A leading executive search firm recalls that in the late 1990s, their efforts to find digital executives were primarily conducted for startups. But since 2010, companies have been demanding board directors and management executives with digital expertise. “Digital” is now integral to the organization as a whole, no longer a term relegated to the IT department or tech startups.
Virtually every Forbes Global 2000 company is undergoing a digital transformation journey. Forbes’ Chief Insights Officer Bruce Rogers writes that a significant number of companies expect to be completely “digitally transformed in the next 3 years.” Whereas the Industrial Revolution took around 85 years, the Digital Revolution may take only 15.
Our Regional Director Jasmine de Clerck believes that the stakes are high.
“There will be winners and losers emerging within very short time frames,” she said. “Companies that aren’t prepared to develop and nurture a digital corporate culture that makes an organization digitally capable will be among the losers.”
It’s very worrying, then, to find that so many companies fall within the “ill-prepared” category. Accenture Strategy research shows that only 34% of business leaders are well prepared for digital in terms of having the right leadership and management practices, and only 39% of leaders feel they’re well prepared for the changes needed with the skill and job mix of the workforce.
In our recent series of executive interviews focused on cultural transformation, Damco Global Head of Talent Management Per Lindved Madsen explained the global shipping and logistics company’s digital transformation journey.
At the end of 2015, the Damco leadership team took a research trip to Silicon Valley. What they learned both excited and scared them, Madsen said. Digitalization was rapidly changing their industry.
“Our industry is ready for a complete transformation,” he said. “There are a number of smaller, purely digital companies out there that are creating marketplaces for logistics and transportation services — they don’t own any customers or assets but are building Amazon-style marketplaces for logistics solutions. If they win, then all we become is asset owners. We would no longer have direct connection to the customers; they will all go to the digital marketplace.”
It’s a dilemma facing most large, legacy industrial companies around the world. Damco needed a strategy to adjust.
“Damco decided that it has 3 options: buy one of the digital logistics marketplaces, partner with one, or develop its own,” Madsen said. “We decided to build it ourselves. We have started a new company, placed outside of Damco, staffed by new people that have not worked in Damco before. We have learned the lessons from other’s mistakes. If you want to start something completely new, within an old global company, you need to completely separate it from your systems otherwise it’s going to be swallowed up.”
This young start-up is being allowed to flourish separately to develop its own culture, albeit with shared values linking the 2 organizations. It’s a fascinating example of how a legacy company can nurture a new culture from within.
Ernst & Young found that customers are sometimes frustrated with gaps at legacy companies, using the example of someone beginning an interaction online but not being able to pick up where they left off when they walk into the store.
“The frustration is particularly felt by digital natives,” the report said, “who have grown up used to immediacy and convenience and expect to be ‘known’ at every interaction with a company, regardless of the channel in which they choose to engage.”
If organizations don’t adapt to these realities, they will die out. It’s something Damco knows well, which is why the company is leaning into the digital revolution rather than trying to avoid it. Is your company doing the same?