Organisations need to learn how to learn again, says McKinsey’s Kate Smaje

Digital transformation requires companies to challenge their business models and ascertain how value will be created for their company, in their industry, along their value chain, said Kate Smaje, senior partner, McKinsey & Company. In an email interview with ET’s Saumya Bhattacharya, Smaje said “the best tech organisations have an intellectual curiosity and deep culture of learning that permeates everything they do”. Edited excerpts:

What's next in the digital transformation journey for organisations?
Most organisations have now embarked on some form of the digital transformation over the last few years--and it is clear that Covid-19 has been an accelerating force for many, making 2021 a distinctly digital year--and yet, our research reveals that just 16% of executives say their company’s digital transformations are succeeding.

So, the most important next horizon is fully delivering the value promised from digital transformation in this next normal. We are well past the opportunity to reduce costs and improve customer experience by simply "digitising" what the company does today.

Digital transformation requires companies to challenge their own business models and how value will be created for their company, in their industry, along their value chain… At the same time, it requires that companies challenge the way they work to deliver against this value. Burning platform or no burning platform, it is unlikely that what got them here will take them to the next level.

To deliver digital transformation, what talent will matter in the next 2-3 years?
All organisations are grappling with how to attract, excite, develop and retain great tech talent. Getting this right is disrupting the way organisations have traditionally thought about hiring processes, their employee value propositions, career pathways, policies around the workplace, and even legal issues like IP protection in a world of open source code and collaboration.

So, while I could talk about where the pinch points are in terms of types of tech talent--and they certainly exist in areas like data engineering, cloud engineering, translator roles--I think what will really matter in the field of tech talent is how fast HR departments can change to help make this talent wildly successful once they have it. What will matter in the field of tech talent is the cultural shift leaders and organisations will need to embrace to make their organisation the place where tech talent will want to come work and thrive. A mindset that moves from filling a role to hiring on learning ability and what drives individuals.

The demand of today will not be the same as demand in the future, the ability to invest in continuously upskilling and reskilling the workforce will be important, and so will the role of HR in that journey. In our recent survey, 82% of global executives expect that reskilling and upskilling will be at least half of the solution to their persistent skill gaps.

How best can companies prepare for the next round of digital transformation?
Companies need to rewire for speed. We know from our research that culture is the multiplier when it comes to the success or failure of a digital transformation. Success in the next wave of digital transformation will depend on how the core organisation can work (differently) and embrace technology/data in everything it does to drive value.

This means properly working cross-functionally, not just bandying around the term "agile"; it means rethinking how they (re-)allocate resources (talent, capital, data) at a different magnitude and at a faster metabolic rate. It means having a higher external orientation that encourages experimentation and identifies where they need to collaborate, how they can augment capabilities, and what their role is in any disrupting ecosystem.

What should be the core strategies to develop talent?
We know from our research that technology capabilities stand out as key factors of success during the crisis. Few executives will debate the importance of talent in this or the difficulty that many have in attracting and keeping top people. In addition to the points above about the importance of changing the environment you are hiring this talent into, two further things are important:

1. Use your people. There's a reason we use the term "anchor hires" or "magnet for talent". As Steve Jobs used to say and Google embedded in their hiring processes-- "make sure you're hiring only A-players" as the A-team hires the A team, but the B team only ever hires the C team. This means asking your people who they admire and making sure your very best people are spending a material amount of their time on talent acquisition and development to inspire and excite the next generation.

2. Building your authentic value proposition: Not all organisations with digital ambitions are tech natives, using cutting edge technologies, or have perks published and bragged about on social media. What most organisations have is purpose, a mission, something they are looking to solve or build. Building a narrative around the mission, the problems one will solve here, and how a candidate's craft can contribute to the bigger purpose is incredibly important and a talent magnet.

What are the potential challenges companies should watch out for?
Many organisations need to learn how to learn again. The best tech organisations have an intellectual curiosity and a deep culture of learning, which permeates everything they do and enables them to move faster than competitors in three ways:

1. Tactically, in the process of making specific changes to businesses (which technologies to execute and how). As my colleague always says, the important part of machine learning is "learning".

2. Organisationally, in terms of how to manage change at a pace that far exceeds that of prior experiences.

3. Intrinsically, in terms of focusing on the learning capacity of their talent rather than on the specific skills they happen to possess today, the need for which will, inevitably, change.