INNOVATION

DigitalTransformationDoesnt
HavetoLeaveEmployeesBehind
byCharles-EdouardBoue
SEPTEMBER30,2015

When we try to dene what a digital organization is, what rst comes to mind are technological
devices: employees toting laptops, permanently connected to a shared, real-time ow of
information on virtual platforms, constantly communicating with customers or suppliers
people working from anywhere, with others they have never met in person.

But digitization is more than just a change of tools. Daily practices, workplace structures,
reporting relationships, information sharing, customer interaction, and even competition are also
thereby transformed. Becoming a true digital organization is not just about becoming tech-savvy.
It means embracing a new culture and mindset, where hierarchy fades and innovation happens
through networks.

At the company level, it is quite clear that digital

DruckerForum2015:ManagingintheDigital
Age
Thispostisoneinaseriesofperspectivesby
presentersandparticipantsinthe7thGlobal
DruckerForum.

maturity is synonymous with stronger economic

growth and a higher level of well-being for
employees. In a study conducted with Google
Europe, Roland Berger assessed the digital
maturity of French companies, looking into
three distinct dimensions: equipment, practices

and uses, and organization and skills. We found that the more digitally mature companies grew
revenue at six times the rate of their less mature counterparts. Beyond this nancial impact,
employees in the digitally advanced companies also reported a 50% higher index of well-being at
work. Mature digital organizations are characterized by a exible, less hierarchical culture where
employees enjoy a real autonomy and the possibility to express their creativity. No wonder
employees like them.

At a more macro level, the possibilities opened up by connected, more ecient production and
new business models are also highly promising. A study conducted by Roland Berger with the
Bundesverband der Deutschen Industrie (Federation of German Industries, or BDI) found that, if
Europe harnessed digitization, by 2025, the continent could see its manufacturing industry add
gross value of 1.25 trillion euros. The risks of failing to digitize are equally dramatic: from
missing out on digital transformation, European industries could suer potential losses of up to
605 billion euros in the same period.

Nevertheless, we should be careful not to overestimate the boon of digital transformation. For
example, we are only beginning to understand digitizations eects on unemployment. In 2013
Carl Benedikt Frey and Michael A. Osborne from Oxford University calculated that about 47% of
American jobs could disappear by 2020 due to digitization. Roland Berger applied its
methodology to the French labor market and estimated that 42% of French jobs could be at risk.
Not surprisingly, low-skilled jobs are most threatened, but even intermediate jobs could also be
aected. These include administrative or middle management functions, which have historically
provided jobs for the middle class.

Managements challenge is to gure out how to capture the benets of digitization, while
minimizing the costs and making sure those costs are shared and not borne disproportionately
by one group.

This places additional responsibility on managers, in terms of anticipating changes in skills,

adapting our training policies, and empowering our sta in other words, ensuring that
digitization makes, within our companies, more winners than losers. While the goal is ambitious,
there are many things managers can do to evolve their conventional organization into a digital
one while ensuring that employees are keeping pace.

The rst step managers need to take is to assess their organizations purpose and vision. What are
the organizations goals? Why does it need digital transformation to achieve them? This in turn gives
rise to more tough questions: Which jobs will be crucial to the company in the next years? Which
jobs will be less crucial? How many employees are potentially aected? How should we adapt our
training and recruitment policies?

The second step towards digital transformation is to acknowledge that technical devices are not
the main issue. Instead of designing tools and implementing them in a top-down approach,
managers should rely on their stas digital maturity, which is often higher than they might
assume. For instance, in our study on the digital maturity of French companies, we saw that
while nearly six in 10 French people shopped online in 2013, only one in 10 French companies
sold online that same year. This gap means that, in most organizations, the employees digital
maturity oers signicant untapped potential. Managers should encourage their sta to suggest
and experiment with digital solutions, and allow them to adapt these into their work practices.

The third step is about developing an organization that will foster digital practices. It means
changing, step by step, from a traditional functional, siloed organization into a modular one with
a loose alliance of autonomous and multidisciplinary teams. Research shows that modular
organizations reach digital maturity with greater ease. They want to encourage distributed
decision-making and empower middle management. This change is happening more commonly
than we think. After all, when HR people routinely talk to nance sta, they are eectively
working as members of a cross-functional team. Recognize these teams formally and empower
them with digital tools, so that they can reach a higher degree of autonomy. While these teams
will not replace the traditional organization, they will work from within to reform it.

Managers and employees will need to navigate the digital frontier together, and this requires a
new set of leadership skills. Ultimately, success in the digital age lies not in the eciency of
technology, but in the dexterity and adaptability of the people who wield it.

This post is one ina series of perspectives by presenters and participants in the 7th GlobalDrucker
Forum, taking place November 5-6, 2015 in Vienna. The theme: Claiming Our Humanity
Managing in the Digital Age.

Charles-EdouardBoueistheGlobalCEOofRolandBergerandtheauthorofLightFootprintManagement:Leadership
inTimesofChange(Bloomsbury2013)andConfuciusetlesAutomates(Grasset,2014).FollowhimonTwitter
@CEBouee.

ThisarticleisaboutINNOVATION
FOLLOWING

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7COMMENTS

ALESSANDROSALIMBENI

11monthsago

Iwonderhowmanyjobswillbelostbecauseofcompaniesmissingthedigitizationopportunity.It'sfairtorealize
digitizationisameantoachievemoremeaningfulgoalsanorganizationmay(andhaveto)have,butrightbecause
ofthisreasonthescenariooforganizationsbeingslowandreluctanttoadoptdigitizationit'saprettysadand
scaryscenario.
00

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