Written by Ash
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Digital transformation (DT or DX) is a term used daily in business today, and more than ever since the arrival of the pandemic.
The definition of digital transformation can be different for every organization because every business is unique, but refers to leveraging technology to create differentiated ways of doing business to drive growth in new and existing markets.
Digital Transformation impacts businesses and the markets they serve in a big way, and will undoubtedly segregate companies that will strive from those who will be left behind.
Why is Digital Transformation Needed?
Digital technology has transformed the landscape of customer service, sales, supply chain, marketing and more, in ways that impact every area of business. Every company has now become a technology company. Managing this transition to a digitally-driven business model will not only critical in winning over competitors but also crucial for survival itself.
Here are 3 Key Reasons Why Digital Transformation is Needed Urgently:
- Acceleration of Change – The new normal or business and work has made it very difficult to maintain a position of industry leadership, and requires an acceleration of new digital solutions brought to market
- Digital Competition – Companies are under ever-increasing pressure to compete digitally, and long-established business models are being disrupted by “born digital” start-ups
- Customer Expectations – Customers expect a good experience across all digital touchpoints and are less dependent on physical service
Why are Digital Leaders Needed?
Global spend on technology and services that enable digital transformation is estimated to reach $1.97 trillion in 2022 (IDC Worldwide Semiannual Digital Transformation Guide).
The reason companies will not only adopt some form of Digital Transformation but also embrace this spend is the estimated 10x return in value.
The World Economic Forum is suggesting that the value of digital transformation for both society and industry could reach $100 trillion by 2025. Yet, according to Mckinsey, about 70% of organizations fail at Digital Transformation.
This is because organizational leaders approach Digital Transformation by thinking first about technology infrastructures, process changes, customer journeys, and cost impact but overlook the most important element of change – leaders themselves.
Developing leaders with digital mindsets can have an enormous impact on the success or failure of an organization’s Digital Transformation. Changing expectations from organizational leaders have necessitated a change in the way leaders are identified and developed as compared to traditional business models.
Digital leaders embrace the 3 key changes identified above by simplifying what these mean to employees.
They encourage employees to harness technology in their current role and subsequently create a competitive advantage.
They innovate and collaborate in new ways and are humble enough to move into the critical role of a facilitator. And they act as agents of change – sparking a multiplying effect across their areas of responsibility.
Building a pipeline for future Digital Leaders is where many companies struggle, and only 35% of organizations say they have the leadership capabilities required for digital transformation.
However, by creating a Digital Leader model, companies can have a measurement framework to identify leaders they will need for successful transformation.
The Digital Leader Model
The Digital Leader model is built on a set of foundational competencies that are not only relevant today but can withstand the test of time. Such foundational competencies are crucial in moving a company forward despite changes in volatility, complexity, and ambiguity.
The following research-backed competency framework can serve as the foundation to help develop a Digital Leader Model.
These 3 Pillars of a Leadership
- Agile Mindset: An Agile Mindset is about being open-minded and learning-oriented, willing to reflect own strengths and weaknesses, intellectually curious, and displaying a positive attitude towards change and development.
- Leading Change: Leading Change is about showing interest in leadership roles in a volatile work environment, promoting and inspiring collaboration, empowering team members to embrace change and drive their self-development, being self-aware and willing to move into a role of a humble facilitator.
- Driving Business: Driving Business is about global networking, identifying and developing business opportunities, generating solutions and taking calculated risks, and ultimately driving business success. It is also about integrity, reliability, and resilience which are needed to handle pressure and continuous regulatory changes.
How to Identify Digital Leaders
Now that we have presented a model for Digital Leaders, the next challenge is how to identify such leaders.
Fortunately for us, there exists a wide range of tools in the market today that can produce results to quantify the Digital Leader model.
The measurement framework below shows how this could be done:
| Framework | Agile Mindset | Leading Change | Driving Business |
| Traits | Learnability Agility Curiosity | Drive To Lead Championing Collaboration Humility Empowerment | Handling Data Strategic Solutions Business Acumen Digital Communication Mental Endurance |
| Tool | Psychometrics + Cognitive Assessments | Adaptive Leadership Simulation | Business Acumen Simulation |
| Measures | The ability for a person to unlearn and re-learn information and the willingness one has to continuously learn | The ability for a person to take over a team and adapt leadership style according to the individual’s needs while maintaining their results, performance, and morale | The ability for a person to lead a business by understanding the different functional parts of a company and make decisions according to market trends and future business needs |
Impact on succession planning
In the above part of this post, we looked at the type of leaders organizations will need to groom for success through the Digital Leader Model.
