“Downsizing itself is an inevitable part of any creatively destructive economy” (James Surowiecki). Digital businesses require less labour then their analogue predecessors. During digital transformations, leaders often need to downsize the legacy business whilst at the same time rapidly hiring new digital talent, creating an uncomfortable dynamic. This is the 8th post in a series building on 10 reasons why digital transformations are difficult. Here are some approaches that others have taken to manage talent imbalances.
- Face into it. Downsizing is never easy or enjoyable. But if the company’s future depends on investment in a new digital business model, delaying the inevitable will only lead to more pain in the long term.
- Sequence thoughtfully. Many of the areas that are most impacted by digital (e.g., stores, call centres) have high attrition, so with careful planning it’s often possible to downsize a function without involuntary redundancy.
- Retrain and redeploy. Analogue and digital businesses need fundamentally different skills and experience. Nevertheless, a proportion of colleagues can be re-trained for a digital world. For example, many software engineers have successfully made the bridge from waterfall to agile development methodologies.
- Use externals. Third parties can help to smooth the transition from analogue to digital business. Externals can be brought on board to rapidly grow the digital business without having to make lots of permanent hires. Analogue operations that are being run-off can be handed over to outsource providers.
- Consider separate organisational structures. In some cases, it may make sense to separate analogue and digital businesses into different units (albeit with some shared services). This makes it easier to grow one business whilst shrinking another.
- Use humans to differentiate. Digital businesses in general are more efficient, better controlled and receive higher customer service scores than their analogue counterparts. But there are still many places where humans beat machines. For example, humans still manage complex sales and service transactions way better than machines. So some of the talent displaced by automation can be re-deployed to differentiate where it really matters.
In summary it’s hard to avoid some downsizing during digital transformation….but with carefully planning the impacts can be minimised.