If you don’t use technology to innovate, will you become obsolete?

By

Andy Baldwin

EY EMEIA Area Managing Partner

Interested in innovation, FinTech, inclusive growth and geopolitics. Regular contributor in print and broadcast media. Leading commentator on financial services in the Eurozone.

28 Mar 2019

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Businesses are investing large sums into digital technologies, but the technological race won’t be won without the right talent.

To succeed in harnessing the full might of the upcoming technology tsunami, businesses are investing huge sums of money into technologies like artificial intelligence (AI), blockchain and robotics in order to become digitally superior. Businesses understand that if they don’t use this technology to innovate, they risk becoming rapidly obsolete. But beyond bolstering our tech armory, are we sufficiently acquiring and developing the necessary digital skills to ride this wave of disruption? Or will a lack of digital talent mean that many businesses are washed away into obsolescence?

Technology is outpacing talent

A study I recently commissioned shows that Europe is currently in the throes of a pronounced skills crisis. Quite simply, innovation is happening at a faster rate than companies can hire the skills that they need in order to successful adopt and harness the new technology. According to our Building a Better Working Europe study, two in five (41%) of the human resource (HR) leaders believe that it’s hard for European businesses to recruit the talent necessary to drive digital transformation, with skills in cybersecurity, big data and analytics, AI and robotics in particularly short supply.

Our survey also uncovered a worrying disconnect between organizations’ digital and people strategies. Just 57% of businesses have their people strategy as part of their digital transformation agenda, while less than half (43%) of businesses have an HR strategy that looks more than three years ahead. The risks to businesses are clear. Already two-thirds (67%) of HR leaders are saying that skills shortages are damaging top-line growth, with 73% seeing a negative impact on productivity and profitability.

The relentless march of digitalization is already having a profound impact on the labor market, creating shortages in specialist digital skills and surpluses in other areas. Unfortunately, unless this disruption is managed carefully, it threatens to undermine the genuine potential for the Fourth Industrial Revolution to be an era of inclusive growth that underpins a more equal society.

So how can we rise to the skills challenge that digitalization presents? For me, these are some of the things we need to embrace:

Mindset and life-long learning

It is clear that individuals, businesses and governments each have a part to play in making sure that everyone has the chance to benefit from workplace transformation. Individuals need flexible mindsets and commitment to life-long learning. These will allow them to develop new skills, enhance existing skills and retrain where appropriate. As a result, they will continue to enjoy meaningful and productive careers – something that matters greatly as people increasingly work for longer.

Adapting workforces

Businesses are investing in digital: in fact, our Europe Attractiveness Survey 2018 revealed that digital and business services accounted for 31% of all foreign direct investment projects in Europe in 2017. The reality, however, is that every business will soon be a technology business. So business leaders need to consider how they can help their existing workforces adapt to change and embrace new skills. Also, how can they enable their organizations to better compete in a marketplace where digital expertise is fought over? 

As highly-skilled workers seek out more portfolio careers rather than traditional long-term roles at employers, it’s important to adapt to the so called gig-workforce. Two years ago, we introduced GigNow, a global talent marketplace that helps specialist workers build out experiences or gain the flexibility they need. We’re now offering this in 10 countries and are able to bring critical skills like digital, cyber, robotics and blockchain to our teams and clients. It’s also important for businesses to tap into the ecosystems – it’s no longer about doing it all yourself. We work with firms like SAP and Microsoft to help businesses best tap into industry-leading technologies – like Industrial IoT to blockchain and cloud storage.

Policies and the education system must keep up

Countries have a duty to their citizens to provide an education system that equips school leavers and university graduates with the skills needed by businesses and society. Even more importantly, they need to have policies that support people in the existing workforce to not only survive – but thrive – in the Transformative Age. These policies should be sensitive to ageing demographics and proactively include groups that have previously suffered some exclusion from the workplace as a result of structural bias – women being the most prominent example. 

I believe that businesses, governments and educational institutions must work together to deliver tomorrow’s talent and to ensure that Industry 4.0 does not reinforce and exacerbate today’s social inequalities. Through collaboration, we can drive investment and job creation that drives inclusive growth. Attracting and developing digital skills, and having the right soft skills to harness the power of technology and drive innovation, must be core to organizational strategy. 

The reskilling and upskilling of Europe’s workforce is not going to happen by accident. It requires deliberate planning, with a longer-term view. By understanding their capability needs, businesses can embed the right learning, tools and apprenticeships to secure their future talent supply. They can also recruit for capabilities, rather than roles, and aim to develop their people to meet their talent needs. Simultaneously, governments can provide the right regulatory context and facilitate skill-building on a larger scale more consistently across borders. As well as policies, they can offer support for SMEs (small- to medium-sized enterprises) that often lack the resources to invest in skills development themselves.

In this competitive, fast-moving Transformative Age, businesses cannot risk becoming obsolete. Talent is the key that will allow them to unlock their digital growth potential. If they are to succeed, however, they need to take an inclusive view on what talent means, implement comprehensive people strategies and commit to investing in the training and development of existing staff alongside the recruitment of new employees. Transformation is happening. Let’s make it a force for good.

Summary

Businesses are investing heavily in technology to enable them seize opportunities and avoid obsolescence.  But it’s not necessarily technology that will lead to innovation. To thrive in the transformative age, it’s essential for businesses and governments alike to invest in digital skills and the flexible working practices that tomorrow’s talent will demand.

About this article

By

Andy Baldwin

EY EMEIA Area Managing Partner

Interested in innovation, FinTech, inclusive growth and geopolitics. Regular contributor in print and broadcast media. Leading commentator on financial services in the Eurozone.