The model, which consists of 3 pillars; Agile Mindset, Leading Change, and Driving Business, helps companies by providing a framework to measure the leadership potential of their employees in today’s business environment.
Now, we’ll discuss 3 key processes that need to change to make Succession Planning strategy work.
First, to understand why there are processes that require changing, we need to look at key changes that have come in 2021 and will stay beyond the year that will impact Succession Planning model drastically.
3 Changes that Impact Succession Planning
1. Transforming Jobs
Technology had already been impacting jobs rapidly over the last 5 years and the pandemic of COVID-19 became a catalyst to this transformation.
Creating a succession planning strategy around the circumstance that jobs will change is a challenge facing HR.
Moreover, the collective of work technologies such as automation, robotics, AI, and such has brought many organizational gains such as lowered production cost and operational efficiency but has also simultaneously shifted jobs in 3 ways: towards extinction, augmentation, or creation.
| Job Shifts | Definition | Example | Forecast |
| Extinction | Jobs that can in totality or at least, for the most part, be done by some form of technology without impacting the customer/business value chain | Travel Agents | With the abundance of easy-to-use travel comparison and booking websites that do not charge as much and provide instant arrangements, people have taken travel bookings into their own hands. |
| Augmentation | Jobs that are automated in part by technology to make work better while still requiring human input but will require new sets of skills to be learned by the people in the roles to ensure customer/business value chain continuity | Marketing Managers | The rise of digital platforms that aim to monetize hyper-targeted marketing combined with needing human touch will make marketing professionals add digital and analytics skills as part of their skills |
| Creation | Jobs that will require people with a completely new set of skills not yet created today but will arise due to innovations in technology and a need to apply those to the work environment | Chief Productivity Officer | The introduction of new technologies, streamlining of departments and a global virtual workforce will need an officer who can analyze data and work trends to advise of productivity leakage |
Impact of Succession Planning on Job Transformation
2. Evolving Work Policies
The need for social distancing during the pandemic forced companies to adopt new work policies such as work from home and rotational schedules that were previously being experimented by a few progressive organizations.
These policies that were thought to perhaps be detrimental to company performance have brought about a paradoxical effect.
One on end, talent identification became harder due to the lack of performance visibility.
The ease of evaluating someone’s performance in the office where personal contact is frequent is now lost and performance frameworks will need to be re-evaluated to accommodate virtual work.
This means for effective succession planning to take place, there should be a new way to measure these needs be designed.
Also, fostering performance becomes tougher. Unless your employees are 100% intrinsically motivated, it’s difficult to stimulate enthusiasm about your service or product without ample social engagement.
On the other end, talent availability has become easier due to global availability. Virtual work teams now mean that talent can be sourced disregarding geographic locations as long as productivity is not impacted. This widens the HR pool of available successors to a role yet puts employees in a competitive spot.
3. Shortening Skills Shelf Life
Innovation will make skills obsolete faster, leaving organizations that thrived on “specialists for life” in a vulnerable place. The quicker jobs go extinct, augment, or get created the faster an organization will need employees with newer skills to keep up. This means even their most valuable employees who are high performers today, may start becoming obsolete day by day. The change to HR will be building succession planning pipelines that now have to be based on skills of the future, which at the moment have no clear benchmark. Estimates put the half-life of a professional skill at just 5 years, and this will only get shorter.
With these changes already taking place that will continue to impact the Succession Planning process, the real questions are – what current processes does HR need to change? And what new processes do they need to put in place to ensure organizational success?
If you are unsure how to assess the current skill composition in your organization read our blog on tool selection.
3 Key Processes Needed
1. Fluid Succession Planning
Leadership succession planning can no longer be a one-time static practice in which a few employees are selected for talent development within a fixed time frame of over a year.
It now needs to be looked at as a fluid process – continuous, running throughout the organization, and moving in line with business needs.
