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.

The Biggest Challenge in 2016

A few years just before the turn of the century, the Internet started to level the playing field for enterprises big and small, old and new. In the last few years, the big four forces of social media, mobile, analytics and cloud (otherwise known as ‘SMAC’) have unleashed a complex game of re-invention and innovation for enterprises. And now, the Internet of Things is poised to change life and business as we know it. By 2025, it is expected to have a global economic impact of about $11 trillion per year, according to a recent report by McKinsey Global Institute. About 70% of this value will come from B2B users.

Consider these changes: The growth of e-commerce across the world, in double digits in the US and Europe and positively exploding in Asia, has put traditional retailers’ business in re-think mode. There are growing demands from patients to have online access to medical services and health records as we move towards a culture of ‘e-health’ through wearable technology. And there is a need for innovation within the public sector as governments embrace agile methodologies and move more of their services online. The Internet of Things will unleash a lot of value for end customers, which enterprises in any domain need to be also ready to deliver. And the sheer amount of data generated has to be put to great use through big data and analytics.

These sweeping changes have forced enterprises in all domains to rethink their businesses and transform themselves into digital enterprises to stay relevant and differentiated, and continue to retain loyal customers. Enterprises now not only have to rethink their business from the ground up, but also find the talent that can make it happen. Today they need talent that is not merely digitally savvy, but digitally ‘smart’. Consider some desirable characteristics of such talent:

Digitally smart talent…
… knows technology, but they also know the intricacies of your business.
… can pore over a working setup, and detect spaces that can yield new revenues, greater margins and new customers.
…can see the widely disparate parts of the business and weave a thread of analytics through them to unearth actionable insights.
… can spot opportunities, create pilots to prove feasibility, and build internal and external teams to make them scale.
… understands lean and agile, and how to combine them to maximum effect.
… understands products and gets the importance of customer engagement.

And so on.

In short, enterprises can’t afford to look purely for experience any more. The focus will be on the right mix of business and technical skills, the right attitude, and fanatical customer focus.

The challenge is that most enterprises, while setting an ‘unreasonably aspirational*’ vision for digital transformation, do not have access to this kind of new talent. In McKinsey’s Global Survey on digitization, the top challenge identified in meeting priorities for digital transformation was ‘difficulty in finding talent (both functional and technical)’. And hence prioritizing talent has been recommended as key to the growth ahead.

How can traditional enterprises accustomed to hiring in a specific way for a certain type of talent, switch their hiring game to now identify the digital talent that their business needs today, and tomorrow? Should digital transformation or IT innovation drive the hiring strategy? Should HR be re-trained to spot, attract and nurture digital talent? Should an expert outsourced team hold your hands through this?

At Arrows Group Global we believe that organizations that are serious about attracting top digital talent need to be brave and change the way they go about attracting them. Digital technology skills have recently been rated as the highest demand skills globally and it is up to the organizations to ensure their employee value propositions are the most attractive they can be. We work with organizations to ensure that their hiring proposition is as appealing as possible to the digital market, and then advise that this be combined with an agile, engaging recruitment process. Gone are the days of traditional 2-3 stage interviews and formal presentations. To really compete, you need to reinvent out how your organization engages with the digital market on their terms – such as the thought leadership events, hackathons, social gatherings and other channels we use to help organizations integrate talent with digital enterprise. Whilst the digital space is all about the technology, it is underpinned by the relationships and engagement of the people and their skills, and that’s the key to building a digital enterprise.

Arrows Group is keen to unearth more of such challenges so that we can create the right talent acquisition solution. I would be happy to hear from you regarding the challenges your enterprise is facing with digital talent today.

*From The seven traits of effective digital enterprises, www.mckinsey.com