Organizations face a radically shifting context for the workplace that includes cognitive technology, intelligent automation, and machine learning. These technologies are disrupting and threatening many companies across many industries. As a result, organization designs and business models are being updated to defend existing market position and proactively seek the new opportunities that “digital” can offer.
Mercer’s 2017 Talent Trends study found that 97 percent of executives say that becoming a digital organization is important to their future, with 77 percent stating that their company is on a digital journey already. However, as few as 8 percent of CEOs believe their organizations are as digital (or even anywhere near as digital) as they must be to ward off emerging competitors.
This same study also uncovered striking discord between the digital strategy and people strategy. While most CEOs are focused on designing a more digital and agile organization to compete for the future, only 15 percent of human resource (HR) departments have organization and job design as key elements of their people strategy. Only 37 percent of HR respondents have change management on their radar screen. The risks created by this disconnect are significant. Without a culture open to change and a workforce willing and able to adopt new technologies, digital change efforts will rarely be as impactful as they need to be.
The Board’s Role in Elevating the Digital and People Agenda
Boards are custodians of organization strategy. They also play a key role in overseeing the talent strategies required to execute and deliver on business objectives. By reviewing the organization’s talent strategy through the lens of digital disruption, directors can help uncover risks and ensure better alignment between their companies’ digital and people agendas that will be necessary for future success.
Here are five sets of questions to get started.
1. Does the executive team possess digital competence and diversity? Digital strategy should be born from the vision of the CEO and executive team. In combination, does the executive team have the digital competence to appropriately prioritize and drive development of transformational digital strategy? Will they think beyond technology to people capabilities and a culture of agility? And, beyond digital capabilities, is there enough diversity to help foresee the range of potential future business scenarios and support the creativity and agility that will be needed to adapt to changing business circumstances?
2. Do our succession planning and leadership development goals emphasize the capabilities needed in a more digital world? Organizations need to revisit their leadership development programs because the competencies that have reliably predicted leadership potential and success in the past, even just yesterday, are not the same as those needed for tomorrow. Are leaders self-aware such that they are not blindsided by emerging risks? Are leaders sufficiently curious to sense more than the obvious trends that will impact business success? Are leaders creative and entrepreneurial enough to create advantage from new technologies and business design possibilities?
3. Is there a balance between the company’s strategy to build talent and buy? Many organizations have a bias to build talent from within, particularly as they plan their succession pipeline for the executive team. However, buying digital experience (within or outside the organization’s industry) is a much quicker way of building digital competence and diversity of thought. Is there a discipline of building executive “succession slates” that includes curating external candidates who offer capabilities different from those gained through internal experience?
4. Has the workforce plan considered the impact of digital disruption on jobs?
In The Future of Jobs report, the World Economic Forum projected that 35 percent of core skills will change between 2015 and 2020. Current jobs will require a different skillset in a few years; skills instability will be high in all industries regardless of employment outlook; and, if current roles are already difficult to recruit for, it certainly won’t get easier as demand for new skills emerges. Does the organization have a workforce plan that forecasts which skills will be needed in the future and which will be less in demand? Is there a talent plan that aligns with this changing pattern of skill demand? And is there transparency with the workforce, so that those whose jobs are most at risk of disruption are able to take proactive steps to build a skillset that will be relevant tomorrow?
5. What thought has been given to employer brand and the company’s role in society? Digital disruption goes hand-in-hand with job disruption. It is likely that tomorrow’s business models will require a smaller core workforce and that digital technology will destroy more jobs than it creates. It is likely that unemployment and underemployment will rise. How will the organization maintain an attractive employer brand and contribute to the health and welfare of broader society? What plans, tools, and programs does the organization have in place to manage the transition of all members of its workforce (executive and non-executive) who will not be able to adjust to the workforce of the future?
Without a robust people agenda, an organization’s transformation efforts to address the challenge of digital disruption will struggle. By applying a digital mindset to the talent strategy and asking questions like those above, directors can play an important role in ensuring the alignment between people and digital strategy, and better position the organization for success.
