There is a huge disconnect between the rise of digital business models and the necessary skills to carry those jobs out, writes WERNER VOGELS, CTO at Amazon.com.
Digitalization offers almost endless possibilities to communicate faster, work more efficiently, and be more creative – in real-time. But groundbreaking digital business models need pioneers: creators, forward-looking thinkers and inventors who don’t hesitate to leave the beaten path, embody ownership, and who understand how to translate customers’ wishes into superb new products, services and solutions that evolve with speed. It is a no-brainer, that getting the right talent on board can decisively accelerate a company’s digital transformation. At the same time, if your daily corporate practice doesn’t fulfill their expectations regarding a vibrant and flexible working culture and a social media-minded environment, digital natives will simply turn their back on you and go elsewhere.
Finding those kind of people is not easy. There are probably only a few companies that can say, they already have a sufficient number of such employees among their staff. Job openings for machine learning scientists, data analytics experts, IT security experts or developers are already difficult to fill, and the demand for this knowledge will increase significantly in the next few years as customers show their demand for digital engagements. The market for digital skills is “hot”, in the U.S. as well as in Germany. And these talents are by no means coveted only by companies that always had a digital business model to begin with; suppliers to the automotive industry, financial services companies, and retailers also, urgently need product managers, and technical staff who can quickly make their organizations digitally attractive to their customers. Recruiting and selection in the digital age therefore needs to be tackled in a more strategic way than in the past. So how do you position your company as an attractive employer for digital talent?
Preparing the organization for a new beginning
One way is to eliminate rigid structures, previously the enemy to digital thinking. Digitalization involves, among others, suddenly converging areas that used to be siloed. Take industrial companies. In the past, their sales departments defined specifications according to the customer’s wishes, which were then transferred step by step into the manufacturing process. These days, it’s expected that everything should happen almost simultaneously. Previously, the top priorities for IT departments were equipping data centers with hardware, purchasing software, and further developing proprietary software. Today, companies take their server capacity and software from the cloud. These changes have to be taken into account when scanning the market for talent. At Düsseldorf-based fashion retailer Peek&Cloppenburg, for example, the business, development and IT functions are increasingly cooperating with each other because they realize that isolated departments and rigid hierarchies can slow down the organization’s innovative strength and speed. That is also why employees have more and more room to make decisions themselves. P&C’s digital transformation is supported by an in-house consulting team that helps the specialized departments analyze and digitize those processes that strengthen the customer touchpoints.
The freedom to create
Another way to make your company attractive for digital talent is to give them as much creative freedom as possible AutoScout24, a Munich-based online marketplace for car, motorcycle and utility vehicle sales is a digital native company. Recognizing that it needed faster decision making, AutoScout24 started to empower employees who are close to their customers. The company created small and agile cross-functional teams with profit and loss responsibility for their market segments. These measures eliminated dependencies amongst business units, increased self-responsibility, eased communication processes and improved overall organizational alignment.
Showcase your best talent – and give them what they need
It’s important to encourage the employees you already have, provide them with resources and let them decide things themselves. They should be able to follow their ideas and feel accountable for them. Offering regular development opportunities can also help you make the most of your talent. In most cases, you won’t select a learning offer from a general training catalog, as in the pre-digital era. Development will have to be customized for each individual. That might be a course, the opportunity to lead a project, or gaining new insights by working in another part of the company.
Some companies have created cross-business-unit roles such as the Chief Digital Officer (CDO) in order to connect everything that needs to be thought of in a unified way in the digital world. Their responsibilities include defining future growth areas, spearheading change processes and allocating resources in a new way so that the company is ready to face the digital era and address the ever-changing customer expectation. They need to find allies who possess enough digital know-how to ensure the company can take advantage of the opportunities that stem from new technologies.
Wanted: Employees with a mixed skill set
Another way to attract the best digital talent is to keep an eye out for applicants who bring a diverse mix of skills. We hear again and again, and not only in Germany, how scarce IT experts and engineers are. At the same time, you need to discuss what role a person who designs cars for example, will play in the value chain in a future world in which the car manufacturer will probably earn most of its money with data and mobility services. How this affects the required skills mix needs to be defined and assessed on a case-by-case basis.
