Leaders in manufacturing and industrial operations understand that digital transformation is a crucial endeavor. In fact, digital transformation spending is expected to reach $2.8 trillion USD in 2025 alone, topping $10 trillion in total from 2021 to 2025, according to the IDC’s latest Worldwide Digital Transformation Spending Guide.

However, we’re observing 70—95% of these digital transformations are failing to deliver the promised ROI. What’s the one simple reason for this? Companies are not addressing the human dimension in the human-machine equation.

The current state of digital transformation

Digital transformation was already underway before COVID-19, but the trend accelerated exponentially during the global crisis, creating new challenges and pressures to reinvent processes, systems and operations. Technology has advanced considerably, while societal factors, such as resource scarcity, inflation, geopolitical conflict and strained infrastructures, contributed to a complex dilemma for industrial leaders.

The solution at the time was for operations to equip themselves with mixed bags of digital solutions like AI, machine learning, 3D printing, open architectures, blockchain, cloud technology, mobile capabilities, autonomous vehicles, internet-connected sensors and big data. But, despite the technical advances, the “best tools” are demonstrating less powerfully.

In working with our industrial clients, Korn Ferry has identified three specific talent-related areas that need to improve in nearly all digital transformations, which we detail below.

1 Redefine digital leadership

If your tech investments aren't paying off, it's time to consider how your leadership must evolve and how to reposition the changing face of leadership by encouraging fundamentally different skills.

There are six areas leadership must modernize to better support digital transformation: behaviors, skills and experiences, populations to lead, ways of building teams, decisions to make and ways of growing.

Today's high-performing digital leaders have a unique set of traits (natural tendencies), competencies (skills and behaviors) and drivers (values). They are curious, adaptable, collaborative, confident and assertive. Digital transformation requires a fundamental behavioral shift.

Previously, leaders were technical, process-oriented, reactive and preoccupied with perfection. They relied on authority and experience and needed complete data to make decisions. New leaders can leverage influence and elevate creativity to innovate for the future, even with incomplete data. They aren’t afraid to experiment and focus on excellence at the core and speed at the edge.

These new leaders may be internal candidates, who have the advantage of knowing the ins and outs of the organization—as well as personal connections that can help teams to welcome new technology and processes. Or they may be external candidates who offer fresh perspectives, especially those with unconventional career paths or Interim experience that have a pioneering spirit, curious enough to try new endeavors with a high tolerance for ambiguity.

2 Reimagine digital operations

While technological advancements improve visibility and accessibility to products, people and information, businesses need nimbler ways of working and new workflows that help everyone accomplish their goals. Planning and execution, for example, is no longer an isolated exercise but a continuous and iterative process.

High-performing companies harness the value of Industry 4.0 by re-architecting the job, developing their people and strengthening the skillsets and mindsets they need. Simply purchasing new technology won't get results. Leaders must also champion the latest technologies and support teams as their jobs change. This support can include, for example, explaining how automation can eliminate specific tedious tasks. It can also include setting employees up for success by acknowledging the disruption to their usual workflows, helping them understand why change is essential and showing them how they fit into the future.

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3 Reskill your digital workforce

True transformation will occur when the workforce of the future is prepared and supported. To recognize the return on automation technology investment, organizations must build an upskilled and reskilled workforce that bridges the gap between people and machine, dedicating resources to learning and development.

Simultaneously, employees must be inclined and encouraged to learn new skills and take on new responsibilities. As the next industrial revolution unfolds, businesses need employees with new skillsets to perform in a more dynamic, digitized work environment. A digital workforce not only requires high skill levels in data fluency, systems mentality and quick decision making but also learning agility, adaptability, collaboration, effective communication and tolerance for ambiguity.

Manufacturers shouldn't choose between developing in-house talent and looking outside the company for people who have digital skills. Rather, they can take a hybrid approach by identifying the necessary skills and competencies within their existing employee population, nurturing the people who already know the workings of the organization and seeking external candidates to fill specific vacancies.

Take the next steps to focus on transforming your talent

Many organizations have already poured time and money into technology; now it's time to shift the focus to people. Investing in skills and mindsets can help your organization take full advantage of the latest tools, giving you a competitive edge in today's complicated industrial landscape. After all, even as automation rises, people and machines still must work together.

Download our whitepaper for a detailed approach to prioritizing people in Industry 4.0.