Ilya Bonic is president of Mercer’s Career business.
Probably the last thing Uber needs right now is to have anyone recount their recent setbacks, but the company’s quick, Icarus-like fall from grace tells us much about how technology companies going through hyper-growth can go wrong. By 2016, the ride-sharing firm was a segment leader, present in 570 cities worldwide and with 12,000 employees. Yet just since the beginning of the year, Uber’s company culture, marked by “sharp elbows,” has rapidly become a liability.
The key is to preserve the great parts of the culture that drove Uber’s market leadership, including the company’s relentless focus on results, and now augment the culture for a larger scale. Specifically, it would be wise to add an appropriate level of processes and gender rebalance to the company’s board.
For Uber, the hits have just kept coming. First there was the video of CEO and founder Travis Kalanick chewing out one of the company’s own drivers. This was followed by lawsuits and first-person stories alleging a toxic company culture of sexual harassment. For good measure, long-time board member David Bonderman resigned after allegedly making sexist remarks at a meeting to unveil plans for reforming Uber’s sexist culture. Then, Kalanick resigned, Uber investor Benchmark Capital is suing him and the company, and Uber agreed to audits for the next 20 years by the Federal Trade Commission (FTC). The FTC’s actions demonstrate the level of long-term damage cultural problems can inflict.
Now that Uber has selected Dara Khosrowshahi to lead the company, and is likely to become a publicly-traded company in the year and a half to three years, the board has even greater impetus to change the direction of the company’s culture.
As a woman who’s served on many major tech company boards, much of this sounds like old news. Women in technology industries still push against a silicon ceiling when it comes to career advancement and cultural issues. Research from the Society of Women Engineers found that 20 percent of today’s engineering school graduates are women, yet just 11 percent continue working in the field. Women in information technology leadership roles (such as chief information officers or technology vice presidents) are just nine percent of the total, according to a survey from Harvey Nash and KPMG.
The numbers are also bleak in other Silicon Valley boardrooms. Among the Valley’s 150 largest tech firms, only 15 percent of board members are women (versus 21 percent in the S&P 500). A Korn Ferry study of the top 100 U.S. tech firms saw just three with women as CEO/chair, and five with a woman as the board’s lead director.
Changing any corporate culture is a challenge, but I’ve found bringing diversity to the tech industry is even trickier. Fast-growth “unicorn” companies can quickly outgrow their founding, venture-based startup corporate governance, and find themselves facing Uber-like crises with too few seasoned, level-headed business people in the boardroom. Yet in my own experience, I’ve seen technology companies nurture diverse, inclusive cultures, starting with a few one-on-one approaches from the boardroom.
Build internal career networks. At Volvo Car AB, where I serve on the board, we’ve launched a regular program where I have the opportunity to meet with senior and mid-level women executives on personal career development. We work with these executives to build on their strengths, clarify their career aspirations, and offer advice on advancement. This is a new program, but it is already proving a success in energizing and motivating the paths of these current and future female leaders.
Make mentoring personal. On the board of Schneider Electric, I make it a point to directly mentor a number of women on the company’s senior executive team. Women in management find it tremendously helpful to have someone in the boardroom take a personal interest in their career strategy and development. At Uber, new board member Ariana Huffington will be in an ideal position to put her mentoring and career savvy to work in helping rising women execs rebuild the company. The key is a regular ongoing program of mentoring and support.
Go beyond mentoring. The tech industry, in particular has too few role models for rising female talents. The mentoring aid above is helpful, but why not go one step better? Companies can ask their male and female executives and board members to either mentor or sponsor promising female executives. There is a big difference between mentoring which is periodic advising and coaching and sponsoring where you take ownership for introducing and more actively helping sponsor an individual for their next step up in their career. Women who are already senior managers or board members can kick mentoring up a notch by sponsoring high-potential women. Take personal ownership of career coaching for the top talent in your organization. Give them advice, introduce them to the people they need to sharpen their skills, and introduce their names at strategic moments.
