May 21st, 2017

Not Changing is NOT an option

by Lucía Crespo

Today, technology is advancing at an unprecedented rate. The digital transformation has

generated an environment of uncertainty, in which we need compasses to chart a course and
determine which skills and abilities are essential to leveraging business success.

New technologies hold the key to solving the great global challenges, and all businesses will feel
their impact, whether through advances in robotics, genetics, artificial intelligence, or digital
devices. What is not yet known is how. Most analysts place the tipping point in about ten years,
a prediction based on the speed with which exponential innovations are dissolving boundaries,
combining new categories of technology, such as molecular biology or materials science. This
reality translates into improvements and breakthroughs in an increasingly wide range of
industries, functions, and disciplines. By way of example, it is estimated that by about 2027,
around 10% of cars will be self-driving, with the consequent changes in fields such as insurance,
accident rates, or traffic management. Similarly, the implementation of 3D printing will lead to
decisive changes in the means of mass consumption, some 30% of audits will be performed using
artificial intelligence, and robots may even come to sit on boards.
Exponential technologies entail a paradigm shift, and their potential is amplified when they
interact and are combined in innovative ways. The impact grows when they are brought
together on open platforms and in ecosystems that reduce the required investment and lead
times, when they converge in entirely unexpected ways. This “not knowing” is characteristic of
the so-called “fourth industrial revolution.” At the same time, digital transformation clearly
involves disruption. In other words, an industry or product works normally until something
comes along to break the revenue stream. This is what happened with telephony, when the
arrival of WhatsApp blew the telecoms’ text-messaging (SMS) services out of the water. And it
may happen again in the car insurance industry with the rise of self-driving cars.

Digital-native businesses, such as Apple, Google, Amazon, and Facebook, do not need to
transform. They have subsidiaries in telecommunications, IT, healthcare, retail, and energy that
allow them to break into those industries and compete with non-digital groups there based on
a different way of working. In this regard, failing to grasp everything that technology entails,
whether due to inability or a lack of time to research the issue, means becoming obsolete and
losing your competitive edge.

Change is an imperative and it affects the entire company; it cuts across all
business areas due to the emergence of a new kind of digital consumer.

The New Digital Consumer

Digital transformation is a winding road. To smooth out the curves, it is necessary to stay abreast
of the latest developments and constantly update your data on the environment, so as to act
accordingly once the situation is understood. Change is an imperative and it affects the entire
company; it cuts across all business areas due to the emergence of a new kind of digital
consumer. Today’s products and services have to be different, and companies have to change
how they work to maintain their competitive advantage over new players on the market.
Furthermore, any strategy must bear in mind that not only will all industries be impacted by the
digital transformation, but the skill sets and jobs of the future will change too. Some 50% of the
first-year courses for different technical degree programs may be meaningless four years later,
when the students graduate. However, the statistics and many studies show that the
transformation will not destroy too many jobs; instead, new roles will need to be defined. This
will result in uncertainty, since it is always much easier to plan a path when you know both
where you are and where you want to go.
A better understanding of technological disruption and a commitment to preparing for the
future lead to a new way of looking at skills and abilities. The three main pillars are: learning, or
the ability to draw lessons from past experiences and apply them to current
challenges; transformative capabilities, or leadership skills and traits heavily oriented toward
ensuring successful change; and the adoption of technologies, which does not mean frenetically
posting on Facebook but rather knowing how to harness the full poten
tial of such tools and using them daily, whether with a consulting team or a factory line.

The ability to keep learning is the most important pillar, since 65% of the jobs that will be
relevant ten years from now have not yet been invented. Mastering new skills fast is vital to
staying competitive in such an environment. It is necessary to be able to grasp new knowledge
in order to apply it in uncertain situations. This skill can be developed, gauging progress against
indicators of learning ability. From there, the profile can be deployed and improved as a formula
for increasing mental agility in interpersonal exchanges.

65% of the jobs that will be relevant ten years from now have not yet been
invented.

With regard to transformative leadership, it is worth noting that 70% of the skills companies
recruit for are related to change. In other words, when an area is looking for a manager, seven
out of ten times it wants to find someone who can help it modify a given situation or unit. This
means that much more value is placed on the ability to negotiate uncertain environments,
change, and transformation today than in the past. Key digital skills for leaders include the ability
to learn and the ability to quickly draw and apply lessons from previous experiences. As a result,
they must both be willing to leave their comfort zone and seek to develop their team’s digital
talent, nudging it toward new technologies.

The third pillar, the adoption of new technologies, is associated with major drivers of the
transformation that lie just around the corner and are sure to have an impact, such as artificial
intelligence, robots, 3D printing, or biotech. It is estimated that, in just a few years, around 20%
of companies’ corporate innovation will no longer come from R&D departments, but rather
online communities, outside the company, a situation that is still remote today.

Another aspect to be considered in a digital transformation process is that everything can be

developed, albeit with different time horizons. One thing that is always present from the start
is proactivity. The goal is to maintain the company’s competitive position in the market and to
grow; what remains unknown is what is needed to tackle the transformation and whether or
not the company has it. It is necessary to combine data and business strategy to work on specific
challenges, drawing on market studies, trends, and information. The first step is to work out the
company’s vision, with constantly updated research on the competition, the market reality, and
the company’s strategic needs. This will result in the configuration of a skills-based profile that,
following an assessment, can be used to identify opportunities and development needs. Such
an initiative grows out of a desire to improve, not to evaluate; the aim is thus to offer guidelines,
ideas, that compass we need in order to know where to steer development.

In just a few years, around 20% of companies’ corporate innovation will no

longer come from R&D departments, but rather online communities,
outside the company.

Size and Agility

Agility in processes and speed in decision-making are key factors in an environment of digital
transformation. While the goal may not be to turn every company into the paradigm of a purely
digital organization, which is very fast, speed is nevertheless one of the variables that must be
taken into account to remain competitive. A competitor cannot be allowed to launch a product
first simply because it has faster processes and beats you to it. While there may be some
correlation between company size and agility, it is not direct, as digital giants such as Google are
still fast decision makers. In short, the ability to react is not directly related to a company’s size,
but rather to agility and speed.

For the new generations, it is more important to realize the need for transformation, to help
management understand and internalize this need for change in order to capitalize on the
resulting opportunities. The idea is that all experience is still useful; however, to survive and stay
competitive in today’s world it is necessary to cultivate a new mindset. The solution does not lie
in handing over management to millennials, because there is a middle path they still must travel
to develop the necessary leadership skills.
About the Author:

Lucía Crespo
Head of Digital Talent Recruitment, Development and Retention at Telefónica and professor at
IE Business School

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