UK: Building Your Digital DNA

Last Updated: 17 February 2015
Article by Deloitte LLP

Most Read Contributor in UK, August 2017

"There's never been a worse time to be a worker with only 'ordinary' skills and abilities to offer, because computers, robots and other digital technologies are acquiring these skills and abilities at an extraordinary rate."

Erik Brynjolfsson and Andrew McAfee, The New Machine Age1

The digital organisation

The triumph of Moore's Law

In the five years since we wrote our first paper on leadership in the digital age the subject has turned from a niche interest in the media industry into a zeitgeist topic for leaders in all sectors of the economy. Leading academics such as Erik Brynjolfsson suggest that we are at the dawn of a Second Machine Age, in which digital technologies such as the microprocessor, the internet and social media have created the basis for exponential economic growth. If true then this is a troubling realisation. Human beings are not wired for exponentials: gradual change is hard enough for most of us, let alone sweeping shifts in the ways we live and work. These are difficult but exciting times for leaders in every industry and geography.

At least the last five years have given us far more clarity on the nature of digital and insights into the enterprises that will succeed in the Second Machine Age. We now know, that at its heart, the digital economy is about symmetry of information; where people have the knowledge to make their own decisions on a wide range of previously opaque problems and the tools to enact those decisions. Since the invention of the printing press we have been generating more information than any one person could possibly make use of. That process accelerated after the invention of the microcomputer in the early 1980s and the liberalisation of the internet in the 1990s. Information kept becoming more asymmetric, organisations and individuals became ever more specialised and collected ever more data without much idea of what to do with it.

Then something remarkable happened. Moore's Law finally brought the cost and size of powerful computers down to a size where we could carry them around in our pockets. At the same time, the powerful computers at the centres of businesses and networks became really powerful, and the algorithms they ran reached a level of sophistication that they could do some of the complex analytical things that people used to do. Much of the underpinning technology also became free or cheap to use.

All of a sudden we had access to enough computing power and sophisticated-enough software to analyse problems more easily. The applications we ran on our phones and tablets made it really easy to start to apply analysis in our everyday lives without needing to have a degree in statistics or computer science. Now the digital world is open to all.

The organisational effects of digital

Organisations that are thriving in the digital economy have adopted loose hierarchies in which responsibility sits closer to where decisions have effect. They also focus on outcomes, not on the processes that realise those outcomes.

This is a real struggle for many organisations we work with as their people have become focused on operating a process rather than delivering an outcome. As a Public Sector executive put it to us, "processes are the barriers that line a road and prevent us dropping off the edge if we get in trouble, not the road itself". Digital enables leaders to focus on outcomes because it makes it possible to measure and test quickly and easily.

This focus on process has meant that people have become part of a machine-like enterprise rather than a vital cell in an evolving organism. It feels contradictory that the lifecycle of a piece of technology, such as a mobile phone, is measured in months, but leaders consider it acceptable for an employee to do the same job for five or even 10 years. It is easy to stagnate in that environment so professional mobility that leads to the right life outcomes for employees is also an important facet of successful organisations in the digital economy.

In our world, basic problems like 'how do I get from Clerkenwell to Old Street' are solved in seconds with vanilla applications, and more complex ones like 'where should I stay in Barcelona' can be answered within five minutes with a combination of search engines and social recommendations. Digital has even markedly changed the nature of such a trip. In 2014, you can stay in a stranger's flat in comfort and safety thanks to Airbnb, hitch a Lyft from the airport to save some money, open the door and switch the lights on with your phone using Lockitron and Lifx, both of which were crowd funded. Most of that was impossible five years ago and the remainder was the preserve of wealthy early adopters.

Mobility and flexibility will be crucial for people to stay relevant. The darker side of ever-more advanced technology is a rising tide of jobs that can be done by machines. An example is the large proportion of news stories on the web that are written by algorithms from companies such as Narrative Science. In reality the act of taking a set of sources, crunching them up and putting them into a readable narrative is actually quite formulaic, as are the acts of processing expenses, summarising legal documents, analysing financial statements and so on. Narrative Science tools are actually able to pass the Turing Test for artificial intelligence2 and it is now easily conceivable that the next five years will see many administrative roles subsumed by mobile phone features.

Planning the skills of a workforce in the digital environment is complicated. So is the simultaneous need to locate the right sort of people to bring new skills into an evolving organisational context and help existing employees gain digital economy skills. Many organisations are acquiring organisations for its talent base – to narrow the digital skills divide. In a world of accelerated change, these organisations have recognised that attempting to build digital capability organically is often not a viable option.

The following sections of this paper each look at a key issue that organisations are facing with the people aspects of digital:

  1. The structure of the digital enterprise
  2. Digital talent
  3. Digital leadership

In our experience, organisations tend to be one of four types. This is sometimes a journey and, while not all organisations will benefit from realising all four phases, there is, in our view, now no argument for not having at least pro-actively considered them for your organisation.

To read the full article please click here.

Footnotes

1. The New Machine Age, Page 11, Erik Brynjolfsson and Andrew McAfee, published by W.W. Norton & Company, Inc, ISBN 978-0-393- 23935-5

2. http://www.theguardian.com/media/2012/may/13/robot-journalist-apocalypse-news-industry

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