Recognize the women making a difference. When I served as chair of the board’s compensation committee at tech firm Polycom, we were active in the annual recognition event for sales staff. I noted that women were leaders in sales, making up less than 10 percent of the sales force, but were 34 percent of our “President’s Circle” top sales performers. Making an added effort to celebrate and promote this talent is crucial in sending the message that sales is not just a “guy thing” in the company.
The news emerging from Uber can serve as a spark for making the support and advancement of women in your company a boardroom mission. The talents of these women are a strategic asset to companies, and there is a growing body of research proving that firms who nurture and empower their gender diversity gain in revenues and adaptability. In any company, balance sheet results are always found downstream from company culture. When it comes to reshaping that culture to be welcoming to women, the boardroom is the ideal place to start.
Betsy S. Atkins is a three-time CEO, serial entrepreneur, and founder of Baja Ventures. She has co-founded technology, CPG, and energy companies, and currently is director of Cognizant Technology Solutions Corp., HD Supply Holdings, Schneider Electric SE, SL Green Realty Corp., and Volvo AB. A version of this article appeared in June on TechCrunch’s Crunch Network.
As part of the National Association of Corporate Directors’ (NACD) continuing mission to help directors understand disruptive technologies and trends, I joined more than 175,000 attendees at the 2017 Consumer Electronics Show (CES) in Las Vegas. My team was doing a little reconnaissance work on your behalf. NACD will host a director-focused, member-exclusive Technology Symposium this July, and we wanted to get an advanced look at the most pressing governance implications of new technology.
After three days of experiencing more than 3,800 vendors, you start to see past the shine of the latest gadgets and understand how the technology that underpins these products is poised to change the world. How those technologies are leveraged by companies is key to understanding the future of disruption, and as we discussed at last year’s Global Board Leaders’ Summit, convergence is the order of the day.
Voice and Motion-Enabled Artificial Intelligence (AI) Are Here to Stay
A booth showcased one of many partnerships between Amazon and consumer products companies, including Whirlpool.
From controlling the radio volume with a wave of your hand to voice-controlled appliances, AI was everywhere. In fact, the most talked-about company at CES this year didn’t even have a booth. The Amazon logo appeared on products ranging from innovations by Whirlpool to debuting devices from smaller start-ups.
Why? Alexa, Amazon’s AI assistant, was ubiquitous on the show floor.
Alexa is leading the way in enhancing consumer products that implement voice-enabled technology. It is anticipated that Alexa will soon be programmed to power and interact with everything from your toaster to your Toyota.
It became apparent at CES that the future of voice-enabled AI is a person’s ability to speak naturally and rely on the computer to accurately transcribe information. This has significant impact for everyone from office workers to doctors who could rely on the technology to dictate notes to medical records.
John Hotta, a director in the healthcare space and NACD Board Leadership Fellow, was also on hand at CES. “Innovations in voice-activated technology also have huge implications for products, services, and the nature of work, as smart speakerphones or personal assistants such as Google Home or Amazon Dot replace direct user interface with a computer,” Hotta said.
Computer, You Can Drive My Car
CES exhibitors demonstrated the growing sophistication of autonomous vehicle technology. Last year Ford Motor Company CEO Mark Fields promised to turn the automaker from a car company to a mobility company. That strategy was on full display as Ford partnered with San Francisco-based start-up Chariot to show off one of its autonomous mini-buses, a vehicle that Ford hopes will “reinvent mass transit for commuters, companies, and fun-seekers with reliable and affordable service.”
A wealth of connected, autonomous vehicles were on display.
Autonomous vehicles also buzzed high above the heads of CES attendees. As drone technology continues to evolve for both commercial and industrial use, autonomous vehicle technology is being applied to those vehicles as well. In a convergence of these trends, Mercedes exhibited a fully autonomous delivery vehicle equipped with two roof-mounted drones that facilitate package delivery from the van to the doorstep.
