lose to US$3.8 trillion was expected to be invested by businesses in
digital transformations in 2019, up 3.2 percent on the previous year, as
companies try to transform the way they work in the face of technological
change, market disruption, and unrelenting competition. But what
kind of bang are these companies getting for their buck? Global productivity
is all but stagnant in the biggest economies, and barely half of organizational
transformations and 40 percent of technological transformations achieve their
goals. The urgency has never been greater for businesses to diagnose the problem
and make the most of this capital spending: The pace of technological change
shows no signs of slowing, but, according to the International Monetary Fund,
economic growth is hitting the brakes.
The assumption has always been that when something goes wrong with a
transformation, it’s the implementation, rather than the original strategy, that’s at
fault. Top management has a vision; the vision is translated into detailed plans.
So far, so good. But somewhere along the way, the change stalls — and accusatory
eyes turn to middle management. Yet there’s evidence that middle managers,
who need to be the agents of any transformation, engaged in the right way, can
deliver outstanding results.
The key is unlocking the skills that will produce the returns. We would argue
that these skills are the ones that augment automation and are not replaced by
it: emotional skills such as creativity, problem solving, and resilience. We would
argue further that it’s not just middle managers who need upskilling in their ways
of working. Leadership has to understand its role in motivating and incentivizing
its workforce to embrace new ways of working and find ways to redeploy talent
into value-creating activities once it is freed up by automation.
In his study of a major transformation program by a large telecom
company, Quy Nguyen Huy, professor of strategy and management at
INSEAD, found that approximately 80 percent of the 117 separate projects
initiated by senior management had failed or had fallen short of expectations.
In contrast, 80 percent of those initiated by middle managers had succeeded,
bringing in $300 million in annual profits. In the right conditions, middle
managers don’t block change — they drive it through. But they need the
right kind of support.
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