Digital Economy Dispatch #07116th January 2022

The 5 Great Shifts Driving Digital Transformation

“There are decades where nothing happens; andthere are weeks where decades happen.”Lenin

The unprecedented events of the past 2 years have increased the pressure on organizations to accelerate delivery of their digital strategies. To survive through this crisis, effective use of digital technologies has been a cornerstone of maintaining business continuity, connecting supply chains, gaining insight into performance, and building flexibility in service delivery. Through a combination of hard work and heroism, most organizations have found ways to expanded their digital footprint to maintain operations and switch to digital-first practices. The costs have frequently been high, but for the most part they have emerged damaged but not broken.

To deliver on the promise of digital transformation, as we head into 2022 organizations now need to overcome a variety of challenges. Over the coming year, their focus will be dictated by 5 major shifts that are redefining the digital strategies of organizations across every industry. Future business success will be defined by how organizations address these shifts to survive in the near term, and the effectiveness of their digital strategies will be evaluated on their ability to adapt to this “new normal” to thrive in the longer term.

The Great Acceleration

The rapid deployment of digital technology over the past 2 years has been referred to as “The Great Acceleration” of digital transformation. From the roll-out of digital collaboration tools to the broadening of online channels, we have seen substantial investments to move to digital-first ways of interacting. Yet, it soon became clear that this digitization focus is insufficient to deal with the scale of the challenges being experienced. A more substantial transformation in working practices is necessary. This realization has had deep consequences for many aspects of organizations including requiring new approaches to leadership and significant redesign of organizational structures and processes.

Now underway, these changes are having significant impact in organizations already destabilized by volatility in their operating environments. Over the next few months, the adjustments taking place to redefine the organization’s structural characteristics and leadership approaches will occupy a great deal of energy and investment. Set amongst other changes, the resulting impacts will particularly be seen within core elements of the organization’s management infrastructure, budgeting activities, and HR practices.

The Great Disruption

Although digital strategies have been a high priority for some time, the slow progress of digital transformation has been recognized as a critical weakness by senior leaders in large organizations. Faced with substantial organizational inertia, many such efforts have been labelled as failures. The shockwave caused by the pandemic has changed all that. The “Great Disruption” initiated by the pandemic has shaken up our way of life and acted as a significant wake up call to many business leaders.

Particularly at senior levels in organizations, the current crisis has highlighted their digital shortcomings. Digital upskilling initiatives have been underway for some time. Whether rolled into corporate learning programmes or discrete events intended to create excitement in a jaded workforce trying to deliver on their daily demands, many of these learning activities have struggled to make difference. The completion rates for self-initiated learning using the plethora of online resources have also been disappointing. Far from leading a digital skills revolution, their take up has been disappointing and frequently considered only essential for limited parts of the workforce.

Over the coming months, leaders in all organizations will be scrambling to educate themselves further on the capabilities of digital technologies, hiring digitally savvy consultancies to guide their tactics, and driving their strategies toward the introduction and support of new digital business models. Educational programmes will be redesigned to be open to everyone in the workforce, to increase engagement, and to be more effective in delivering business results.

The Great Resignation

Many organizations are currently facing a critical challenge to maintain existing staff, address unplanned staff absences, and hire new employees with the right skills to support their increasingly digital ways of working. These concerns, broadly described as the “Great Resignation”, are driven by three factors: Lack of motivation in low skilled working environments; Stresses introduced by digitization of the workplace; and Shortage of key digital skills.

In particular, increased adoption of digitally-driven activities such as remote working and pervasive digital connectivity, while important to enable business continuity, have also been associated with increasing levels of stress caused by an “always-on” culture expecting an instant response to queries and increasing unpredictability in workload. One consequence is that there has been a steep rise in those looking to change employment, seek new kinds of roles, or leave the workforce all together.

