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Human Digitalisation – it’s the human, stupid!

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Digitalisation? Of course – what else?
But focus on the people, please!

1.      Digitalisation as the driver
Digitalisation is a megatrend that is changing our society and our economy faster than ever before. It is changing the way we live together, communicate and buy things. It’s also changing our approach to working together, as well as how and where we do it. The opportunities from digitalisation arise from the application of new technologies and methods; consequently, these are opportunities for people who realise their own potential as well as the potential of digitalisation.

But what’s old? What’s new?
And why is everything suddenly happening so fast?

2.      Understanding digitalisation – we lack a (shared) basis for discussion

Where this is debated in public and discussed in most companies, there are many different points of view on individual aspects of this issue.  These range from ‘automation’ (a long-held view – “we’ll all lose our jobs”) right through to ‘disruptive new business models’, the new Holy Grail of entrepreneurial activity.

While Joe Kaeser at Siemens is convinced that the middle classes will disappear, Dieter Zetsche sees a golden future for Daimler as a networked mobility provider focussed on people. How can it be that the opinions of the helmsmen at two iconic German companies of roughly the same age (that is, fairly old) are so far apart?

To provide a foundation for our discussion we need to stay objective and to take several key issues into account.

3.      The areas or dimensions of digitalisation

It is generally agreed that three areas or dimensions of digitalisation are apparent.

No matter how helpful these three current dimensions may be in describing the results of digitalisation, they are inadequate in explaining how these actually came about. So let’s add a fourth dimension to all of this, a fundamental dimension that makes the digitalisation of the other three dimensions possible: the digitalisation of human achievement. We call this dimension ‘Human Digitalisation’ and use it to embrace all the prerequisites for successfully digitalising an entire organisation and even society as a whole.#


4.      Human Digitalisation – it’s the human, stupid!

If we think of digitalisation from the consumer’s point of view, most of us first envisage a piece of technology: a smartphone, an app, or perhaps a Web-based service such as Spotify or Facebook.

If we ask HR executives, for example, whom they see as drivers of digitalisation in their company, the IT department comes out a long way in front (82%). But at least 52% of HR people see themselves as drivers of digitalisation. Apparently even Human Resources managers think of technology first and foremost when they approach this issue, but they suspect or already know that HR needs to make its contribution to ensure the success of the whole enterprise. If we ask corporate leaders where they see the greatest obstacles to digitalisation in their companies, most of them first answer ‘a lack of expertise’, often followed by ‘an inadequate digital culture’.

The starting point for a successful digitalisation process – that is, generating new processes, products and business models – is people. This becomes clear immediately if we think in terms of cause and effect. The same applies (perhaps less obviously) to the end-point, or better, to the focus of digitalisation: again, this can only be people. Technology is not an end in itself; it is always intended to serve people. Perhaps not in the same way for every interest group but, at the end of the day, it always serves what we call progress.

In this sense, we can only agree with Mr Zetsche as long as he puts the people (as customers and employees) at the centre of his digitalisation strategy. This reveals new thinking and behaviour – which will probably be the only successful way out of a profoundly uniform, industrial, product-driven world towards a new digital, people-centred age.

5.      ‘Human Digitalisation’ in detail – four clearly-defined levers

So far, so good (in human terms)! But can we also be more specific about the prerequisites for people-centred digitalisation? Yes we can. We see four levers on the path towards people-centredness.

We meet the first demand from corporate leaders with digital competencies. What is decisive here is the distinction between ‘competencies’ and ‘skills’. Digitalisation is not primarily about acquired knowledge (skills), such as a special programming language. Experience-based knowledge in the application of modern technologies and in dealing with the increasing flood of information counts much more. Personal flexibility and the ability to network ourselves are universal qualities which that cannot be emphasized enough in personnel selection and development. There is an opportunity here for every employee to self-determine their own market value and confront their own fears of rationalisation. Qualifications for shaping the new digital world are required only at a secondary level; recruiters currently hunting online marketers for their organisation, for example, or user-interface designers, are perhaps well-placed to judge how urgent these requirements are in this area.

Having addressed the aspect of ‘capability’ with digital competencies, ‘willingness’ is also required to be able to take advantage of the opportunities provided by digitalisation. The prerequisite for this is an ‘agile culture’ to shape the changes that go hand-in-hand with digital transformation. In the age of digitalisation, organisations are characterised by curiosity, openness and willingness to change. They are happy to ask themselves whether their company needs to become a start-up or, if possible, something like Google (the answer of course is: “No, we don’t need to – it’s not possible anyway”). But we can easily take off our ties and roll up our sleeves while we find our own way out of a hierarchical command-and-control culture and move towards a community of cooperation based on trust and levels of freedom.

