Digital capabilities, both for companies and individuals, are seen as the leading way to stay competitive in the long-term. Increased digitization is seen to be the key way to achieve a more defined and successful customer journey. There are four key trends that are fuelling this race to digital competency:
The power of the Internet of Things (IoT) along with the dramatic decrease in data volumes and connectivity
The emergence of analytics and business intelligence capabilities
New forms of human-machine interaction, such as AI and augmented reality systems
Substantial improvements in transferring digital instructions to the physical world, such as advanced robotics and 3-D printing
Companies are beginning to realise that the right talent and resources required for this transition are not always readily available in-house. Companies need experienced Business and Data Analysts, User Experience experts, Product Managers who are literate in cutting-edge technologies and Strategists who are able to translate business decisions into digital transformation roadmaps.
At Freshminds, we are increasingly holding conversations with businesses that are keen to understand how to embed ‘digital’ skills in their workforce. Explore some of the key steps that organisations are taking in order to stay competitive in today’s digitally driven world.
‘It’s all about talent’
Companies that are not digital natives are realising that hiring, developing and retaining the appropriate talent requires a sustained effort. Sourcing for digital talent is different and the focus is now purely on talent and not on cost, project scopes are ever-changing at a quick pace, and smaller disruptive players are dominating the capability market.
One option that many larger organisations are considering, especially professional services firms, is to acquire smaller digital players to bring their capabilities in-house, a process termed as ‘tech-quisition’. Paul Cuatrecasas, the founder of Aquaa, an M&A strategy firm specialising in helping traditional businesses acquire smaller tech disruptors, remarks that bigger businesses are willing to invest the capital required to source and acquire the right smaller player with market dominance. An example of this is in 2016, GM purchased Sidecar, an app-based ridesharing service provider, acquiring not only the company’s software but also 20 tech-savvy employees including the co-founder and CTO. According to analysis from marketing consultancy R3, the majority of M&A activity in the digital marketing sector was down to major consulting firms, including Accenture, Deloitte and McKinsey, who invested more than a collective $1.2 billion in agency acquisitions in 2017.
Another way that businesses that are less digitally-native are bringing digital skills internal is by adopting a flexible workforce approach with short-term contracts for experts being seen as the only viable option for quick injections of a particular skill-set. At Freshminds, we realise that analytical skills extend beyond the advanced modelling ability of using Excel, and many consultants coming into the network now have a strong understanding of analytical tools like SQL, VBA and Alteryx, and a keen interest in AI, Business Intelligence and the ability to ‘translate’ insights from Big Data analysis into commercial decision making.
‘In-house digital hubs’
Larger companies are also building digital skills hubs or internal subsidiaries with a start-up like environment. This is attractive to young digital talent and is separate from a traditional corporate culture. For example, a global industrial goods player saw that its digital technologies were disrupting major segments of product and service lines and therefore embarked on a digital transformation programme. A principal element was to establish a digital accelerator unit to run the most important digital development projects and recruit analytical talent in order to increase the organisation’s online success.
Indeed, governments are heavily backing this move to digitalization due to the positive growth effects on the economy with research by Oxford Economics for Virgin Media Businesses claiming that the UK economy could receive a £92bn boost if firms fully develop their digital potential (Source: News.gov.scot, June 2018). Two months ago, the Scottish Government introduced the Digital Development Loan to improve digital economic productivity. This £2 million loan has been launched to help companies who wish to improve their digital capabilities and processes, in areas such as cyber security, data analytics and software engineering; it can also be used to develop the digital skills of their staff.
It is clear that the focus of the moment for businesses is on effective digitisation not only from a commercial and customer-centric viewpoint but also when it comes to operational effectiveness. UK businesses that improve the digital skills of all their employees will become more productive, innovative, profitable and secure. Businesses that are able to address skills gap with external consultants and analysts, and shift their focus to bringing the right talent on board either through acquisitions or focused training, will find themselves staying ahead of the competition.