Zero One: Without Bedrock Talent, Digital Transformation Craters

Dig deeper into digital disruption, and you’ll hit the mantle, the layer of hard rock. This mantle has many names: Internet of Things architect, security professional, customer experience designer, DevOps engineer, data scientist, mobile developer, marketing technologist, machine learning engineer, to name only a few.

Companies won’t be able to go further in digital transformation unless they can hire some of these people. It’s a difficult task, because there just aren’t enough of them.

No shortcuts around the mantle, of course, but you can chip away at it. Business leaders will have to tap into a tech worker mindset known as the “gig economy,” acquiesce to their demands, shore up training programs, open up their wallets, and, most importantly, accept the fact that today’s tech skills are as important as business ones.

First, the big picture on hard-to-find tech skills and their impact on digital transformation. Spoiler alert: It’s bleak. If you haven’t seen the numbers, you really haven’t been paying attention.

Companies are spending millions, even billions, as in the case of Home Depot, to digitally transform their businesses, create disruption, remake the customer experience. In the main, they’re failing. Only 3 percent of companies have gone enterprise-wide with their digital transformation efforts, SAP says.

Problem is, they’re running smack into the mantle. A Capgemini Consulting survey conducted a few years ago found that 77 percent of companies consider missing digital skills as the key hurdle to their digital transformation.

Conversely, if companies unearth great talent, especially in engineering, they’ll yield double-digit investment savings by accelerating digital transformation by 20 to 30 percent, McKinsey & Company reported last fall.

Related: Zero One: Digital Transformation Leaders vs. Laggards

The trick is to win on the frontlines of a talent shortage.

“In the next five years, we expect the demand for talent to deliver on new capabilities to significantly outstrip supply,” say McKinsey’s Satty Bhens, Ling Lau and Hugo Sarrzin, in the report. “For agile skills, demand could be four times supply; for big data talent, it could be 50 to 60 percent greater than projected supply.”

There are many ways to get an edge on tech talent – one only needs to gaze west. In Silicon Valley, tech workers call the shots, and they demand a different kind of working environment. For them, every day is casual Friday. Flexible schedules and work-at-home arrangements are must-haves, despite former Yahoo! CEO Marissa Mayer’s failed attempt to force a cultural change.

Walk into the offices of any tech company in Silicon Valley, and you’ll be struck with colorful, imaginative workplaces. It’s a surreal outgrowth from the seeds of a foosball table in the break room. Companies across the country wooing tech workers will have to replicate this working environment. (In 2014, I created a slideshow while writing for CIO.com, Silicon Valley’s 18 Coolest Workplaces.)

There’s sound reasoning behind corporate playgrounds.

“One of the biggest problems when it comes to attracting technical talent and development talent, specifically, is that a lot of organizations don’t fundamentally have the right model to create the culture to attract top technical talent,” says Forrester analyst Jeffrey Hammond in a podcast. “That’s because we find the top development talent tends to be creative… it’s very intense, very demanding. And one of things you need to deal with that is space for creative breaks.”

Silicon Valley is also the land of venture capital and entrepreneurialism, which has trickled down to the tech worker. More and more tech workers embrace a career path known as the “gig economy” (formerly called “free agent nation”), whereby they freelance their services in digital marketplaces such as Topcoder, Upwork and Kaggle. A 2016 survey by Freelancers Union and Upwork found that freelancers now make up 35 percent of U.S. workers.

Related: Zero One: Got Digital Talent? Probably Not

Companies with a cultural aversion to contingency work will have to overcome their fears and change their ways. That is, they have to be willing to expose gig-economy workers to their competitive advantages: digital transformation efforts, customer data insights and emerging business models.

Often, this means disrupting human resources to be more flexible, more nimble. Some full-time employee job positions will have to be made available to gig-economy workers. Old vetting and hiring processes, which can stretch for months for a single candidate, have to be stripped down. In a talent war, hiring decisions need to be made quickly.

“Talented people may not be available 48 hours after an initial interview,” Kelly Workman, vice president and Chicago metro market manager at Robert Half Technology, told me last fall.

If human resources doesn’t make the changes, it might go the way of the impotent IT department. Much like they did with tech, business leaders will practice “shadow HR,” essentially challenging human resources’ penchant for full-time workforces and slow recruitment and selection processes, says an MIT Sloan Management Review article.

Companies can speed up the selection process by making an offer to a candidate who has, say, only three out of five requisite skills, Workman advises. Then companies should develop a solid in-house training program to grow the missing skills.

Related: 2017 Salary Guide: 16 Hottest Digital Transformation Skills

All of this begs the question, why not simply grow skills of current tech staff? Oddly, this seems to be an option few companies choose. The Capgemini survey found that a staggering 54 percent of companies aren’t investing in developing digital skills.

That’s not stopping tech workers – perhaps your current staffers – from personally investing time and money sprucing up their skills and jumping into the hot job market. They’re no doubt eyeing hefty salaries and licking their chops.

Business leaders have little choice but to open their wallets. According to Forrester, the mean wage for an application developer is around $95,000. A top-tier graduate from MIT or Stanford University will start at anywhere from $110,000 to $120,000 plus benefits. Among the elite, a 10x engineer commands a seven-digit salary.

Companies choosing to do none of this and remain idle in the war for tech talent risk not just competitors acquiring talent but talent fleeing their own ranks. Simply put, highly skilled tech workers are the enablers of disruption, the bedrock of digital transformation. Without them, companies will never be able to achieve business outcomes critical to their future in the new digital reality.

Tom Kaneshige writes the Zero One blog covering digital transformation, AI, marketing tech and the Internet of Things for line-of-business executives. He is based in Silicon Valley. You can reach him at [email protected].