Two things are crucial here. First, you need talented individuals who want to be customer-centric and who are able to cross the traditional (internal) customer and IT organizational boundaries in order to truly feel what customers want. In some cases, it could be helpful to even ’embed’ your employees at the customerfor a period of time. Secondly, it’s clear, that digital business models require experts who view data as an essential element of future value creation — regardless of the specific expertise they bring to the company.
Create room for adventure
Finally, be aware of the impact of your culture. Today’s digital talent seeks adventure and a job that gives them meaning. The more comfortable they feel in the workplace, the more willing they will be to work harder for your company’s success. And they want to be surrounded by similarly minded colleagues. Companies must ensure their culture can meet these expectations. A company can differentiate itself on culture also by taking a strong stand on issues that are of concern to their employees, and by having a leadership principles that are not just on paper, but reflected within the employees every day. At Amazon, we stand for a culture where failure is explicitly allowed — and even desired — because in our experience the path to transformational innovations can never be straight and failure is a sign of progressive thinking. That’s why we need candidates who love to experiment, who are prepared to take other paths, and who are energetic enough to quickly find a way out of a dead-end. Our leadership principles also play a critical role; they describe in detail what is important to us. Everyone can find these values on our website, and they apply to everyone. We expect our employees to focus constantly on the customers’ needs and to continuously improve themselves. That can be inconvenient. But to thrive, innovations need a certain tension.
Digitalization is happening fast. That shouldn’t be an excuse for taking shortcuts in recruiting. Jeff Bezos once said: ” I’d rather interview 50 people and not hire anyone than hire the wrong person .” In the end, only a carefully planned and executed HR strategy will allow a company to achieve the digital transformation and develop it in such a way that it fulfills the company’s long-term goals .
VoD cuts the cord in SA
Some 20% of South Africans who sign up for a subscription video on demand (SVOD) service such as Netflix or Showmax do so with the intention of cancelling their pay television subscription.
That’s according to GfK’s international ViewScape survey*, which this year covers Africa (South Africa, Kenya and Nigeria) for the first time.
The study—which surveyed 1,250 people representative of urban South African adults with Internet access—shows that 90% of the country’s online adults today use at least one online video service and that just over half are paying to view digital online content. The average user spends around 7 hours and two minutes a day consuming video content, with broadcast television accounting for just 42% of the time South Africans spend in front of a screen.
Consumers in South Africa spend nearly as much of their daily viewing time – 39% of the total – watching free digital video sources such as YouTube and Facebook as they do on linear television. People aged 18 to 24 years spend more than eight hours a day watching video content as they tend to spend more time with free digital video than people above their age.
Says Benjamin Ballensiefen, managing director for Sub Sahara Africa at GfK: “The media industry is experiencing a revolution as digital platforms transform viewers’ video consumption behaviour. The GfK ViewScape study is one of the first to not only examine broadcast television consumption in Kenya, Nigeria and South Africa, but also to quantify how linear and online forms of content distribution fit together in the dynamic world of video consumption.”
The study finds that just over a third of South African adults are using streaming video on demand (SVOD) services, with only 16% of SVOD users subscribing to multiple services. Around 23% use per-pay-view platforms such as DSTV Box Office, while about 10% download pirated content from the Internet. Around 82% still sometimes watch content on disc-based media.
“Linear and non-linear television both play significant roles in South Africa’s video landscape, though disruption from digital players poses a growing threat to the incumbents,” says Molemo Moahloli, general manager for media research & regional business development at GfK Sub Sahara Africa. “Among most demographics, usage of paid online content is incremental to consumption of linear television, but there are signs that younger consumers are beginning to substitute SVOD for pay-television subscriptions.”
New data rules raise business trust challenges
When the General Data Protection Regulation comes into effect on May 25th, financial services firms will face a new potential threat to their on-going challenges with building strong customer relationships, writes DARREL ORSMOND, Financial Services Industry Head at SAP Africa.