In such an agile culture, the understanding of leadership changes. We could also say that the company culture reinvents itself in the interaction with a new type of leadership. A willingness to change requires a departure from the zero-error culture particularly endemic in Germany. Digitalisation as a meta-trend has its roots in software development. If we have learnt something (often painfully as users) from this, it is the principle of going to market with prototypes, i.e. with unfinished products, and eliminating errors as we gain operational experience. This cannot be transferred to every product and every service, but it is a completely different innovation philosophy from the one we know. It is consequently also completely different from the leadership style widespread in engineer-dominated companies.

Passing on responsibility, delegation and trust are fundamental prerequisites if employees are to take on responsibility and embrace self-determination. The levels of freedom associated with this enable the creation of new solutions that inspire the digitalisation of the company. Allowing mistakes, granting trust and providing levels of freedom are what matter in digital leadership. With this we are describing a form of management that has developed and grown out of transformational leadership. This type of leader-manager is first and foremost a coach and mentor. They guide, encourage and lend a hand if necessary. They both give and request feedback (which many traditional managers see as highly suspicious). They gain allies by convincing people, but without collectivising responsibility. They do not need to be permanent leaders, but can fulfil a leadership role temporarily. Neither need they be conformist, and in particular they need not be masculine. Digital leadership needs to be atypical and diverse to enable its power to develop.

The same applies to the way we will work together in future, and with whom. There is no longer any typical configuration for collaboration. This ‘New Work Order’ will play a decisive role in our future business activities: the digital workplace can be anywhere, and the way we work and cooperate with each other is already changing radically. This is driven by both new technologies (such as collaboration platforms) and new working methods (such as Scrum or Design Thinking). Dedicated workplaces (in service industries, for example) are also significantly affected by these changes. Digitalisation is thus enabling a new form of work, which in turn further inspires the digital transformation.

6.      Outlook

Through Human Digitalisation people and the new reality of work can harmonise with each other, and this represents an opportunity for both individuals and organisations. The apparent contradiction of ‘human digitalisation’ will resolve itself when we succeed in meeting the requirements for successful digital transformation in each and every organisation, all the way to our whole society. The levers to help us achieve this are clearly visible; their configuration and application is the responsibility of each company – and every organisation will always need to find its own, highly individual path to this goal. Depending on the economic sector and competitive situation, there is not much time left to achieve this. However, if we approach this issue consistently and with determination, the opportunities from digitalisation will far outweigh the risks.

Statement: Is human resources coping with the digital transformation?

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If you have been following business media over recent months, you could hardly have missed the subject of digitisation. There is not a single magazine that does not regularly report from the frontline of the new digital world order: They look at the challengers: the start-ups who want to teach established businesses the meaning of fear. Or they cast their gaze at this old world, which does not yet know what it has to fear or even what it might possibly hope for. It is all increasingly reminiscent of the first New Economy in the wake of which the swansong of the familiar economic order was heralded at the end of the 1990s. What materialised from that?

Quite a lot, even if not as radically or as fast as was predicted. At the start of the 21st Century we reached the age of the internet, or to put it better: we arrived there. The real innovations in the 2000s, such as the emergence of social networks and the proliferation of mobile internet, have fundamentally changed our social and consumer behaviour. Along with this there has been a significant shift in the economic power ratio in favour of the US, the birthplace and breeding ground of digitisation. While Europe fails dismally in reaching the head of the pack in this race (e.g. Nokia or Intershop) or hardly gets out of the peloton (e.g. myTaxi or Rocket Internet), the competition from the Land of Opportunity shoots ahead with ease. Although, and this is still good news with the predictions of the first New Economy in mind, our economy is not just digital. Germany has remained the workshop of the world. This is where a good portion of the machines come from that produce goods which are then marketed online, sold and delivered to our door. German companies clearly have not done a bad job so far. Their share of software in machines is constantly growing – this is where the biggest increases in added value are to found. Efficiencies arise from the synergy between automation and digitisation, which now enable production capacities to be brought back to Europe from low-wage countries. This has now been given its own name: re-shoring. The Adidas Speedfactory shows what is now possible – a scenario that is for the start giving countries in Asia a serious headache. In order to maintain our share of global economic output, we will have to rely on the combination of hardware and software even more than in the past. The next stage is the ‘Tour of the Internet of Things’ and is called Industry 4.0. When it comes to this, Germany is at the head of a very fast and dangerous breakaway group. Whether we win is not decided first and foremost by the technology, but by the quality of the rider. This realisation is not new. It always comes down to the correct application of technology and converting it into successful business models. (Who was it who discovered the mp3 format? And who turned an industry upside down with it?)

Risk or opportunity?

Whether we see digitisation as a risk or an opportunity is primarily a question of our own disposition. This is true for individuals as well as the organisation. The risk for the company is losing the business model (e.g. advertising business for newspapers). It is the responsibility of the stakeholders in the company to find the right ways to take advantage of the opportunities presented by digitisation. In fact this is the only way to avoid risks – i.e. that others will do it sooner than us.

