Driving network innovation: how HR remains vital for digital transformation
CEOs today not only expect their CHROs to secure them the best digital talent in a tough market, but to also champion innovation and disruption across the business. Are HR leaders doing enough to meet these requirements?
Digital transformation is happening at a quicker pace than ever before. Businesses around the world, in all sectors, are devoting more time, attention and resources to ‘going digital’.
In fact, nearly 90% of corporate leaders list digitalisation as a top priority; a fact made all the more evident when considering that, globally, organisations are expected to spend close to $1.7 trillion on digital transformation in 2019, according to recent Gartner analysis.
Businesses who neglect to follow this trend and invest resources into digitalisation may live to regret it later. According to Gartner's Digital Enterprise 2020 Survey, 67% of business leaders agree their company must become significantly digitalised by 2020 in order to remain competitive.
The challenge for HR leaders
As organisations undertake efforts to become more digital, CEOs are demanding more from their Chief HR Officer (CHRO) counterparts on this front. As part of Gartner’s ‘Pulse on the Future of Work’ report, 30 CEOs were polled on future business objectives.
According to the survey, the top three demands of CHROs moving forward will be to:
Attract, develop, and retain digital talent to support digital strategy
Help leaders shift their mindsets on the talent implications of their digital strategy
Help facilitate or train their workforce to adapt to digital changes
HR leaders currently face two courses of action when looking to attract, develop and retain digital talent: build talent from the ground up, or buy it externally. For the majority of HR decisionmakers, 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 programmes focused on digital management (Gartner, 'Driving Network Innovation: Talent Strategies for the Digital Age'. October 2018, p. 9).
At the same time, the majority of respondents recognise the need to also buy digital talent externally. 74% of the leaders surveyed said they would be recruiting employees with specialised technical skills – such as coding or data analytics – from outside their company.
Furthermore, CHROs seeking to shift the mindsets of leaders around them also seem to take solace in the external hire: 54% of CHROs, in fact, are hiring senior leaders with prior experience of managing business.
Increasingly, CEOs are expecting their HR leaders to go beyond procuring digital talent and to drive digital progression holistically across the business.
Focusing on digital talent
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 digitalisation?
Perhaps surprisingly, digital talent is becoming harder and harder to attract, build, and retain. Indeed, the digital labour market has 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 (Gartner, 'Driving Network Innovation: Talent Strategies for the Digital Age'. October 2018, p. 10).
It’s not enough for innovative solutions to just improve existing business, they must be able to disrupt and create new opportunities too.
The task for HR departments trying to ‘keep up’ with digital is complicated even further by 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’.
HR leaders must champion innovation
Increasingly, CEOs are expecting their HR leaders to go beyond procuring digital talent and to drive digital progression holistically across the business, capitalising 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.
Like the labour market, innovation itself 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 organisations must identify, prioritise 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 FinTech challenger Revolut’s ability to eliminate expensive exchange rates on currency, which almost all consumers face when travelling abroad; or Domino’s ‘Hot Spots’ function, allowing customers to get pizza delivered to them outdoors, capitalising on a plethora of touchpoints outside a typical Domino’s customer journey.
Most importantly, however, to be truly successful in today’s environment of rapid technological change, organisations must be able to mobilise their entire workforce to drive innovation across the board.
Realising network innovation
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:
Engaging employees not just in filtering, but generating ideas.
Equipping leaders for shared, not individual, risk taking.
Giving employees more guidance, not more access, for using innovation networks.
Brian Kropp, group vice president, Gartner’s HR Practice, oversees the research, tools, services and support that we provide to HR leaders and their teams.