Companies are investing heavily in AI and digital transformation, yet according to research some 70% of all trajectories fail. The main cause? Organizations are simply not ready. Talent management is therefore gaining strategic importance, argues Prof. Henk W. Volberda, professor of Strategy & Innovation, expert member of the World Economic Forum and project leader of the Dutch Innovation Monitor.

In this episode, SkillsTown speaks with professor Henk Volberda about "social innovation" and why talent development is the most profitable investment a company can make.
As a scientist, Volberda has been researching how companies deal with digital transformation for years. Together with his team at the Amsterdam Centre for Business Innovation, he developed the DX300 survey for MT/Sprout: an annual scan among thousands of business decision makers.

The scan shows how organizations are doing in terms of digital maturity. ING has topped the list for three years in a row, and that is no coincidence, according to Volberda. What ING and other leaders do well starts with recognizing a fundamental fallacy.

Social innovation as a lever

"Many companies invest in technology without asking themselves whether the organization is ready for it," Volberda argues. "I call that the technology fallacy. The misconception that digital transformations are primarily about technology, when in reality people and organizational culture are the decisive success factors. That 'soft side' of the innovation process is what we call social innovation."

Volberda argues that many companies are now investing in AI, but often they don't have the data housekeeping in order. "AI is nothing but machine learning, so without good data you have nothing." According to Volberda, digital transformation requires a fundamentally different way of working. And that will only succeed if people can learn and adapt.

"Only 25% of innovation success comes from technology. The other 75% depends on how you get people to learn, work and change."

"We have been researching digital transformation projects for many years, including for the DX300 survey," Volberda said. "This shows that only 25 percent of all innovation success comes from investing in new technology. The other 75 percent depends on how you set up the organization. Social innovation is about leadership, collaboration, and how you organize learning and development."

Companies that invest in both technology and social innovation are often more successful, according to numerous studies. Volberda: "They can quadruple their turnover from new products and services. But many organizations do not dare to do it, because you first have to go through a dip. We call that the J-curve. First the performance deteriorates slightly, because everything has to change. Only then comes the field hockey stick effect. Many managers are shocked by this."

The skills crisis of 2030

According to the World Economic Forum's Future of Jobs report, which Volberda contributes to with his research center, in five years about 40 percent of our professional skills will be obsolete. "We literally have to reinvent 40 percent of ourselves," he states. "At the same time, entirely new jobs are emerging. 65 percent of children who are in grade 3 today will soon be doing work that doesn't exist today."

Ironically, on balance, technology is creating more jobs, a 7 percent growth rate. "But the mismatch is widening," Volberda warns. "New positions require different skills and are mostly in digital sectors. 11 percent of the current workforce is unlikely to keep up in 2030."

Therefore, investing in both broad and deep knowledge should be top priority. "We don't know exactly what skills the future demands," said the professor. But we do know that we need to train people to be learning, agile professionals."

"If you want to be a frontrunner as a company, you not only need people who specialize further, but also broaden their knowledge base so that they can also communicate with employees from adjacent functional areas."

In addition, the report states that by 2030, only a third of work will still be done entirely by humans, along with their AI agents or other tools. Therefore, it is important for companies to start working hard on the technological literacy of their employees. At the same time, skills such as creativity, empathy and curiosity, are becoming increasingly important.

"Anything you can routinize and standardize, an algorithm is much better at that than we are," Volberda says. "What sets us apart as humans is our intuition, empathy and creativity. What we also see is that analytical and cognitive skills remain important, but are increasingly combined with creative and social skills."

There is also a danger in our growing dependence on AI. "I do see that my confidence in my own skills is waning slightly as I become more and more dependent on ChatGPT. If you no longer understand what an AI is doing for you, you are also no longer able to judge its quality. You need basic knowledge to monitor quality."

Read the entire interview with Henk here