Organizations Zero in on the Digital IQ Gap, a Long-Term Risk Threatening Digital Transformation

Originally published in HBR

July 18th, 2022   
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Organizations place enormous importance on digital transformation as they look for ways to enhance efficiency, boost productivity, and trim expenses. Yet many are quickly discovering that they need to better develop their workforce’s “digital IQ” to optimize these technological investments.

This message was crystal clear in the recently released Executive Perspectives on Top Risks, an annual survey that Protiviti conducts with NC State University’s Enterprise Risk Management Initiative. In this the ninth edition of the survey, executives ranked the lack of digital technology skills and talent within their workforce and among job candidates as the fourth-highest risk in 2021, a significant jump from tenth place last year.

And the apprehension over workforce digital aptitude isn’t going away anytime soon. For the first time in the survey’s history, we asked executives to look ahead and rank the most significant risks for 2030, a decade from now. Digital IQ came in at number one.

The results indicate that organizations are putting a premium on enhancing digital knowledge to prepare for the future of work. How to retrain the workforce and help it develop new skill sets, how to compete for talent in a market that’s short on supply, and what the future workplace will look like are all top of mind in executive suites and boardrooms.

Value Revealed

The COVID-19 pandemic played a significant role in why executives moved tech talent worries up four spaces in a year. The pandemic largely exposed the lack of digital preparedness within workforces as the uptake of technological solutions exploded. In many cases, organizations had advanced technologies already in place, but they were minimally utilized. With remote working arrangements, organizations had to quickly make up for missed opportunities.

Digital telemedicine capabilities like Telehealth have existed for many years, for example, but adoption of the applications ballooned almost overnight. ` The use of virtual collaboration technologies like video conferences suddenly became crucial in business and productivity continuity as corporations closed offices and sent personnel to work from home. And restaurants and retailers scrambled to shift to online and mobile ordering and fulfillment platforms as they rolled out curbside pickup and expanded deliveries.

Organizations that tapped into heretofore latent technologies have now benchmarked their current digital state and are determining how they can harness technology more strategically in the future. For organizations that just began their digital transformation under pressure last year, that could translate into planning to implement more complex systems, such as robotic process automation (RPA) to perform repetitive manual tasks and artificial intelligence (AI) to crunch data to enhance decision-making. For those already employing automation, increasing the use of these tools could help mitigate business disruptions and enhance efficiency and productivity even further.

Regardless of where corporations are on the digital transformation arc, the pandemic has placed the future of work front and center in executives’ minds. They should not miss the opportunity to reassess their needs and reimagine the workplace by thinking strategically about what work will need to be performed, where, how, and most importantly, by whom.

Closing the Digital IQ Gap

Digital transformation will manifest differently and vary in scope among organizations, but almost certainly, it will affect nearly every function, either directly or indirectly. So what are some strategies for building and maintaining a tech-savvy workforce? Here are some ideas:

• Hire outside the box – At the very least, digital transformation is expected to displace some jobs and shift worker roles. Creating the optimal workforce in such an environment will likely include supplementing full-time employees with contract talent, both of whom will work with and alongside their so-called “electronic co-workers” – RPA, AI, machine learning (ML), and other technologies. Such an “ambidextrous” workforce is in high demand: When hiring, organizations will need to assess a candidate’s potential for adapting to a tech environment rather than demand an exact fit. Someone with ten years of blockchain experience, for example, is very difficult, if not impossible, to find. To narrow the digital IQ gap, companies should keep an open mind and plan on reskilling or upskilling existing talent and new hires.

• Ensure continuous learning – Given the talent shortage and the fact that technology is constantly evolving, establishing and maintaining a culture of constant learning will be key to enhancing the digital skill level of their workforce. Ongoing education in the latest technologies should replace one-off seminars. Organizations should also consider recommending or building libraries of relevant reading material, webinars, and educational videos to encourage independent learning.

• Expand the definition of the workplace – Remote working, especially where technology was sufficient and effectively deployed, revealed that people can be just as productive working outside the office as they were inside the office – if not more so. That has prompted some workers to reimagine their living situation, from building a workspace in their homes to moving across town or even across the country. This has given future work a new physical dimension and created a competitive factor among companies based on the lifestyle choices they can afford for their workforce. Organizations should assess how this new dimension will affect their digital needs, training, hiring practices, and retention policies.

Time to Act

Ensuring that workforce skills and talent can fuel and maximize digital transformation efforts will remain a top concern for the foreseeable future. The health crisis helped reveal the digital IQ gap; now is time for organizations to address it. Those that hesitate or are slow to create the conditions for their future tech-savvy workforce will lose any competitive edge they may have gained with technology deployment during the pandemic. Conversely, organizations that seize the moment and prepare for the digital future of work now – with flexible thinking, education opportunities, and wholehearted adoption of new technologies – will be able to mitigate the number one risk of the next decade.

A version of this article appeared in the May–June 2018 issue of Harvard Business Review.

Written By

Laura Beucher, Associate Director, Technology Strategy


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