Two concerns are at the top of many CEOs’ lists for 2019: digital disruption and a historic labor squeeze. These issues are combining to produce an undisputed No. 1 priority for many business chiefs in the new year: finding, keeping, training and deploying workers and managers who can succeed in the digital era.
Thousands of CEOs in dozens of legacy industries have seen the pixels on the wall: Adjust to the perils and possibilities of digital transformation of their companies, or risk falling behind.
So while most CEOs are optimistic about a continuation of the business expansion in 2019, their focus is on using today’s prosperity to fashion their companies into digital powerhouses that are viable five, 10 and 20 years from now.
CEOs we spoke with agreed that the challenge will be recruiting and retaining technically savvy talent, as well as un-leashing digital technologies that can help employees in their legacy roles and, in turn, leveraging legacy knowledge to bolster the company on its digital path.
As Avanade CEO Adam Warby puts it: “How do we balance acquiring new people and new skills as well as help existing people to move their skills into the new world?” Getting the answer right will be critical for his tech consultancy company. “That’s why the talent agenda is very much at the forefront for me,” he says.
Chief Executive talked with CEOs across company sizes, verticals and geographies about how they’re grappling with the digital transformation of their workforces in 2019. They’re dealing with issues such as ensuring digital capabilities in their leaders, managing distributed and mobile workforces, harnessing Big Data analytics, and balancing generational strengths in technology versus legacy knowledge.
Here are a dozen snapshots:
Barbara Humpton, CEO, Siemens USA
Based in Washington, D.C., the U.S. arm of the German industrial giant faces digital disruption across its fast-changing and varied verticals, which range from power generation to industrial automation to medical diagnosis.
“We’re now changing the way we analyze leaders from just the classic evaluation of who’s ready now, which looks at their IQ and their [emotional intelligence]. One thing we’re doing overtly now is talking about what their ‘digital quotient’ is—something they’ll need in the digital age. If people have leadership qualities, we really want to defer to those people who’ve shown the most inclination to get involved in the digital economy, give them a learning ground to round out all of their skills, and get them ready to lead in the future.
“[Also] we’re saying why not have, in essence, venture-capital behavior inside the corporation? So for the second year in 2019 we are giving employees around the world the chance to bring forward their digital ideas in a Shark Tank-style pitch. We also have a venture-capital arm in Silicon Valley that is making investments in digital startups. We need to have people who are catalysts and connect the startups to corporate capabilities.”
Bob Burke, CEO, Repair Clinic
The old business of supplying parts to consumers to repair household machines has gone digital, and the Canton Township, Michigan-based company, part of Burke America Parts Group, is overhauling its e-commerce platform.
“We are putting in machine learning to help consumers search for parts on our digital platform and we are also building content in this space. We’ve invested 100,000 man-hours in our digital transformation in the last two years, and we’ve got 30 to 35 contractors working on this in addition to 10 to 15 people working on it full-time out of our 175 to 200 employees.
“The issue is finding a team, and talent. Finding a developer who wants to work on Canton, Michigan, is difficult, so you have to adapt to finding a developer somewhere in the country who wants to work four to six hours a day on some days of the week. And where someone is based goes by where the skill set is, not where our distribution or call center is. The key is using Slack, so you can talk with people and keep them focused.”
John Schlifske, CEO, Northwestern Mutual Life Insurance
The Milwaukee-headquartered financial giant is moving to an “always-on” platform, requiring a vast expansion of its digital capabilities and favoring technical expertise that’s not the forte of its legacy home-office people.
“We have to build an exceptional customer experience that’s based on a digital platform. It’s meant to be a complement to a human financial advisor, not a replacement. We’re moving to what we call a Planning Experience, which is dynamic, 24×7, constantly updated, and constantly telling you how your investments are doing with a wellness score.
“So we’re really shifting the kind of people we’re hiring from the old model of a lot of lawyers and investment professionals and actuaries and CPAs. Now half our open jobs are digital-tech jobs. And we can’t simply retrain our investment analysts and send them on a two-week course on programming.”
