Digitization has changed and is changing every one of the world’s biggest companies. AsJean-Pascal Tricoire, CEO of Schneider Electric, pointed out at a recent conference, his company has made digitization central to its innovation efforts. The company has an “innovation principle” which states that, “every product should be augmented into a digital capability.”
Even five years ago, this would have been seen as a bold statement for a large, mainly B2B manufacturing firm. But today it’s the norm; in fact, 69% of business leaders expect that by 2020, their company will prioritize the creation of services to enhance existing products over designing and creating new additional products.
How to Help Employees Prepare for Digitization
This shift toward digitization has placed new expectations on all employees. They need to be able to lead and contribute to technology projects, handle the demand for rapid innovation, and adapt to new ways to deliver products and services.
But, unfortunately, many employees aren’t ready. For example, in IT, 94% of IT employees are too risk adverse, process-centric, or removed from the day-to-day work of their colleagues to support the innovation and digitization that’s taking place in their firm.
In response, senior managers should create a climate of openness amongst all employees. Like “culture,” climate can become a catch-all term in business, but in this instance it refers specifically to the shared perceptions of employees about the nature of their work. These perceptions are, in turn, shaped by organizational policies, practices, and leadership.
Employees that display a climate of openness will be more open to collaboration outside of their immediate teams, more open to new ways of working, and more comfortable with risk and uncertainty. And these are three essential ingredients for companies that wish to digitize.
Two Ways to Boost the Climate of Openness
So how can organizations create a climate of openness? Here are two examples:
- Prioritize metrics that matter to digitization: Emphasizing metrics that measure on-time, on-budget, and operational performance will not prepare employees for the fast paced innovation required for digitization, and won’t make them more open to new ways of working.Business leaders should “unbalance” their scorecards to disproportionately emphasize metrics that matter most to digitization, time to market for new digital capabilities, percentage of projects aligned with corporate digital goals, and percentage of innovative digital experiments evolving into full projects. As business leaders’ scorecards become more unbalanced, the deprioritized categories, such as operational performance, should contain fewer but more composite metrics that focus on value and risk.
- Share lessons learned from failure stories to increase employee openness to risk: Risk and uncertainty is a key component of digitization, but the many employees worry that working on projects that fail will harm their careers, compensation, or standing in the company.To overcome this challenge, the CIO at a media company in CEB’s networks of IT professionals outlined and communicated the organization’s attitude toward failure from the leadership team down, and encouraged IT employees to share and learn from their experiences of the right kind of failure (e.g., through experimentation, not policy violation) through an online platform, using things like gamification to encourage participation. The success of this initiative has resulted in the media organization opening it up to employees outside of the IT function.