Another trend emerged at CES: the use of autonomous vehicles as a tool for vehicle safety. Thanks to the convergence of AI and the Internet of Things (IoT), vehicle-to-vehicle technology has enabled cars to talk to their passengers and to other vehicles on the road. As attendees at the 2016 NACD Global Board Leaders’ Summit may remember, Chris Gerdes, head of innovation at the Department of the Transportation (DOT), discussed how DOT is piloting this technology in cities across the U.S. to slash traffic fatalities, and nearly every major automaker is now getting in on the act. Hyundai and Cisco announced a partnership to leverage IoT technology to improve safety and improve congestion by connecting vehicles to municipal infrastructure.
Collaboration is Key
Consumer products and technology companies are forging essential partnerships.
As technology becomes more ubiquitous and innovation becomes decentralized, companies are realizing they can’t go it alone. Consumer products companies are linking up with leading technology companies to build resilience to innovation. In addition to the proliferation of Alexa-linked products, Honda Motor Co. has teamed up with VISA to enable vehicle-based mobile payment systems that allow passengers to conduct transactions without leaving their cars. Apparel companies like Tory Burch and Fossil—companies that seem more at home at New York Fashion Week than at CES—also had large booths touting their new lines of wearables. And finally, in-house labs at big brands like Whirlpool are partnering with crowd-funding platforms like IndieGogo to launch new products. Like the auto companies profiled above, this is another example of convergence that directors would be wise to anticipate.
Private Eyes Are Watching You
The act of welcoming devices into our workplaces and homes that listen and watch our every move could revolutionize the way we live and work—and opens us to unprecedented privacy and security concerns. Coupled with a proliferation of smart products aimed specifically at tweens and children, smart devices present a whole host of liability issues that technology, legal, and regulatory experts are just starting to grapple with.
Amazon’s Alexa and Mattel have already made news for the unintended consequences of giving children access to this kind of technology. Additionally, U.S. courts are considering the legal implications of using recordings from these devices as evidence. One such case pits Amazon against prosecutors in who believe that data from an Amazon Echo might be key in solving a murder case.
In this rapidly evolving climate, directors should be asking questions about whether or not security is being integrated into product development now and in the future—from research and development, to plant upgrades, to policies that allow employees to use their own smart devices for work.
The Future of the Workforce
Ian Bremmer, president of Eurasia Group and a 2016 NACD Global Board Leaders’ Summit speaker, recently said, “Technology will surely create jobs. But virtually none of the people displaced will have the training for them.” The changing nature of the global economy threatens to make some American jobs obsolete. If CES made one point clear, it’s that the current concern over the decline in manufacturing and coal jobs pales in comparison to the potential changes that will come with widespread automation of jobs.
Volkswagen exhibits its electric, autonomous I.D. concept car.
Remember the self-driving delivery van with the automated drones that deliver packages mentioned above? Think about that technology and then look at this interactive map of the top jobs by state. Last August, Uber Technologies acquired Otto, a self-driving truck company, further showing how 1.7 million middle-class jobs could disappear in short order. The American economy is facing a potential employment crisis the likes of which may be unprecedented.
It’s not just delivery drivers who are in danger. As Jane Fraser, CEO of Citigroup’s Latin America business said at Fortune magazine’s Most Powerful Women Summit in October, “we are expecting 500 billion objects to become connected to the internet and this automation is going to hollow out middle and working class jobs.”
This shift has huge implications for the American economy and its ability to compete on a global scale. Consider, for instance, that automated delivery of packages is only helpful if your company has a customer base that can afford to spend money on products. A recent report by the President’s Council of Economic Advisers lays out the dual challenges of educating a workforce that is ready for the jobs of the future, and the uphill battle of transitioning to an AI-based economy. This report is great reading for directors as they consider the role of the corporation in society, and could help the board shape individual company strategy in critical areas like innovation, talent development, and long-term value creation.
You can see, hear, and learn more about these trends at the 2017 Global Board Leader’s Summit.Stay tuned for information about our new director-focused, curated tour of the 2018 CES show next January.