- Succession Planning needs to be a continuous process – Succession planning as a process must now be on-going, where talent data is constantly collected and refreshed and enables HR to always have updated information regarding talent.This then allows HR to move talent according to need and cut downtime that a role is left vacant.
- Succession Planning needs to be run throughout the organization – Traditional succession planning is typically reserved for top management.However, this means that the majority of the organization is vulnerable to vacant positions contributing to potential loss of business. Today’s succession planning process needs to include all levels of the organization, from top to bottom.This not only allows positions at all levels to be filled quickly but also builds an organization’s bench-strength readiness which is critical for business continuity.
- Succession Planning needs to move at pace with business needs – The rise in ambiguity in business means that business strategy reviews are being done at shorter intervals.When a shift in business happens, HR needs to be equally ready to provide the right talent to support this business move.However, having a rigid succession planning process hinders this, since it doesn’t provide a way for HR to pivot mid-way through the planning process, or becomes too costly as the resource has already been invested into a long-term plan.Therefore, HR needs to build a process that allows for movement according to the business’s agile talent demands.Creating a fluid succession process means leadership pipelines are now agile and can keep up with the demands of complex business environments.
2. 24/7 Talent Availability
Having constant external candidates available doesn’t necessarily translate into having constant talent available. There still may exist skill gaps in matching the right applicant to the right role.
Also, if skill gaps aren’t a problem, cultural gaps may exist as well. This issue in addition to heavy recruitment costs is faced by many organizations that rely too much on external recruitment.
This is why HR teams today have to consider adopting a talent marketplace to leverage internal talents whilst reducing cost as well.
As Josh Bersin said in his article Talent Marketplace Platforms Explode Into View “Companies have been restructuring at lightning speed (driven by the Pandemic) and now, more than ever, they need an intelligent way to move the right people into the right role”.
Talent marketplace allows employees throughout the organization to post opportunities for open positions, gigs, projects, and any other need within the organization for other employees to apply.
Using technologies like AI and algorithms the Talent Marketplace then matches the best talent for an opening and vice versa allowing the organization to discover untapped potential and abilities of its employees truly optimizing internal recruitment.
Having an internal talent marketplace that connects talent buyers and talent sellers can benefit your organization by:
- Maximizing internal recruitment
- Reducing external recruitment cost
- Optimizing talent utilization
- Reducing attrition
If you are unsure of what factors are preventing your organization from internal talent movement read our blog on internal mobility roadblocks
3. Future-Looking Career Pathing
In 2020, the pandemic forced organizations to put the accountability of work in the hands of employees. In 2021, to strive despite the on-going work practices organizations need to put the accountability of careers as well in their employee’s hands.
This means developing a future-looking process of career pathing in which employees map out their professional career development plan within the organization.
In accomplishing this, HR then serves as the organization’s vehicle to drive employees along their career paths.
Staying competitive in complex business environments requires organizations to retain and maximize valuable talents, which in the rise of career nomads has become increasingly difficult.
Career nomads are high-performing talents who have no qualms about switching jobs, organizations, and careers.
As these talents are expensive to replace, HR needs to finds processes that boost both retention and engagement rates and career pathing helps with both.
- Retention – Whilst there are countless reasons why people leave their job, lack of career growth opportunities and a feeling the job isn’t a good fit for them are at the top of the list.Offering your employees career training and development opportunities are something that can make a big difference. Career pathing gives people valuable insights into their career advancement possibilities and the various paths that can lead them there.As such, it can be a big help in lowering turnover rates.
- Engagement – Now, more than ever before keeping engagement high has become a challenge for organizations, and learning and development are viewed as a key benefit by employees.By letting employees craft their career paths they can get valuable insights on their skills and competencies, the potential internal vertical and lateral opportunities to move, and the resources they can use to fill personal gaps to make those moves.Employees knowing what’s potentially in store for themselves boosts employee engagement.
When business operations have become increasingly complex and uncertain during the pandemic, succession planning contributes to strongly supporting the business by building a strong leadership pipeline ensuring talent supply is never short and always meets business demands.
Using the Digital Leader model to find the right business leaders and incorporating the 3 processes above, HR can help build resilient business organizations.
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