Unlocking the full potential of digital transformation through technology and talent

Industrial companies globally face a conundrum: despite the continuous advance of technologies promising improved productivity and efficiency, productivity growth remains low. Many organizations are struggling to capture the full value of digital technologies, even though digital transformation is no longer a nice-to-have but a strategic necessity.

What sets those who are succeeding in end-to-end digital transformations apart from those who are investing but failing to see a return? A closer look at the exceptional performance of sites in the World Economic Forum’s Global Lighthouse Network suggests the real difference is a holistic approach that puts people at the centre.

The Global Lighthouse Network was co-founded by the World Economic Forum and McKinsey in 2018 to recognize organizations that lead in digital transformation – converting digital capabilities into tangible, sustainable impact across their operations, workforce and environmental footprint. These companies have delivered digital transformation and generated real value at their production sites, along their end-to-end value chains and through their business models.

The Global Lighthouse Network is packed with examples of the difference such a people-centred approach can make for workforces and customers. Johnson & Johnson gives one example on the impact of technology on customers looking for a more personalized experience. By scaling digital technologies across its end-to-end value chain to better connect its consumers, it increased its conversion rate by more than 40%. The company also harnessed intelligent automation to reduce costs by more than 30%.

A similar customer focus can be found in Tsingtao. With consumer needs for personalized, differentiated and diverse beer, this brewery automated quality management and optimized supply chain planning to reduce its lead time by 56% and cutting production scheduling time in half. It also increased its demand forecasting accuracy by 20%, reduced the need for product changes by 70% and increased brand preference by 37%.

Organizations in the Global Lighthouse Network all share a common approach: they understand that investing in technology alone is not enough — they must also nurture the skills and capabilities of their workforce to get the best out of these tools. This dual focus on technology and talent development allows these companies to implement cutting-edge solutions more quickly and to sustain and scale them effectively across their operations.

This is not surprising: companies that prioritize continuous learning and upskilling are better equipped to adapt to new technologies and seamlessly integrate them into their processes. This approach also empowers employees to take ownership of the transformation journey itself, fostering a culture of innovation and agility.

The results of such an approach are compelling. Both Siemens and HP, for example, needed a workforce that was prepared for the fourth industrial revolution transition. By focusing on complementary approaches of creating upskilling journeys for each worker profile, as well as mapping the digital technologies needed for its transformation to succeed, they ensured that new technologies were fully utilized. At HP, this led to a staggering 70% increase in productivity and a 10% reduction in time-to-market. Siemens saw a 50% increase in labour efficiency.

Another example can be found in Novo Nordisk. This global pharmaceutical company has successfully engaged its workforce in its digital transformation by leveraging success factors including upskilling, collaboration, user-centric experience, empowerment and communication. Across all use cases, a focus was placed on digitizing and optimizing the workforce shopfloor experience. This resulted in around 80% of the workforce engaging with initiatives arising from the digital transformation and spending ~10% of their time on reskilling.

Successful digital technology transformations require new skills and mindsets at all levels of an organization. A McKinsey survey of Lighthouses reveals these organizations are willing to make the necessary people investments to ensure success — including through new hires. Typically, Lighthouses hire about 25 new digital roles per 1,000 factory full-time equivalent workers to enable a transformation. Of those new hires, around 60% are in technology roles and 40% in operations, underscoring the importance of operations in driving through any transformation initiative.

Those organizations that are struggling to capture the productivity gains available from new technologies could start by creating an operating model to match. Here, companies focus on five essential questions and tasks to understand where change needs to happen:

What do you do today better than anyone else and how will that look in five years’ time? How will you evolve to achieve that?

Which skills are likely to remain relevant in future and how will you develop this talent?

Who are your best leaders and what sets them apart? How can you form a coalition and involve them in your transformation?

What is your team set up today and does it support innovation and improvement over and above standard tasks?

5. Define and invest in your tech stack

What technologies will you wish you had invested in five years from now? Is your tech stack flexible enough to accommodate new technologies?

Now is the time for organizations to learn from these Lighthouse leaders so that they can reap the benefits of digital technology and take a fresh look at the people power dormant in their talent pool.

To reap the real rewards of a digital transformation, a holistic approach is called for, one in which organizations transform by integrating technology and talent for optimum results.

Learn more about the application process to become part of the Global Lighthouse Network here.