Over the last fortnight, I read several news articles that were published in different media websites. If you piece them together, there are patterns to explore and lessons to learn.
The Globe and Mail carried The Canadian Press article, “Banks face recruitment challenges as fintech startups snag talent”. The article noted, “While upstarts allow employees to work flexible hours, wear jeans to the office and play beer pong during lunch breaks, those who work for such companies say the differences in corporate culture go beyond such superficialities.” It spoke about digital talent being in search of “learning opportunities, less red tape, and the chance to work on problems they feel genuinely passionate”.
To compete well with #fintech startups, traditional companies are reinventing themselves to attract digital #talent https://t.co/ocWHZTDy42
— James Parsons (@JamesWParsons1) January 20, 2016
The Wall Street Journal ran a news story on The New Republic, a century-old magazine being put up for sale by Facebook co-founder, Chris Hughes. The story quotes Mr Hughes in a staff memo published on Medium, that he “underestimated the difficulty of transitioning an old and traditional institution into a digital media company in today’s quickly evolving climate.”
The third news article was from digiday.com: “‘There’s been a mindset change’: Legacy publishers are catching up”. It carried details of how traditional publishers like the Wall Street Journal, Forbes, and many others have made significant gains in traffic while their relatively new digital counterparts like Buzzfeed and Gawker Media saw traffic stay flat or dip.
To me, these articles capture the great change we are currently in the midst of. How traditional businesses are reinventing themselves as digital enterprises; the struggles of finding the right talent to work, and to lead; the challenges of the digital onslaught being overcome by many traditional institutions.
As these stories demonstrate, embracing the right talent and the right technologies are two key levers to enable this change, and if done well, are the routes to continued success.
What interests me the most is how companies the world over are handling the talent part of this route. The most obvious answer is of course poaching. And that is the key reason some of the traditional publishers have caught up with, and are now beating, the digital upstarts in their own game.
However, just getting digital talent and hoping that they would be absorbed into the organisation culture is likely to backfire. And it would work even less if they are dispersed across the organisation thus causing their digital edge to be blunted considerably. The news story on fintech start-ups I spoke about earlier mentions how Scotia Bank set up a ‘digital factory’ of 350 tech people including UX designers and data scientists, in one place. That is reminiscent of Wal-Mart’s @WalmartLabs, an “idea incubator”. It was set up as part of its e-commerce division in Silicon Valley in 2011, away from the company headquarters in Arkansas. This group helped the company outpace Amazon’s growth in 2013.
Will such an approach work for all enterprises aspiring to go digital? Maybe not, but it is a definite start. Especially given that a lot of people are opting for far more meaningful jobs where they can make a difference, instead of being mired in monolithic organisations that have worked the same way for decades.
The second route is to acquire digital companies that make strategic business sense to traditional companies. According to McKinsey, Tesco, the UK grocery retailer, went the ‘aqcui-hire’ way. It made three digital acquisitions over two years, which helped in quickly building up the skills needed to move into digital media. Verizon did the same in the US, says McKinsey, with its strategic acquisitions in telematics and cloud services.
In both routes, the key transformation challenge is integration into the existing culture, because for the customer, the enterprise brand has to provide a seamless experience, no matter which channel she chooses to engage with the brand. Should the companies operate as separate entities? When should they begin to integrate? And how?
In 2016 and beyond, these are some of the questions we are tackling at Arrows Group Global.
