Introduction
The MaCuDE Task Force on Management and HR conducted an extensive study to investigate the effects of digitalization on work and the workplace. The task force interviewed 62 executives in private sector companies, seeking to gain a deeper understanding of how digitalization is being integrated into managerial life, its impact on various aspects of work, and the skills needed to effectively manage in this new environment. The interviews followed a semi-structured format with open-ended questions, allowing for a rich and nuanced exploration of the topic. The task force came up with a number of key findings, as follows.
Examples of how digital technologies are being applied
Throughout the interviews, many examples of how digital technologies are applied in business were presented, and these were categorized in 4 categories: improving efficiencies, monitoring performance and key metrics, improved decision making, and societal contributions.
In efficiency improvement, most examples had to do with streamlining, re-engineering or automating processes. In monitoring, examples included tracking the functioning of remote operations, using drones to inspect problems, utilizing sensors for real-time inventory monitoring, performance monitoring of employees, and more. In decision making, examples included optimal shipping decisions, asset management, improving decisions in complex environments, and more. In societal contributions, helping law enforcement, identify fraud, improving food tracking to prevent harmful batches, and more.
Impact of Digital Technologies on Management
The study revealed that three digital technologies are having the most significant impact on management: automation and algorithms, data analytics, and the cloud. Automation, driven by algorithms, is transforming the workplace by taking over tasks that can be digitized and standardized. This shift is not only eliminating errors and mitigating risk but also fundamentally changing the nature of many jobs. The task force identified two types of automation: “dumb” automation, where the algorithm remains constant, and “smart” automation, which leverages machine learning to continuously improve processes without human intervention. The trend is that gradually “dumb” automations will be moving towards “smart” automation, extending beyond routine tasks and taking non-routine jobs.
Data analytics has emerged as the main currency in the digital economy. The ability to collect, process, and analyze vast amounts of data in real-time has transformed decision-making processes across industries. Executives now have access to up-to-the-minute metrics and insights that were previously unimaginable. However, the real competitive advantage lies not in merely possessing data but in the ability to turn that data into actionable information and insights that drive impact. Companies are investing heavily in structuring their data to ensure interoperability and enable more sophisticated analysis. Visualization has become a key tool for translating complex data into understandable and engaging formats for a broader audience.
The cloud has revolutionized data storage and access, making information globally accessible and enabling unprecedented levels of collaboration. By centralizing IT functions, the cloud has eliminated the need for local servers and expertise, streamlining operations and reducing costs. This centralization has also facilitated the standardization of processes and the rollout of updates and changes across an entire organization. The shift to the cloud has been transformative, breaking down silos and enabling seamless collaboration across geographies and functions.
Impact on the Workplace
The impact of digital technologies on the workplace has been multifaceted, affecting the customer experience, efficiency, metrics and measurement, the pace of change, and change management.
Companies are leveraging analytics and AI/ML to enhance customer relationship management, improve responsiveness, and deliver personalized experiences. While digital solutions are becoming increasingly expected, they also raise the bar for meeting customer expectations, creating new challenges for organizations. Increased pervasiveness of social media has changed the dynamic with dissatisfied customers.
The drive for efficiency has been a primary motivator for the adoption of digital tools. By automating repetitive tasks and eliminating positions, companies can achieve significant cost reductions. The goal that has been reported is that bots handling 99% of the repetitive work. However, this efficiency comes at a price, with jobs being lost and the nature of work being fundamentally altered.
The availability of real-time data has elevated the importance of metrics and measurement, particularly in the realm of performance monitoring. This heightened focus on metrics, which has increased during the pandemic, has led to increased transparency and accountability but has also contributed to a sense of constant performance monitoring of employees.
The pace of change has accelerated dramatically, fueled by the rapid evolution of digital technologies. This acceleration has created a sense of uncertainty, stress, anxiety, and resistance among employees, as they struggle to adapt to an ever-changing landscape. The ability to rapidly adapt has become a crucial skill for both individuals and organizations.
Change management has taken on new significance in this context. Managers must not only commit to change themselves but also foster a culture of change within their teams. This requires coaching, training, and support to help employees navigate the challenges and uncertainties of the digital transformation.
Despite the pervasive impact of digitalization, the study found that many companies are still in the early stages of implementation. Organizational structures are often strained, with silos and legacy systems hindering progress. To fully realize the potential of digital technologies, companies need to update their structures, eliminate silos, and centralize decision-making.
Impact on the Workforce
The digital transformation has given rise to new ways of working and demanded new skill sets from employees. Work has become increasingly project- and team-based, with a greater emphasis on autonomy and accountability. Work life is moving away from hierarchical management. With the availability of vast data and the access to data through the cloud there has been heightened transparency, responsiveness, and the visibility of individual productivity. It has also enabled more effective collaboration and the generation of innovative solutions across geographies and functions.
However, these changes have also brought challenges. Information overload, increased complexity in decision-making, and the constant pressure to adapt have contributed to heightened levels of anxiety and stress among employees. The competitive advantage gained by early adopters of digital technologies has intensified the sense of urgency and pressure to keep pace.
New roles, such as data scientists, big data analysts, social media managers, and project managers, have emerged to meet the demands of the digital economy. At the same time, jobs that involve repetitive, programmable tasks are rapidly disappearing, as automation takes over.