The risk for individuals is as clear as the risk to the company: the loss of the personal business model, i.e. job losses. Nightmare scenarios arise that even respectable media like to pick up on (see Spiegel front page, issue 36/2016). It is true that model-based (monotonous) activities and simple decision making will no longer be needed in future. But is that a loss? Has the disappearance of difficult, monotonous physical work through automation been a loss?

Behind this question is the question of the underlying concept of man. The liberally oriented, autonomous man with a desire to shape his surroundings, looking for meaning, is happy to be released from monotonous, mindless tasks. The others have a problem. But this is exactly where there is an opportunity for individuals, the company and our society to find and claim our place in the new digital economy.

Human digitisation as the answer

Together with Lufthansa, Promerit asked the University of Liechtenstein and specialist magazine Personalwirtschaft what digitisation means for HR management – or conversely, to what extent the human factor is crucial to the success of the digital transformation. To answer this, in a comprehensive procedure, a benchmarking study of 18 DAX companies was carried out, best-practice companies in the USA were analysed and the digital maturity of an additional 120 companies was surveyed.

This is based on a model which formulates the responsibility of the HR department in two dimensions. The first, obvious dimension includes activities for the digitisation of HR processes and HR services. Not an insignificant task for the department with the most touchpoints in the organisation with each of its employees and also a high level of external interactions (with applicants) each day.
The second, more important dimension for the organisation includes the measures with which the conditions for successful digitisation are created. These are the competencies necessary for digitisation, an agile corporate culture, a new form of management and the new digital world of work, which must be formulated.

The biggest task for HR management lies in recognising that the technologies exist and that their benefits can only be exploited by using them. Ultimately it comes down to bringing people into sync with the new reality of work. We call this field of activity human digitisation and see it as the key to the future success of companies in the age of digitisation.

The levers in this field of activity are as follows: In order to take advantage of the opportunities presented by digitisation, a company must ensure that its employees have the necessary digital competencies. We see this as a broad approach that ensures that every employees has the opportunity to carry out meaningful work using modern tools and technology. This is both a prerequisite and employer pledge. The development of the individual and of the organisation can be achieved in equal measure in this way. Regardless of this, certain target groups in the organisation (for example knowledge workers and the organisers of the digital world of work) must have these competencies and additional skills (such as programming skills) to a greater extent.
Digital competencies address the ability side of the digitalisation equation, but people also have to have the desire to capitalise on the promise of digitalisation.

An agile culture is needed to drive the changes associated with digital transformation. Curiosity, openness and a willingness to change form the bedrock of the road to digital organisation. Consistent digital transformation requires a corresponding strategic alignment, which must be conveyed to every part of the organisation and every employee. Communication, dialogue and role models at the top management level are the means, which must be used in combination.

Closely associated with an agile corporate culture is a new form of management – we call it digital leadership. Management becomes leadership. In this way the self-image of the managers changes. Disciplinarian supervisors become coaches and mentors. Delegation and trust are essential to building a workforce that is autonomous and seeks responsibility. These traits provide the freedom to develop new solutions that accelerate the company’s digitalisation.

The framework of our future activities will be determined by the New Work Order. Tomorrow’s digital workstation can be anywhere. Our working and collaboration habits are changing dramatically, driven by new technologies (such as collaboration platforms) and new work methods (such as scrum or design thinking). Even stationary workstations (e.g. in the service department) will change significantly. Shaping these conditions will have a significant influence on the success of the digital transformation.

What is to be done

The provision of competencies and skills is the core responsibility of HR – it should be possible to achieve this task with a view to the necessities of digitisation. The changes in business requirements will have to be dealt with intensively. Entire job descriptions will disappear, others will change massively. It is the strategic task of HR to anticipate the developments here and draw the right conclusions with regard to training and staff development.

It is also imperative that all employees come along for the ride. Individual reservations must be addressed by citing the opportunities for the individuals and the entire organisation. Digitisation can overcome boundaries in communication and collaboration in the company and enable entirely new forms of organisation. The loss of information sovereignty creates transparency for every employee. This presents an enormous opportunity to help shape the development of your own field of activity. At the same time the acquisition of digital competencies increases your own market value and allows you to be deployed flexibly. This can only be an advantage considering the coming changes. A condition for successful digital transformation is that it has strategic foundations. Companies and their HR departments must be clear about what digitisation means for their business and what goal is being pursued. As well as formulating the appropriate strategies and road maps, it is a matter of getting these rolling. If the framework parameters are defined in terms of milestones, scenarios for digital transformation must be developed and approached in an agile way. Trial and error is the tactic to achieve stage victories with sprints, which have a signalling effect for the organisation. This requires courage, consistency and ability – characteristics that are ultimately crucial in the race for digitisation.

http://www.digitalbusiness-cloud.de/fachartikel/statement-schafft-human-resources-die-digitale-transformation