Getting ready for digitalization: What does it mean for HR?

Technology has transformed how we shop, travel, work and even build social relationships.

Digitalization has also enabled companies to execute business strategies that were impossible just a few years ago and has enabled most companies to achieve some level of business continuity over the challenging year of 2020.

These developments are creating new markets while destroying others, reshaping labor economics and fundamentally altering the nature of work itself.

To survive digitalization, companies must learn to compete in a world where technology constantly transforms what organizations do and how they do it. This starts with understanding and embracing three truths about business in the digital economy.

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Truth No. 1: Whatever the company is doing now, it’s the wrong thing to be doing 2 years from now

In our digital world, technological innovations create constant market disruptions, process transformations and shifting business conditions.

Regardless of a company’s industry or market, something is going to happen within the next two years that will significantly alter its business landscape.

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This could involve technological innovation, factors impacting supply chain or manufacturing methods, entrance of new competitors, shifts in consumer preferences, new regulations or any number of other disruptive changes. The challenge is that companies won’t know what these changes or their impact are until they start to happen. And when these changes come they’re likely to happen quickly. Leaders who fail to quickly act will find their companies losing ground in a business market that is only becoming more competitive. To paraphrase Charles Darwin, the law of business survival of digitalization is “adapt or die.”

Truth No. 2: Digitalization success requires getting people to do things in the future that are different from what they did in the past

Succeeding in a world of ever-accelerating change requires mastering the one thing about companies that isn’t changing: Businesses depend on people working together to accomplish shared goals. Companies will always employ people, even if all they do is take care of robots. Not only are people the only constant about companies, but

Under the right conditions, people have a phenomenal aptitude for learning, growing and adapting to changing situations and environments. But under the wrong conditions change can be extremely stressful and punishing. The challenge companies face is how to create a work environment that fosters a growth- and change-oriented mindset among employees. Becoming “digital ready” requires understanding and leveraging the psychology of people to ensure change is viewed as an opportunity instead of a threat.

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Digitalization Truth No. 3: Any business process designed more than 3 years ago is out of date

Technology enables and constrains process design. All processes are a function of the technology available when they were created. Older processes inevitably include elements that would not have been used if the process designers had access to modern technology.

Three years is an eternity in the world of technology.

Requiring employees to use processes built using outdated technology forces people to live under the constraints of the past. People are a valuable resource, but they are also an expensive resource. Money spent on people will not generate a return on investment unless people have access to tools, knowledge and technology that support their productivity and efficiency. People also don’t want to work for a company that forces them to use outdated tools and inefficient methods. This is particularly true for high-skilled employees who are used to state-of-the-art, consumer-grade technology solutions. What may have been an acceptable work experience a few years ago may now be considered outdated, inefficient and impersonal. This doesn’t mean every process needs to be updated every three years, but companies should critically review older processes and ask “Is this still the right way to do this given the shifting needs of the organization and the expanding capabilities of technology?”

These truths are not challenges to be solved. They are realities that need to be factored into everyday operations of digital ready companies. To use an analogy, the truths of digitalization should not be thought of as being “major storms we need to survive.” They must be accepted as changes to the overall climate of where we live. It’s one thing to prepare for an occasional heat wave; it’s another to adapt to living in a world where it’s hot every day.