A summary of Learning & Development in Times of Digital Transformation: Facilitating a Culture of Change and Innovation, by Karin Vey, Tanja Fandel-Meyer, Jan S. Zipp and Christian Schneider.

Written by Sadok Sahmimi for Global Environments and Management Trends, 19 January 2019.

Introduction

We live in an age in which computers and processors influence our lives and shape how we see the world. In business, the digital world is becoming increasingly significant. Digital marketing, digital transformation, Industry 4.0, artificial intelligence, virtual reality and augmented reality are terms that have become more familiar over the past decade.

Nevertheless, many companies still fail to recognize the influence of digital transformation. Intentionally or unintentionally, they miss developments that leave them exposed to competitors and new digital products.

The paper examines two questions:

Why do companies ignore digital transformation?
What can Learning & Development, or L&D, do to help a company undertake this transformation?

Digitalization

Companies and industries have been investing in digitalization and digital transformation for years. IT initiatives to improve marketing and production have often been priorities in their strategic plans. The fourth industrial revolution has arrived.

Mobile technologies such as smartphones and tablets, together with social media such as Facebook and Instagram, are changing society. Manufacturers increasingly face challenges connected with new ways of working. The digital transformation of the workplace is one example of why companies must change their thinking. Employees can no longer simply be fitted into traditional working models. Industries need to adapt to changing expectations and use digital tools to offer new possibilities.

Customer expectations have changed as well. For many customers, round-the-clock service has become standard. They expect companies to be available at any time and to provide a consistent service across different channels. These expectations can weaken loyalty to established products and brands, creating new threats to an existing customer base.

In manufacturing, few companies produce everything entirely on their own premises. Most exchange information with suppliers, partners, subsidiaries and other organizations. Sharing information and coordinating processes across these relationships is a challenge. A car manufacturer, for example, may work with more than a thousand suppliers. A purchasing manager needs orders to arrive on time to prevent a production stoppage while also keeping storage costs under control. This requires quick and straightforward cooperation between supply chain management, accounting, engineering and manufacturing, as well as with suppliers and other external partners.

IT infrastructure is changing too. Many companies have begun to move away from operating their own servers. Cloud services make it possible to use IT systems remotely and can reduce infrastructure costs.

These developments also generate large amounts of data. Researchers have described data as the new oil. For companies, it has opened up new possibilities and become central to their activities and business models.

Digitalization has changed the familiar image of a company and its products. In a platform economy, major businesses may trade in information or act as intermediaries rather than make physical goods themselves. eBay, Airbnb and Alibaba illustrate how digitalization can change the business landscape.

Why do companies still hesitate?

Despite the possibilities offered by digitalization and the risks of missing it, many companies hesitate. A survey cited in the paper, conducted by the Global Center for Digital Business Transformation, asked 1,000 business leaders around the world about this issue. In that survey, 45% did not consider digital disruption a matter requiring board-level attention, while one third followed a wait-and-see approach.

The reasons for this hesitation vary, but the paper groups them into five areas.

1. The effects are not fully recognized

Many managers have not yet recognized the impact of digitalization. Some examples show how quickly it can change established business models:

Airbnb allows customers to rent private accommodation around the world, competing with the traditional hotel industry.
Uber connects drivers with people looking for a ride. Customers can order and pay through an app instead of waiting outside for a car. This challenges the traditional taxi business.

Good trading conditions, such as a strong order intake, can also obscure the risks. Managers may find it difficult to see changes that arrive quickly and unexpectedly.

2. A lack of imagination and strategy, alongside growing unpredictability

Digitalization can turn a potential risk into a threat to a company's existence very quickly. As the paper quotes Ian Cunningham, COO of Tangerine Bank:

“It’s really hard to predict the rapidly evolving technology environment; you don’t know what you don’t know but you’re still trying to stay ahead of it.”

— Ian Cunningham, quoted in [4, p. 6] of the paper.

New competitors can enter a market and gain a share with unfamiliar products and services. A conventional, inflexible strategy may leave an established company poorly prepared to respond.

The paper uses BMW as an example of adapting a strategy to digitalization. Alongside producing and selling cars, the example discusses DriveNow, a car-sharing service in European and North American cities, and ride-sharing services that compete with businesses such as Uber. These are examples from the source material, rather than a description of BMW's current portfolio.

3. A lack of agility and insufficient support for innovation

Digitalization has changed markets substantially. Leaders who recognize this need to adapt their organizations. The changes concern structures and products, but also corporate culture and the way a company responds to its market.

Moving from a conventional manufacturing business towards a company with a market-oriented portfolio and services that meet new customer expectations requires flexibility and agility.

Some companies are not flexible enough to implement changes in time. Others lack the capacity to develop and introduce new ideas. External support, such as cooperation with research institutes, new employees or the acquisition of a start-up, can help with the transformation.

4. A lack of relevant skills, knowledge and attitudes

Digital transformation is a long and demanding process. The people leading it need specific knowledge and skills to guide the organization through it.

5. An insufficient culture of innovation

Innovation is an important factor in sustainable growth. It needs to be part of a company's culture, rather than remain a theoretical strategic aim. Employees need the opportunity to act on their own initiative and contribute ideas. They also need motivation and a willingness to change, learn new technologies and adopt new processes.

In practice, established companies may resist new ideas or changes because they are reluctant to invest in them.

What can L&D contribute?

L&D managers have a central role in digital transformation. Their work can help address the barriers described above.

Change agent and consultant

L&D professionals can encourage changes in organizational structures that help a company manage change and support innovation. The concepts discussed include holacracy, innovation labs and “ACCElation”.

The aim is to involve employees in the transformation and improve agility, innovation and learning, both individually and across the organization.

L&D professionals can also introduce working methods such as design thinking and Scrum to help the company work more effectively and respond to change.

Designer of a broader learning portfolio

L&D professionals need a broader portfolio of products and services to build effective learning plans. These should support specific employee training and help those leading the transformation develop the knowledge they need.

Abbildung aus dem Original

An L&D portfolio grouped into standard training, extended training and performance support, content and tool curation, workplace learning and reflection, and learning in networks and communities.

The figure groups this portfolio into five areas:

Standard training and courses, including e-learning.
Extended training and performance support.
Curation of content and tools.
Facilitated learning and reflection in the workplace.
Collaboration, exchange and learning in networks and communities.

Figure: Product and service portfolio of L&D managers [20].

Shaper of an innovation culture

L&D professionals do more than plan and deliver learning. They also help shape a culture of innovation. This can include guidelines that give employees and managers room to develop ideas, as well as workplaces and meeting rooms designed to support experimentation and exchange.

L&D can create a framework in which learning and innovation become part of daily work. The authors refer to measures associated with the ten pillars of innovation culture at IBM Research – Zurich.

Conclusion and outlook

Digitalization offers opportunities while also creating serious threats that require a timely response from management.

The necessary changes affect more than organizational structures. They also concern a company's thinking and culture.

L&D has an important role in this process, particularly in preparing employees and managers for the transformation. Alongside training, the company needs a culture that supports innovation. Helping to establish that culture is one of L&D's central challenges.

Source note

The supplied summary does not include the full bibliography behind references [4, p. 6] and [20]. The quotation and figure attributions have been retained. The term “ACCElation” is preserved because the intended concept is not explained in the source. The company examples and survey figures belong to the paper's historical context.