70% of business transformation fails. This bold but true statement was made by McKinsey in 2019 after thorough academic research.
Business transformation refers to the evolution of workforce management and skills sets, in preparation for the digital-heavy world of Industry 4.0. One of the most popular methods of business transformation is Digital Transformation, also known as digitalisation – the process of integrating digital technology and data into all aspects of business operations.
Digitalisation involves upskilling or reskilling the workforce to operate in harmony with the latest technology, by raising their skills proficiency levels and keeping their skills up-to-date.
By understanding the reasons why businesses fail at their transformation, we hope that you can avoid these pitfalls, and to work with JobKred to be part of the 30% that do succeed.
1. Leaders do not have high enough conviction
Digital transformation is an important process, for the advancement of businesses. It is what separates ex-bookstore market leader, Barnes & Noble, from the almighty Amazon. More investors are realising the importance of transformation, and actively drive C-level executives to push for this change.
However, for any plan to work, the leaders must have 100% commitment and conviction to lead this change, in order to inspire and motivate subordinates to follow through. From the employee’s standpoint, “if my boss does not care, why should I put in extra effort to impress him?”. Thus, this is the very first challenge companies have to overcome – the leaders must champion change and that will build a strong foundation for the company to embark on a successful digital transformation journey.
2. Leaders do not recognise the importance of skills sets, skills gaps and competency frameworks
In many of the unsuccessful attempts of digital transformation, organisations tend to ignore the fundamental components of workforce transformation: skills sets, skills gaps and competency frameworks. Without these, employees are underprepared and easily blindsided – they do not know which areas to transform in, nor how to transform? This unfortunately leads to a failure in implementing digital transformation.
However, with the help of Competency Management System, in place, this complex workforce transformation problem can be tackled. Competency management systems can compare the ‘workforce’s current skills set’ with the ‘expected industry skills set’ in order to generate actionable skills gap findings. With these data points, companies can be focused on where and how to close the skills gaps in their organisation.
3. People in the organisation do not buy into the transformation plan
“What is Digital Transformation? Why should we transform? Is it worth my time to transform?” These are some vital questions that must be addressed by management before there is buy-in by the rank and file for organisation-wide digital transformation adoption.
Fortunately, Digital Transformation is widely accepted by most people, once it is understood. Without upskilling, jobs are going to be lost and replaced by automation and artificial intelligence. A Gartner research paper reveals one-third of skills present in average jobs in 2017 will become obsolete in 2021. As an example, financial analysts, traditionally known as a high-status job, have been highly impacted by the rise of Artificial Intelligence technology. Computers can spot complex patterns and trades faster and more accurately than most humans. This brings us to a sombre conclusion – if you wish to keep your job, you have to upskill yourself constantly.
To make this concept more welcomed by the workforce, Learning & Development programmes must be relevant and easy to implement. Workers need clarity in what and why they are undergoing training. A competency management system can complete all the tedious tasks of identifying skills gaps and recommending areas of improvement to the workforce, streamlining and fast-tracking the process of digital transformation.
CrimsonLogic initially struggled with this issue, but through JobKred’s partnership with them, SPRE enabled their workforce to achieve the necessary buy-in. There was a 10 fold increase in course take-up rate, and this contributed to a 37% decrease in CrimsonLogic’s attrition.
4. Organisations do not have the capabilities to drive transformation
A traditional method for organisations to go through transformation and upskill employees would be hiring consultants to do a detailed and time-consuming analysis of the company and its industry. This process is expensive, time consuming, and unfortunately lags behind the true current state of work, in both skills and application. With pressure internally and externally to transform and future ready the entire workforce quickly, organisations are forced to spread the budget thinly across a large pool of employees, often rendering the transformation ineffective, as the effort is dispersed and unfocused.
Large Multi-National Companies are not immune to digital transformation failures!
General Electric attempted to transform their organisation all at once, but the combination of their mammoth size and tight budget led to a focus on quantity instead of quality. This ended badly, with billions of wasted dollars and the CEO being forced out.
Procter & Gamble also had a broad goal of digital transformation, but this led to broad initiatives that lacked purpose and precision. Coupled with several challenges, including an economic downturn, the transformation exercise failed, and the CEO asked to resign by the board.
Competency Management systems take away a lot of transformational risks, by being cheaper and more agile than traditional methods. The scalability of software makes it inexpensive and effective, transforming workforce uniformly across all levels is now possible. For clients using JobKred’s SPRE, up to 80% of time and cost savings were achieved.
5. Organisations are missing key elements that enable successful implementation
They don’t put the right change-management infrastructure in place,
They don’t establish a cadence of leadership oversight meetings.
They don’t create a transformation office
They don’t set regular performance-management discussions to track progress.
Implementing digital transformation may be fairly new to HR, but its fundamental objective, Learning & Development, is very familiar. If it is such a familiar topic, why are there still transformation failures? Because the process does not scale easily, unless a technological solution is used.
When HR implements transformation, it is often done manually. This can work on a small scale, perhaps in a business of 11-50 employees. However, an organisation of 500 will likely have 100s of job profiles. If each job profile has an average of 30 skills, HR would need to populate, manage and analyse at least 3000 skills! The HR team struggles to coordinate such a big effort, without the help of specialised tools.
That’s where SPRE comes in – our system can complete these manual and tedious tasks in just seconds, and it presents you with actionable insights and easily created analytics to measure progress. That is the power of a competency management system.
Before ST Logistics partnered JobKred, their HR team attempted their Digital Transformation exercise through a manual and tedious process using Microsoft Excel. The team even worked through their weekends to conquer this monster task! To make matters worse, given the ever changing industry landscape, they had to struggle through the entire process again just to keep up with the frequent changes. Thankfully, JobKred’s software allowed for automation and intelligence, which enabled ST Logistics to finally future-proof their workforce in a scalable and successful way.
Regardless of the sector, size and type of business, everyone can agree on the notorious difficulty of business transformation. Despite its challenges, business transformation is a mandatory step for every business. Sooner or later, every occupation, no matter how old, will be disrupted by technology and will have to evolve. Overcoming these 5 main challenges will greatly reduce the failure rate of business transformation. To streamline the whole process and further increase the chance of success, a competency management system becomes a mandatory tool.
Reach out to us to find out how your organisation can use SPRE to embark on a successful business transformation journey.
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