Vicki Holt, CEO, Protolabs
Digital is the DNA of this Maple Plain, Minnesota-based company that produces rapid custom prototypes and low-volume parts for manufacturers but is seeking ways to keep Protolabs at the forefront of a rapidly changing market.
“We’ve created the new role of chief learning officer, which we’re in the process of filling. It’s going to allow us to make sure we’re developing the right curricula, as employees help to determine what they need to stay on top to be effective.
“It’s a very strategic role, because this person has to be able to work with each of the members of the senior-leadership team, and to make sure we’ve got the right eyes and ears out there for the latest technologies in software and IoT, and to make sure our employees stay at the leading edge of where they need to be.”
Nick Westfall, CEO, Vitas Healthcare
Based in Miami, the company has 12,000 employees in 47 locations across the country, caring for 18,000 hospice patients on any given day. This requires an ever-expanding ability to communicate on a mobile basis.
“In 2016 we realized our future depended on retaining high-quality caregivers and allowing them to be physically present at the bedside with patients and families. But to be able to do that while improving our employees’ overall experience, we needed to make a multi-year investment in digitizing our workforce.
“Since then we’ve deployed mobile devices to our field staff. We developed a proprietary mobile-admissions app so our people could do more personal interaction and not be at their laptop, typing. We created the industry’s first mobile platform for full management of prescription orders. And we enacted emergency-messaging capabilities so we can get in touch with our employees and they can let us know if they are OK or need help, which really came in handy when wildfires and hurricanes have come through.
“All of this differentiates us from other hospice companies that are all trying to source the best people. Whatever we can to do create a more attractive employment offering, that’s what we’re going to do, and a lot of it starts with these pieces of digitization and benefits that come to employees because of them.”
Tom Linebarger, CEO, Cummins
Engineers comprise about half the workforce of the Columbus, Indiana-based leader in diesel engines. Now the company is harnessing data produced by onboard computers to improve its products and become more valuable to customers.
“We’re increasingly using big-data analytics and deploying that across our engineering, for more wisely designing and improving our products. Half our people are engineers, and in understanding information and IT, broadly speaking, our folks are reasonably sophisticated. But big-data analytics isn’t what we all learned in school, and now we’re doing wide-scale deployment with it.
“Our people are in the acceptance phase. Our leaders accept that we need to use big-data analytics, and there’s a relatively strong core of people who know how to use it. Everyone knows we’re going to do it and understands that it needs to be done, but we have work to do.
“So in 2019 our large-scale quality-improvement plan will deploy a number of pilots with analytics. We just finished a big one with our heavy-duty engine group and now we’re moving it across several other engine groups, in our operating plan to push out deployment in engineering over the next three to five years.”
Chris Ripley, CEO, Sinclair Broadcast Group
America’s largest TV-station operator has more than 8,400 employees providing local news across the U.S. Based in Hunt Valley, Maryland, its ongoing digitization covers news gathering, production, marketing and sales.
“We’re always seeking to reduce the amount of human intervention that’s needed. We’re taking lean-manufacturing, kaizen principles and applying them to every step that occurs in a newsroom: How do you reduce non-value added steps so that production flows to multiple outputs and platforms, not just to a [TV] newscast?
“And on our marketing and sales side, we’re also going through a step-by-step: What does a salesperson or marketing consultant do every single day? How do we either digitize it, if it’s not digitized, or automate it to make it more efficient? We’ve switched our whole ERP system to be cloud-based and just rolled out a brand new CRM.
“We’re giving the sales force the ability to work while mobile so they can be out of the office more. And we’re giving them a bunch of new products to sell, not just spot TV ads, but also Adwords, social sites, our web site and over-the-top targeted advertising not just on our air but on other people’s products as well.”
Ira Robbins, President and CEO, Valley National Bank
The regional bank holding company headquartered in Wayne, New Jersey, has witnessed a revolution waged by “fintech” startups that provide quick online mortgage application and approval, fighting back with Valley’s people.
“We’ve applied fintech to the pain points and gone totally paperless in our residential-mortgage operation, and we’ve cut our approval time down by one-third compared with a year and a half ago. We used to have four or five people looking at each loan; now it’s an automated process. Updates are now totally transparent to customers, on their phones.
