Digital disruption to displace 4 in 10 industry incumbents: Cisco-DBT report

NEW DELHI: By neglecting digital workforce transformation, companies are failing to build the capabilities that they will need to succeed in an era of digital disruption, says the new report 'Workforce Transformation in the Digital Vortex', from The Center for Digital Business Transformation (DBT Center), an IMD and Cisco initiative.

The report describes the steps that an organization can take to digitize its people-related processes in order to build a workforce that is highly agile, innovative, and engaged – factors that will enable the organization to create value for its customers, partners, and for its own employees.

Cisco projects that by 2020, 50 billion objects will be connected to the Internet and able to generate massive streams of data. In such a climate, organizations must ensure that, ultimately, people are empowered by these new forms of communication and the insights they enable. Only then will they capture their share of a massive opportunity in new digital value.

According to the DBT Center’s Digital Vortex report four in 10 industry incumbents will be displaced by digital disruption over the next five years. In an effort to battle digital disruptors, many companies have focused business transformation efforts on IT and business processes. Too often, however, they neglect their greatest asset: people.

The DBT Center studied the business models of more than 75 disruptive workforce startups and conducted in-depth interviews with many of the founders and/or CEOs of these companies to understand their value propositions and how they believe digitization can transform the workforce. Interviews were also conducted with senior human resources practitioners and operational leaders at large global enterprises in order to understand how these organizations are approaching digital workforce transformation. In addition, the DBT Center surveyed 941 executives globally to assess the current state of their digital transformations and their workforces.

The study found that, in the area of people, fewer than 10 percent of companies have achieved a level of excellence in three key capabilities of digital business agility: hyperawareness, informed decision-making, and fast execution. As described in the study, these are three foundational capabilities that organizations must build in their workforces in order to compete successfully in the Digital Vortex.

“We speak to companies every day that are trying to understand the role technology plays in their business strategy,” said Kevin Bandy, Chief Digital Officer, Cisco. “Many of their most pressing questions focus on how they can empower their employees through digitization to help them improve decision-making, accelerate innovation, and be more productive.”

However, the DBT Center’s research cautions that technology solutions alone are not the only answer to transforming the workforce. These efforts must aligne to the business process changes that occur across organizations as they reinvent their operating models to compete effectively in a digital era. Furthermore, workforce transformation requires sustained commitment from leadership. “Transformation is more than a summation of digital solutions, explains Bandy. “Digital transformation is rewriting the rules of business and will require a workforce that is appropriately equipped to work with the speed and agility that this level of change will demand.

The study finds that companies that digitize the workforce stand to win big in the Digital Vortex. In the Digital Vortex, business models, offerings, and value chains are digitized to the maximum extent possible. As innovative disruptors drive toward the center of the Vortex, they reshape markets and industries.