A version of this article first appeared on BRINK on May 4th, 2018
An explosion of data, accessibility of cheaper computing power, and broad adoption of technologies, such as machine learning and the Internet of Things, has accelerated the pace of work in the digital era.
Increasingly, companies are taking advantage of these trends to develop more innovative and compelling experiences for their customers, drive better and faster decisions, streamline their operations, and proactively reduce operational risks within their ecosystem.
But while digital transformation promises accelerated innovation and economic advantages, the shift often creates unprecedented challenges for many companies steeped in legacy culture, process, technology, and ways of working. Not surprisingly, business model disruption and technology disruption are highlighted as some of the top trends impacting companies over the next 12 months, according to the National Association of Corporate Directors’ 2017–2018 Public Company Governance Survey. While board members are grappling to understand the implications of these changes for their organizations, they must also turn their attention to the digital literacy and preparation of the company’s workforce to prepare it to face new challenges.
Figure 1: Top Five Trends Viewed as Having the Greatest Effect on the Company Over the Next 12 Months
Source: 2017-2018 NACD Public Company Governance Survey
Preparing for the Future
One critical challenge that can’t be ignored is a company’s role in preparing its workforce for intelligent automation. The World Economic Forum’s Future of Jobs report predicts that 7 million jobs could be lost over the next five years through redundancy, automation, or disintermediation, with the most significant losses in white-collar office and administrative roles. Others argue that job losses could be less pronounced over the long term. There is much debate among economists, historians, and think tanks on the level of job destruction and creation that will come from automation. But two things are certain: First, in the near term, we expect much workforce disruption. Second, as artificial intelligence algorithms increase in sophistication and computational power, the pace of intelligent automation is likely to accelerate and push the workforce to focus on higher-value activities. To meet that challenge, the workforce of the future will need to acquire a new set of skills rapidly in order to interact with the future of intelligent systems.
Unfortunately, many companies aren’t entirely equipped to assess and prepare their workforce for this disruption, especially in corporate functions such as finance, treasury, risk management, and human resources. Research suggests these critical functions are still struggling to understand the full scope and impact of new technologies. For example, the 2018 AFP Risk Survey Report, supported by Marsh and McLennan Insights, polled more than 600 senior-level treasury and finance executives. The majority of respondents to the annual survey cited artificial intelligence and robotic process automation as technologies that could expose their companies to business disruption and regulatory risks. Only 14 percent surveyed said they are “significantly prepared” to manage these changes effectively and more than half (54 percent) said they are only “moderately prepared.” Similarly, the 2017 Excellence in Risk Management report, by Marsh and the Risk & Insurance Management Society, found an awareness gap among many risk managers on the use of disruptive technologies by their organizations. The survey also found that more than half of organizations have not conducted risk assessments for disruptive technologies.
Figure 2: Treasury and Finance Functions’ Preparedness To Manage Risks from Increasing Use of Technology
A New Approach Is Needed
It is clear that the need to invest in re-tooling the workforce couldn’t have come at a more critical time. At the heart of this investment should be access for the workforce to a digital literacy program. Digital literacy is notably separate from computer literacy. Rather, it should be a focused program that educates employees in emerging fields such as big data, machine learning, process automation, blockchain, and the Internet of Things. The program would provide practical applications that are contextual to the employee’s role.
Thanks to advancements in online technology, there is now an array of learning opportunities available to employees and to board members alike. For example, massive open online courses offered through companies such as edX and Coursera offer an array of courses as well immersive, state-of-the-art educational content developed by top technology companies. Many of these platforms cater to the needs of individual enterprises and can customize digital literacy pathways for employees based on their industry and current skill sets. A small but growing number of companies are exploring these platforms as an avenue to accelerate learning within their organizations.
A subset of technology companies are also opening up access to core courses beyond their employee population as a way to shore up interest in the technology used at the company and to close the skills gap. Microsoft recently announced a professional program for artificial intelligence for aspiring engineers and analysts that offers courses for a basic introduction of AI to those for mastery of the skills needed to build deep learning models for AI solutions that exhibit human-like behavior and intelligence.
Last but not least, companies are incorporating traditional ways to close the digital literacy gap as part of their overall workforce strategy. AT&T, for example, sponsors a low-cost online master’s degree in computer science from the Georgia Institute of Technology’s school of computing and offers a variety of courses to retrain its employees who work in jobs that will become obsolete, such as landline installation and repair.
The concept of digital literacy is still at an early stage, but it is a critical foundational step that companies need to take to prepare their workforce for their future. Technology is disrupting everything in its path—including the demand for, and demands on, the workforce—and it’s not slowing down. The question that boards need to ask is whether their organization is prepared to oversee the transformation of their company’s workforce proactively or whether they’ll passively react to the inevitable technological progress that will disrupt operations down the road.