Digital Value Creation

Winning the Talent War

April 05, 2021 Tamas Hevizi
Digital Value Creation
Winning the Talent War
Show Notes Transcript

Research shows that lack of digital skills is the main reason why 70% of digital transformations fall short of their goals. Unfortunately, this has been the case for years now. Why is the digital skill gap so hard to fill?

Research shows that lack of digital skills is the main reason why 70% of digital transformations fall short of their goals. Unfortunately, this has been the case for years now. Why is the digital skill gap so hard to fill?

Even companies where digital transformation is a matter of survival, struggle to attract, retaining and motivating the talent necessary for success. This is clearly not a recruiting channel, but lack of talent may be the biggest barrier to digital value creation today.
Oftentimes digital skills are perceived to be IT skills. Some believe they should only hire more data scientists and machine learning experts and all will be good. Recent studies tell us that digital talent starts at the top. As one CEO bluntly put it in a recent McKinsey article, even if he's the best football coach, all the resources, money, and people won't let him build a world-class cricket team. The business would first need a great cricket coach and that person would have the experience to know what talent and playbook are needed to win in that game.
The same is true for digital transformation. The senior leadership team needs to expand its digital expertise to be able to lead and guide digital strategy.
The recruiting firm Spencer Stuart was quoted in a recent HBR article about this very topic. They looked at all the positioned companies hired from the CEO to the individual contributors. They analyzed all the job descriptions to see which roles required digital or even technical skills. Not surprisingly, most companies in this day and age required digital skills for CIOs, CTOs, and most IT roles. Even Chief Marketing Officers had requirements for digital marketing and analytical skills.
However, and this is a big one, most other roles of the company lacked that same digital experience requirement. Only 10%-20% of functional leaders, finance, supply chain, or procurement managers needed to know digital. Why does it matter?
Every CIO I've talked to complains about resistance or the lack of understanding of digital transformation in the business. The data shows us why. Leaders cannot take people where they have not been. If leadership does not understand digital it tends to discourage people and they tend to move elsewhere where digital is the center for the leadership team.
Let's step back and look at the big picture. Innovation happens when the business gets under pressure either from competitors or investors or customers. When under pressure, the leadership team taps into their collective experience and chooses a course of action they believe will best help the company succeed. In most cases, digital transformation is not in the skill set of the executive team and therefore they tend to pursue other interventions that are more familiar. 
A broader aspect of the digital talent gap is geography.  In a study conducted in England, 42% of businesses canceled digital projects because of talent. Talent will go where their expertise is most valued and simple. It is a virtuous cycle. Companies that make digital a core strategy will attract digital talent and that in return will reinforce investment in those skills by other companies and schools in the area. The companies that innovate and disrupt tend to cluster in certain markets reinforcing market leadership for companies that can tap into those markets.
In a recent study by Linkedin - they looked at the profile of over 40 million professionals worldwide. From that data, it became clear that for companies that want to attract digital talent, they have to operate basically in 10 major cities in the world. In these 10 cities, the top 5 skills on Linkedin had to do with digital and software technology. These cities included San Francisco, Shanghai, Bangalore, and Shenzhen. On the other hand, there were major cities where the top 10 skills had no digital component. These were for example London, New York, Berlin, Boston, or Singapore. 
Location matters. If digital is a core strategy you need to bet on the location where the talent pool is. 
The key learning for me is this. We require most people in business to have the basic financial literacy to perform almost any job. That's why business degrees and MBAs are a common requirement. For the digital future, we should make digital literacy a requirement. In the same way, you are expected to know what a balance sheet is, you should also understand what machine learning or predictive analytics can do for a business. 
As I said in the beginning, I believe the digital talent gap is the primary reason digital value creation falls short. That talent needs to be deployed on the top, the middle, and every level of a future digital enterprise.