“But we understand how our customers want to interact with us, not just how a fintech company says they want to interact with the industry. So we can also layer relationships in with tech to provide a wonderful experience.
“We train our people and spend a lot of time making sure our relationship managers ask the right questions. If you’re asking the right questions, specific to each individual situation, then you’re providing a solution that fintech isn’t going to want to go after because they pursue commoditization. If you provide qualified, talented people and ask the right questions, and overlay that with fintech, this is an opportunity for us.”
Jaja Okigwe, CEO and President, First Choice Health
Based in Seattle, the company is a health-benefits administrator that is owned by hospitals and physicians, serving nearly 600,000 members throughout the West with its 200 employees, many of whom are telecommuters.
“We made the decision a number of years ago to drive telecommuters to close to 30 percent of our workforce today, up from just a fraction. At that level, as an employer it becomes challenging to try to establish a common theme for the company. So we have online town halls, virtual meetings and other things that you might see in companies that are more dot-com. We’ve gone 100-percent Skype. We’re using technology to help people feel like they’re sitting in the next cube even though they’re not.
“But we also need them to come into the home office. So we’re making it easier for them with ‘hotel’ cubes where they can come and plug in easily. We’re also looking at setting up smaller satellite offices where they can come in for a set period of time and go out again. And when we have our annual holiday party, first we devote the whole morning to department meetings and encourage everyone to come in for them. Then we party in the afternoon. Doing both, they’re more likely to come in.”
Adam Warby, CEO, Avanade
This Microsoft-Accenture joint venture based in Seattle helps companies confront the digital era, growing by about 15 percent and adding 3,000 people in 2017. But digital transformation still has its challenges.
“My executive-leadership group is the top 240 people in the company. I talk with or engage them once a month over Skype. The last time we had a physical meeting was [mid-2017]. We look for simplistic ways to advance our digital culture, to encourage people to contribute and have conversations digitally.
“An example: In a digital meeting, you actually want to encourage chatter in the background because it shows engagement and encourages commentary. At a physical meeting, you’d be asking people not to chat in the front of the room because it’s distracting.
“One way that we keep people is to regularly articulate and update our vision for being the leading digital innovator for the Microsoft ecosystem. We’re clear that we have both ambition and innovation to be digital, and the tie between digital and innovation is very important.”
John Fish, CEO, Suffolk Construction
The Boston-based contractor tries to be on the cutting edge of digitization of a traditional industry and is entering the second phase of a three-phase strategy for technologically transforming its workforce to spark a new era of growth.
“We’ve been able to introduce an adaptive culture in phase one, getting people to understand that leveraging technology and innovation can be a huge competitive advantage.
“Phase two is the big-data strategy we introduced [in 2017] to create a clean data ‘lake,’ and using it will be foundational to any new investment in digital technology. For instance, we can invest in software for facial recognition on construction projects that can identify unsafe behavior on the job through video, where we can rectify it fast. And we can create a virtual-reality twin of a project that is much better than the old-fashioned way of building a scale model.
“We also are leveraging our four generations in digital formulas to staff job sites. And we are reverse mentoring, where millennials help our boomers with technology skills and the boomers on staff provide them with the benefits of their construction experience. Never before have we had this thoughtful exchange of currency; it’s always gone one way.”
Jeff Simmons, CEO, Elanco
The former animal-health unit of Eli Lilly went public in 2018 to unleash its business from big pharma. The Greenfield, Indiana-based concern improves the health of food livestock and of pets at a time when both businesses are booming.
“We’re turning our data to knowledge. We’re holders of some of the largest databases in the world on poultry and cattle disease and productivity, and on the overall optimization of an animal’s health. We also know how to administer products. And turning to the other side of our business, we have to be more connected with the end user. It’s not just with a big food company but also using IoT to be connected to a Brazilian cattle farm and to veterinary clinics.
“So we need to be able to blend that college graduate who comes here with a love for agriculture and the animal-health space and a basic knowledge of it with someone who’s agile enough to understand that knowledge gets outdated in two years. The sweet spot is people who love our cause and can connect digital with that need and are ready to jump in.”
Read more: Why CEOs Should Put CFOs At The Helm Of Digital Transformation
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