloud Solutions
Cloud Computing is now a reality. Organizations do not consider if they
should work in Cloud or not the question is "when to do so. 35% of
companies already have their HR application hosted in an external server
and work with a SaaS (Software as a Service) solution, against 33% that use
licenses.
Working on the Cloud not only enables the application to be accessed from
anywhere with an Internet connection, but makes it possible to connect
instantly with the rest of the corporate applications.
A commitment to gamification as a source of motivation
and retention of the best talents.
Gamification is becoming positioned as a different way of motivating
employees and bringing them closer to the companys objective, all through
an instrument that until now was discarded in an employment
environment: gaming.
The growing interest in this area results in a desire to increase employees
level of commitment, both to their work and function and to the
organization, at the same time offers greater business visibility. A job
reward and recognition system is used for this purpose, which is the basis
of gamification.
Launch Social Networks as a channel of corporate
communication and collaboration.
There is no doubt that Social Networks have marked a before and after in
the way we relate to each other. Within the EU, Spain is one of the
countries with the largest number of Social Network users, specifically 74%.
In HR management, Social Networks are also gaining increasing weight.
For example, according to a recently-published study, 31% of current hires
adapts them to tablets. Thus, those that do not have computers at home can
also access the application from these other smaller and cheaper devices.
Do not miss the train
These trends are just some examples that highlight how digitalization is
more topical than ever. We are traveling in an
era in which social networks, gamification or mobile devices were
prohibited in workplaces as a result of their original recreational or
personal function, to a time when the use of these is rather strengthened
and promoted by the organizations the Human Resources cannot remain
outside this natural evolution, and needs to be prepared to profit from all
the advantages that the new technologies provide. It must continue to be
positioned as a partner in the corporate activity of the organization, using
the new tools that have emerged as a result of the technological and digital
revolution, just as other areas and the business itself are doing. This bond
will make it possible to contribute significantly and, through people, to have
ever-more collaborative, communicative and creative professionals that are
able to adapt rapidly to the change and reinvent themselves constantly.
In the end, it is these people that will make the company of the future a
transparent and innovative place, able to adapt to any change that may take
place in the market and the industry. They will contribute to the
organizations being prepared to grow in an environment in which
everything evolves on the basis of new parameters and at an until now
unknown pace. This is the key to success.