Every organization seeks to build its digital wherewithal, but the challenges often boil down to where, with what. For even the most digitally-savvy enterprises (or maybe because they’re so digitally advanced), it comes down to finding or developing people with the right skills to move things forward. And that’s not so easy.

An innovation culture can be very attractive.

Photo: Joe McKendrick

If anything, lack of skills is now the single greatest impediment to digital efforts, a recent study by Constellation Research of 81 organizations concludes.

The study, co-authored by Courtney Sato and R. “Ray” Wang, identified digital transformation as focused on two technology initiatives: artificial intelligence and the Internet of Things. AI investment surged in 2018, with 58 percent of respondents reporting they’ll spend money on the technology — up from 25 percent in the previous years survey. IoT investment remained relatively flat at 51 percent. More than two-thirds (68 percent) said their digital transformation efforts have yielded a positive ROI.

Skills concerns topped everyone’s lists. Sixty-one percent cited “lack of talent to staff transformation projects,” ahead of corporate culture, budgets, or technology infrastructure requirements. Fifty-one percent of respondents said they needed “to make significant hires to staff digital transformation projects.” In addition, 61 percent “identified a lack of talent as an impediment to successful digital transformation projects.” Put more starkly, only five percent say they have the “workforce talent necessary to implement digital transformation projects.”

Where are the skills needed? AI and data science skills ranked as the skills most in demand, and 58  percent are investing in data science, data analysis or data skills, while 37 percent are investing in AI skills.

To find these people, 78 percent say they are seeking talent from outside the organization for digital transformation projects, while 48 percent are developing talent internally. “Constellation clients have expressed a growing frustration about the lack of qualified applicants to staff digital transformation efforts,” Sato and Wang add.

Some informed observers say organizations shouldn’t complain too much, and instead, understand the need for a smart, competitive recruiting and retention strategy that includes both competitive compensation and greater investments in internal professional development.  As Deloitte’s Daniel Bachman bluntly put it, “blaming the state of the labor market for a company’s flawed personnel strategy is about as productive as blaming consumers for disliking the latest tech gadget.” 

So what does it take to attract, keep and develop the digital talent needed to keep digital enterprises on the move? For answers on this, we turn to two people who know a thing or two about this challenge: Werner Vogels, chief technology officer at Amazon, and Scott Snyder, partner with Heidrick & Struggles:

Seek and encourage a diversity of skills. “You need talented individuals who want to be customer-centric and who are able to cross the traditional (internal) customer and IT organizational boundaries in order to truly feel what customers want,” Vogels writes in BusinessWorld. “Though it can be tempting to focus on new technical talent in a digital transformation, the better approach is a model that integrates new digital talent with the domain knowledge that comes from legacy employees,” Snyder states in a World Economic Forum report.

Be open to new types of jobs. Look beyond “the designers, developers, and data scientists that everyone is battling for today,” says Snyder. “These may include product incubation managers, behavioral scientists, journey mappers, business modelers, solution finders, and emerging tech specialists. Maybe soon you’ll need an AI specialist in your HR department.” In addition, these roles would just be internal employees, but a “talent ecosystem, which will typically include internal people, external hires, partners, and freelancers.”

Encourage autonomy and an entrepreneurial spirit. Employees “should be able to follow their ideas and feel accountable for them,” says Vogels.

Encourage a “venture” mindset. Managers need entrepreneurial or digital skills to drive a disruptive innovation opportunity, Snyder says. This includes skills such as “capital raising, design thinking, lean startup execution, calculated risk taking, creating go-to-market strategies, and venture scaling, in balance with product and technology expertise that is directly relevant to the market being pursued.”

Build from within. Offer development opportunities, customized for each individual, Vogels urges. “That might be a course, the opportunity to lead a project, or gaining new insights by working in another part of the company.”

Build a fun and rewarding culture. This may be the greatest challenge, especially if your culture is uptight or hierarchical. But it’s essential in today’s digital economy. “The most innovative companies are usually the ones that stand for a culture where failure is explicitly allowed — and even desired,” says Vogels. “The path to transformational innovations can never be straight and failure is a sign of progressive thinking.”

Focus on the power of data. “Digital business models require experts who view data as an essential element of future value creation – regardless of the specific expertise they bring to the company,” says Vogels.

Plan for balanced AI-human capabilities. “Classify which activities should be optimized for machines, which for humans, and which for a hybrid model,” says Snyder. This will require “difficult decisions about reskilling, shaping talent, and ensuring your workforce is the correct size in the face of a future dominated by AI.”