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Staff not ready for digital

Innovation

Bridging the digital acceleration gap

Published 29 September 2022 in Innovation • 5 min read • Audio availableAudio available

How digital leaders can overcome the barriers to achieving their ambitions.

The constantly changing business landscape has left digital leaders (CIOs and CTOs) struggling to adapt. An “acceleration gap” has opened up between organizations’ aspirations for digitalization and their ability to deliver it.

In our recent research into this subject, Closing the Acceleration Gap, more than half of senior business executives (52%) said there is a growing divide between where their business is and where it needs to be in order to compete.

How can leaders bridge this gap? At Workday, we believe the answer lies in an integrated approach that stays true to your company’s unique strategic priorities and balances investment in technology and people.

Diminishing digital ambitions

At the beginning of the COVID-19 crisis, many companies pushed their digital strategies, but now the pace of digitalization is slowing.

Our research confirmed that, compared with a year or two ago, digital ambitions are more restrained. In 2020, more than one-third of senior business executives (36%) reported that within three years they expected digital to account for 75% or more of their revenue. In our latest research, just 13% of organizations said the same – a figure that is aligned with pre-pandemic digital aspirations (12% in 2019).

Invest in training and culture

Even where ambition remains high, leaders are struggling to maintain momentum. Recent research from BCG shows only about 30% of companies are currently navigating digital transformation successfully. For many, cultural factors and a lack of skills stand in the way. Our study found that nearly four in 10 leaders (38%) believe a lack of relevant workforce skills is the biggest barrier to achieving their transformation goals.

Despite this, direct investment in training and corporate culture is rare; more than half of our respondents (54%) agreed that investment in technologies ultimately takes priority over the cultural and structural transformations that are required to embed them.

This short-sightedness persists, despite the lessons of the pandemic, with the widespread and sudden shift to home working. After investing in business-wide operational changes, the majority realized that a remote work environment also requires a completely new cultural approach.

The digital employee experience is also a vital consideration for leaders as they advance their transformation strategies. As approaches to work continue to evolve and adapt, they must maintain channels of communication open to facilitate collaboration. Recent research carried out by Columbia University and Stanford University, and published by Nature, found that in-person collaboration fosters creativity more effectively than when people work via video calls. Companies must focus on enhancing their digital employee experiences, so that they provide as many as possible of the benefits offered by in-person collaboration.

“In-person collaboration fosters creativity more effectively than when people work via video calls”

Democratize data to boost innovation

Providing open access to data – through a system where data is collected, stored, processed, and managed effectively, giving employees self-service access to timely and reliable insights – is key to building-in innovation and adaptability. Gartner predicts that, by 2023, organizations that promote data-sharing will outperform their peers on most business value metrics.

Fewer than half of leaders (46%) in our study said they are sufficiently digitally well-equipped to ensure business continuity in times of crisis. In companies where data is fully accessible, that proportion rose above three-quarters (76%). If employees are to contribute fully to optimizing the digital transformation of their organizations, including improving processes and developing innovative new products and services for the digital age, they require access to stored data and insights.

Investment in modern data architecture is crucial; the operational and data silos of legacy systems restrict businesses’ growth. When there is one reliable source for financial, people, and operational data, everyone can access real-time insights to make sound decisions, at pace, in response to changing business needs.

The right headspace for change

A critical aspect of cultivating innovation and flexibility is empowering decisions at every level. About half of leaders (52%) in our study said that their organizational culture enables the business to embrace change. This rose to 85% among companies where data is fully accessible.

A “fail-fast” mentality (trying new ideas with high potential but minimal viable scope prior to extensive investment) is essential to effective innovation. However, the culture of experimentation that gathered pace during the pandemic has fallen back, with many businesses no longer confident in this approach. This is backed up by our research: in our latest study, only 53% said they had a fail-fast mentality, compared with 77% in 2020.

While an innovative mentality is important, finding a sustainable approach to change is a key consideration for businesses. Digital transformation must be an ongoing effort, from the implementation of technology to its ongoing use and development.

Digital leaders can find it difficult to balance experimentation with the need for steady progress. By better aligning transformation with specific company-wide strategic priorities, organizations can support a more measured approach that maintains momentum towards long-term goals.

Four steps to success

It’s important for digital leaders to remember that the acceleration gap is a global problem, and is partly a product of our current circumstances. There is a worldwide skills shortage, and every budget has its limit.

However, there are key steps that should be taken to help overcome these barriers to transformation:

  1. Take an integrated approach: plan technical and people investment simultaneously, offering skills development or training with the implementation of every new technology.
  2. Create a “change-ready” culture of innovation.
  3. Ensure data accessibility, empowering agility at every level of the company.
  4. Use your business’s specific strategic priorities as the basis for every development or initiative.

If you are always guided by your specific goals – even if there are significant challenges along the way – you will be transforming in the right direction.

Authors

Jens Löhmar

Workday Chief Technology Officer, Continental and DACH

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