The regulation – dubbed GDPR for short – is aimed at giving European citizens control back over their personal data. Any firm that creates, stores, manages or transfers personal information of an EU citizen can be held liable under the new regulation. Non-compliance is not an option: the fines are steep, with a maximum penalty of €20-million – or nearly R300-million – for transgressors.
GDPR marks a step toward improved individual rights over large corporates and states that prevents the latter from using and abusing personal information at their discretion. Considering the prevailing trust deficit – one global EY survey found that 60% of global consumers worry about hacking of bank accounts or bank cards, and 58% worry about the amount of personal and private data organisations have about them – the new regulation comes at an opportune time. But it is almost certain to cause disruption to normal business practices when implemented, and therein lies both a threat and an opportunity.
The fundamentals of trust
GDPR is set to tamper with two fundamental factors that can have a detrimental effect on the implicit trust between financial services providers and their customers: firstly, customers will suddenly be challenged to validate that what they thought companies were already doing – storing and managing their personal data in a manner that is respectful of their privacy – is actually happening. Secondly, the outbreak of stories relating to companies mistreating customer data or exposing customers due to security breaches will increase the chances that customers now seek tangible reassurance from their providers that their data is stored correctly.
The recent news of Facebook’s indiscriminate sharing of 50 million of its members’ personal data to an outside firm has not only led to public outcry but could cost the company $2-trillion in fines should the Federal Trade Commission choose to pursue the matter to its fullest extent. The matter of trust also extends beyond personal data: in EY’s 2016 Global Consumer Banking Survey, less than a third of respondents had complete trust that their banks were being transparent about fees and charges.
This is forcing companies to reconsider their role in building and maintaining trust with its customers. In any customer relationship, much is done based on implicit trust. A personal banking customer will enjoy a measure of familiarity that often provides them with some latitude – for example when applying for access to a new service or an overdraft facility – that can save them a lot of time and energy. Under GDPR and South Africa’s POPI act, this process is drastically complicated: banks may now be obliged to obtain permission to share customer data between different business units (for example because they are part of different legal entities and have not expressly received permission). A customer may now allow banks to use their personal data in risk scoring models, but prevent them from determining whether they qualify for private banking services.
What used to happen naturally within standard banking processes may be suddenly constrained by regulation, directly affecting the bank’s relationship with its customers, as well as its ability to upsell to existing customers.
The risk of compliance
Are we moving to an overly bureaucratic world where even the simplest action is subject to a string of onerous processes? Compliance officers are already embedded within every function in a typical financial services institution, as well as at management level. Often the reporting of risk processes sits outside formal line functions and end up going straight to the board. This can have a stifling effect on innovation, with potentially negative consequences for customer service.
A typical banking environment is already creaking under the weight of close to 100 acts, which makes it difficult to take the calculated risks needed to develop and launch innovative new banking products. Entire new industries could now emerge, focusing purely on the matter of compliance and associated litigation. GDPR already requires the services of Data Protection Officers, but the growing complexity of regulatory compliance could add a swathe of new job functions and disciplines. None of this points to the type of innovation that the modern titans of business are renowned for.
A three-step plan of action
So how must banks and other financial services firms respond? I would argue there are three main elements to successfully navigating the immediate impact of the new regulations:
Firstly, ensuring that the technologies you use to secure, manage and store personal data is sufficiently robust. Modern financial services providers have a wealth of customer data at their disposal, including unstructured data from non-traditional sources such as social media. The tools they use to process and safeguard this data needs to be able to withstand the threats posed by potential data breaches and malicious attacks.
Secondly, rethinking the core organisational processes governing their interactions with customers. This includes the internal measures for setting terms and conditions, how customers are informed of their intention to use their data, and how risk is assessed. A customer applying for medical insurance will disclose deeply personal information about themselves to the insurance provider: it is imperative the insurer provides reassurance that the customer’s data will be treated respectfully and with discretion and with their express permission.
Thirdly, financial services firms need to define a core set of principles for how they treat customers and what constitutes fair treatment. This should be an extension of a broader organisational focus on treating customers fairly, and can go some way to repairing the trust deficit between the financial services industry and the customers they serve.