The digital enterprise: The next wave of HR transformation

It’s amazing to me how the world of digital has radically disrupted business. Nearly every company I talk with is working on ways to disrupt their business models, build apps and interactive new customer experiences, redesign their products and services, and figure out how to embrace the concepts of “digital” throughout their business.

Our research and experience shows that true “digital companies” are not simply technology companies that build apps and leverage social networks. Rather they completely change the way they do business, embracing ideas like design thinking, iterative design, high degrees of customer listening (empathy), sensor-aware apps, MVPs (minimal viable products), hackathons, and a focus on getting things done quickly, using new digital tools, and iterating rapidly on behalf of customers.

As we talk with more and more companies focused on this problem (most are worried about being disrupted by another more “digital” competitor), I also see another big issue: digital companies don’t just “do digital,” they “think and act digital.” This means they question their core business models and often build products and tools that appear to compete with or question their core business strategy.

One manufacturer, for example, which sells highly designed consumer products, has a business which encourages its customers to come into a sales office, show them the end-to-end solution, and select and buy a fully configured set of products designed for their need. As you can imagine, this company, which is well known, is now being disrupted by companies that sell each of the component parts separately, so customers want to “mix and match” between their products and others. Quite a vexing challenge!

If this company moves to this new model, they fear their whole core business of “integrated, highly designed solutions” would be at risk. Yet they have no choice. So they have taken a group of product and consumer designers, put them on the task of building a set of apps that let consumers “design their own experience” and then mix and match products from their company with selected others. It’s an experiment at first, but already they’ve seen a huge increase in new customers who would never have approached their intimidating, end-to-end sales process.

• The HR function must shift its focus from “building HR programs” to facilitating a fantastic employee experience. When the business moves this fast, people are overwhelmed and busy (more than 65% of all employees are now “overwhelmed at work”), so HR must look at office design, meeting spaces, and tools that make work easier.
  
  
• The HR function must embrace digital tools to make project and team work easier. In a digital enterprise, people work in small agile teams, constantly changing tasks, often moving from team to team. A once a year performance process that creates annual goals barely makes any sense. Rather HR should build performance and goals solutions that help people set goals for each project, give each other feedback, and facilitate sharing and mobility around the organization. This is more than just “redesigning performance management” – its focusing on human performance tools in a digital work environment.
  
  
• The HR function must create new tools for feedback and engagement. Work today is fast-moving and dynamic, and in countries like India people can switch employers by simply walking across the street. One of HR’s biggest jobs today is to build tools and programs to get rapid feedback – to leaders, between team members, and to executives – to make sure the organization is acting quickly to solve problems, make work better, and improve leadership.
  
  
• The HR function must redesign its leadership programs. I’ve looked at hundreds of leadership programs over the years, and today HR must build programs for “leadership in the digital enterprise” and focus on building leaders faster, helping Millennials and other young people move to team leadership roles rapidly, and teach the concepts of agility, design thinking, customer empathy, and team leadership.
  
  
• The HR function must focus on mission, purpose, and culture. In a fast-moving, team-centric company, people work together because they feel a common bond. The days of managers telling everyone what to do and people just “doing it” because they were told are slowly coming to an end. If we want teams to coordinate and avoid conflict, HR should build programs to define and communicate culture, assess fit, and bring people to a common ground. This also means forcing executives to discuss and talk about the organization’s true purpose, not just focus on making money.
  
  
• The HR function itself must become agile, and buy tools that facilitate rapid change. Rather than building a set of highly structured process teams that take years to build out programs for onboarding, leadership, performance, etc. the HR team should adopt hackathons, rapid design sessions, and client empathy programs to really follow employees around. Then we can build things that people love, not just “use because they have to.”
  
  
• The HR function must push executives and team leaders to focus on inclusion, diversity, and programs and practices that eliminate unconscious bias. Our research (and many other studies) shows that agility, innovation, and speed come when people feel trusted and included. Gender diverse teams, for example, are more innovative. Racially diverse teams, for example, come up with far more new ideas. Inclusion is no longer just a “nice thing to do” – it’s vital to success in the always-on digital enterprise.
  
  
• The HR function must shift its focus on technology away from “implementing systems and tools” to that of “learning to leverage data.” Yes of course we need HR systems to automate and capture lots of information about people. But the real value today is not automation, but information and analytics. Our research shows that the maturity of people analytics has doubled in the last year and every HR team today should have an analytics center of excellence, and all HR business partners and functional leaders should be building dashboards and understand what data you have and how to use it.
  
  

The other big transformation taking place in HR is the need for HR itself to become smaller and more business integrated. As companies shift from a hierarchy to a “network of teams” (read the Deloitte Global Human Capital Trends 2016 for more on this), HR has to become far more embedded into the business. We need more valued business partners and fewer administrators and bureaucrats. Everything that feels like paperwork should be automated (Robotic Process Automation tools are exploding and easy to use today). Low level HR professionals should be trained to become advisors. And all HR professionals should learn to become “bold” and understand the business well, push leaders toward culture and inclusion, and hone their craft as coaches, analysts, and consultants.

The High-Impact HR organization of today is very different from the one only five years ago. I look forward to sharing more on this topic as the world of the “digital enterprise” further changes organizations everywhere.