Driving network innovation: The role of HR in driving digital transformation

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Digital transformation is happening at an unprecedented pace. Businesses from around the world, in all sectors, are devoting more time, attention and resources to ‘going digital’ than ever before. Digitalization is a top priority for nearly 90% of corporate leaders, with organizations globally expected to spend close to $1.7 trillion on digital transformation in 2019, according to recent Gartner research. 

Across the board, the perception is that businesses who neglect to invest efforts and resources into digitalization will live to regret it later – 67% of business leaders agree their company must become significantly digitised by 2020 in order to remain competitive. 

The pressing need for businesses to embrace digitalization presents a wealth of opportunity for HR leaders: as the gateway for digital talent into an organisation, their decisions are crucial to the digital transformation of any business. How best, then, might they proceed?

The task ahead for HR leaders

As organization undertake efforts to become more digital, CEOs are demanding more from their Chief HR Officer (CHRO) counterparts on this front. In a poll of 30 CEOs, executed as part of Gartner’s “Pulse on the Future of Work” report, the top three demands of CHROs moving forward will be to:

1. Attract, develop, and retain digital talent to support digital strategy
2. Help leaders shift their mind-sets on the talent implications of their digital strategy
3. Help facilitate or train their workforce to adapt to digital changes

When looking to attract, develop, and retain digital talent, HR leaders currently face two courses of action: build talent from scratch, or buy it externally. For the majority of HR decision-makers, the option of developing digital expertise among existing leaders and employees is most appealing. According to further research from Gartner, 95% of HR leaders surveyed are planning to invest more in training employees for digital opportunities, while 63% noted that they are developing new leadership programs focused on digital management. 

That said, the majority of respondents also recognize the need to buy digital talent externally, with 74% of the leaders surveyed claiming they would be recruiting employees with specialized technical skills – such as coding or data analytics – from outside their company. 

Furthermore, CHROs seeking to shift the mind-sets of leaders around them also seem to find solace in the external hire: 54% of CHROs, in fact, are hiring senior leaders with prior experience managing business, in order to remedy this issue.

A digital talent focus

These figures demonstrate the effort currently being ploughed into the sourcing of digital talent by HR leaders. But how successful are their efforts? Could there be a better way for CHROs to pave the road to digitalization?

For a number of reasons, digital talent is becoming harder and harder to attract, build, and retain. The issue is complex, with the digital labour market having experienced a period of significant turbulence and change over the past few years. The skill requirements listed for the majority of tech-focused jobs, for instance, have changed by more than 25% since 2013. Compounding the difficulty for HR departments trying to ‘keep up’ with digital, is the fact that demand for digital talent significantly outstrips supply; accordingly, such talent is expensive, with the average data scientist’s salary amounting to almost twice that of a typical employee with an advanced degree. 

Among such unaccommodating market conditions – where competition for digital talent is fierce, and the shelf life of skills is seen to get shorter every year – it is becoming increasingly apparent that CHROs need to think beyond simply ‘digital talent’. 

What CEOs really want: innovation

Increasingly, CEOs are expecting their HR leaders to go beyond procuring digital talent and instead to drive digital progression holistically across the business, capitalizing on growth opportunities fuelled by technological improvements such as advanced data analytics and augmented reality. Fundamentally, the remit of the CHRO has expanded. They are no longer overseers of talent and rewards; the HR leaders of the future will be champions of innovation. 

Innovation – like the labour market – is rapidly changing in today’s digital era. Speed, crucially, is becoming a hallmark of success in this arena: in a “winner-takes-all” environment, successful organizations must identify, prioritize, and implement innovation faster than those around them. Furthermore, it’s not enough for innovative solutions to just improve existing business, they must be able to disrupt and create new opportunities too. An example of this trend could be Domino’s “Hot Spots” idea, allowing customers to get pizza delivered to them outdoors; or FinTech challenger Revolut’s ability to eliminate expensive exchange rates on currency, which almost all consumers face when travelling abroad.

To be truly successful in today’s environment of rapid technological change, organizations must be able to mobilize their entire workforce to drive innovation across the board.

The network innovation approach

As detailed in Gartner’s webinar “Driving Network Innovation: Talent Strategies for the Digital Age”, the most effective innovation strategies are those that take a ‘network innovation’ approach, which involves building and drawing on a network of expertise – including employees and leaders at all levels –- to innovate at scale.  

Key strategies to develop a network innovation approach include:

1. Engaging employees not just in filtering, but generating ideas. 
2. Equipping leaders for shared, not individual, risk taking. 
3. Giving employees more guidance, not more access, for using innovation networks. 

Brian Krop, Group Vice President of HR at Gartner

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