Often described as a “war for talent”, increasing digital skills, rebuilding employee satisfaction, and hiring people with appropriate digital experience will undoubtedly be dominant activities in many organizations over the coming months. Many adjustments will be required in pay, incentives, working practices, and hiring processes as the challenges to support existing staff and hire new employees experienced in digital delivery approaches become more severe.

The Great Dispersion

The forced shutdown and on-going travel uncertainties over the past 2 years have had a major impact on many of the collaborative activities essential to personal and business engagement. The result can be seen in a “Great Dispersion” in many aspects of our way of life, from where we choose to live to how we want to interact, communicate, educate, exercise, entertain, and much more.

This change is particularly affecting the workplace where daily activities have been redefined over recent months through the adoption of digital technologies to support remote collaboration, the introduction of a plethora of new internet-based support services, and the establishment of streamlined processes for many kinds of distributed decision making. Understanding the ramifications of a more dispersed workforce is becoming a major emphasis for organizations. While significant doubts remain in how extensive and pervasive the dispersion of the workforce will be, most organizations now recognize a more hybrid form of home and office based working style is inevitable. Yet so far, a great deal of the support for remote workers has been reactive and rather ad hoc. The focus now is to anticipate employee needs and to provide more rigor to emerging work patterns.

Many organizations are still very early in their understanding of how to carry out these adjustments and will spend much of the coming months redesigning their working practices in response. As organizations adjust to these new working patterns, they are looking to redesign the workplace to support emerging needs. The increased stress and inefficiency that surrounded the somewhat chaotic approaches employed during the pandemic are being replaced by more responsive techniques that guide and support workers in the short, medium and long term. Furthermore, beyond the physical needs of workers, effective management post-covid requires that organizations also adapt the working practices in light of remote collaboration, shorter planning cycles, and flexible partnering styles.

The Great Reset

Beyond the challenges being faced by individuals and organizations, many analysts and commentators now also highlight the instability and uncertainty of the current period as an indication that society is in the midst of a major transition to a new set of values and concerns. In what has been declared as the “Great Reset”, organizations undergoing a digital transformation are reviewing their obligations toward issues such as sustainability in a digital era. Much of the attention has focused initially on increasing our understanding of the impacts of our organizations on the physical environment. Consequently, improving operational practices to gather data and intelligence to meet environmental targets will be the focus of a lot of attention for years to come.

As the world adjusts to this great reset, the implications for all organizations will be considerable in how they define their strategies, deploy their resources, and delivery products and services to meet the new expectations being set. Undoubtedly, organizations will be asked to justify digital transformation activities to reduce their negative impact on the environment. However, they will also need to more explicit on the choices made across three areas of sustainability – planet-profit-people.

What Matters Now

Without doubt, adjusting to the massive shifts of the past 2 years will take time. The changes we have seen have affected all aspects of business and society, and as we emerge from this crisis it would be reckless to assume we can return to the strategies and operational practices of the past.

In spite of this uncertainty, perhaps one thing is clear: Organizations ignore these shifts at their peril. The role of digital technology in this new future will be substantial. It is now incumbent on us all to expand our understanding and ensure we live up to the responsibilities for delivering digital transformation in whatever “new normal” awaits us.

Digital Economy Tidbits

Toward Data Centric AI. Link.

Everything that is said by Andrew Ng is worth reading and thinking about. This is no exception.

In the dominant model-centric approach to AI, according to Ng, you collect all the data you can collect and develop a model good enough to deal with the noise in the data. The established process calls for holding the data fixed and iteratively improving the model until the desired results are achieved. In the nascent data-centric approach to AI, “consistency of data is paramount,” says Ng. To get to the right results, you hold the model or code fixed and iteratively improve the quality of the data.

5 Impactful Technologies From the Gartner Emerging Technologies and Trends Impact Radar for 2022. Link.

It is interesting to see the Gartner perspective on digital technology trends. The scale of impact and timeframes for their impact is debateable, but it is certainly a useful exercise.