Ethics of Digital Technologies
The study revealed three main ethical concerns related to digital technologies: data privacy, cybersecurity, and job loss due to automation. Interestingly, the emphasis on these issues varied by region, with Europeans placing more importance on privacy, while Americans focused more on cybersecurity. Other ethical considerations included the potential harm caused by poorly constructed algorithms and the misuse or misinterpretation of data.
Skills Needed for Early Career Graduates
Interviewees acknowledged the digital savvy and enthusiasm of younger employees but noted a significant gap in their ability to interpret data analysis and apply critical thinking to craft compelling narratives. “They use the digital tools they have been trained on, run the numbers, and come back to present the results. But they do not accompany their number crunching with analysis of why the results were obtained or what they mean. They lack the ability to apply critical thinking to the results and are unable to interpret them and turn that into a story. Technically trained graduates understand the principles of data science but not how to apply it to a client.”
In addition, Interviewees opined that younger employees were uncomfortable with interpersonal relations, found it difficult “to look someone in the eye when they are talking to them,” wanted it now, got easily bored, lacked business acumen, lost sight of the bigger picture, lacked resilience, and were not good at working under pressure, not persistent, and gave up too easily.
This highlights the need for a combination of technical and soft skills in the digital age. The key skills identified for new graduates include strong interpersonal abilities, emotional intelligence, and self-awareness. Teamwork and communication skills are also crucial, as is the ability to adapt, be resilient, and maintain flexibility in the face of constant change. Other important attributes include a positive attitude, intellectual curiosity, humility, problem-solving capabilities, critical thinking, and learning agility. New graduates must also possess a customer orientation, an understanding of business etiquette, and the ability to navigate complex organizational structures. Digital savvy, data interpretation skills, and quantitative abilities round out the list of essential competencies.
Skills leaders need
For leaders, these same skills are necessary, but at a higher level. Advanced interpersonal skills, such as empathy, active listening, and diplomacy, are critical for effective leadership. The ability to build and lead teams, empowering and inspiring others while fostering trust and managing intergenerational differences, is also key. Change management skills, including the ability to lead through change, manage resistance, and alleviate anxiety, are increasingly important. Business acumen, customer-centricity, and industry awareness are also essential for leaders, as is a sensitivity to social issues like diversity, sustainability, and ethics. With the rise of remote work, virtual management skills have become indispensable.
Executives need a solid grasp of the capabilities and limitations of relevant digital technologies, even if they are not technical experts themselves. Complacency is a significant risk, and proactive learning is essential to stay ahead of the curve.
Remote management requires a unique set of skills, including strong interpersonal abilities, effective communication, and clear governance. Despite the growing importance of these skills, few companies provide training for remote management.
Impact on Business School Curricula
Respondents emphasized the importance of practical exposure for students, through internships, projects, role-plays, and group work. They also stressed the increasing necessity of quantitative skills in the digital age. Some suggested that business schools could provide tool-specific certifications to give graduates a competitive edge.
However, beyond technical skills, the development of a “digital mindset” was seen as crucial. This mindset encompasses an openness to learning new skills, a willingness to adapt to new tools, and an understanding of the potential of technology to transform business.
Impact of the Pandemic
The COVID-19 pandemic has had a profound impact on work and the workplace, accelerating many of the trends associated with digitalization. The sudden shift to remote work blurred the boundaries between work and personal life, leading to increased hours and heightened levels of exhaustion. Managers found themselves having to be more attuned to the mental health and personal circumstances of their employees, as the pandemic took a toll on well-being.
The economic fallout from the pandemic was severe, with many companies experiencing revenue losses, layoffs, investment freezes, and facility closures. Employees faced fears about job security and their ability to adapt to the new reality.
However, the pandemic also brought about some positive changes. Greater unity, empathy, and collaboration emerged as people came together to face a common challenge. Decision-making processes were streamlined, and long-held norms were challenged. The forced adoption of digital tools led to a rapid upskilling of the workforce and proved that remote work was viable on a large scale.
Looking ahead, hybrid remote work models and reduced business travel are expected to continue post-pandemic. The use of digital tools will likely expand, and skills like agility, adaptability, and resilience will be even more highly prized. The increased managerial concern for employees’ personal lives may also persist, marking a shift in the relationship between work and personal life.
Conclusion
Digital technologies have become integral to business operations, automating tasks, informing decisions, and demanding new skills from employees. The MaCuDE Management Task Force’s study highlights the ongoing importance of interpersonal capabilities, even as quantitative skills become a necessity in the digital age.
For business schools, the implications are clear. Curricula must evolve to provide students with hands-on exposure to digital tools and technologies, while also cultivating the soft skills needed to thrive in the new world of work. Developing a digital mindset—one that embraces continuous learning, adaptability, and an understanding of technology’s potential—will be key to preparing graduates for success.
The COVID-19 pandemic has accelerated many of the trends associated with digitalization, solidifying the need for adaptable leaders who can navigate rapid change and lead with empathy in an increasingly data-driven world. As organizations continue to transform, the role of managers and leaders will be critical in guiding their teams through the challenges and opportunities of the digital age.