2018

STATE OF DIGITAL
TRANSFORMATION
AND TALENT REPORT

beta@smithandbeta.com
http://smithandbeta.com/
@smithandbeta
EXECUTIVE SUMMARY
In the second decade of the new millennium, the most successful
businesses realize that people capabilities equal business capabilities.
Training employees is critical. Continual learning, the ability to move
employees’ capabilities forward, is part of work. Technology now allows
employees to quickly research, learn and apply new skills despite shifting
priorities, uncertainties and daily pressures.

What’s new in 2018? This report could be summarized as ‘what’s not

new.’ For many companies, capabilities remain stalled. There will continue
to be winners and losers. Winners will continue to operate with people at
the center of their business model. Five summary points contained within
this report:

1. Businesses are experiencing skill deficits, capabilities are not evenly distributed.
2. There is an overreliance on experts. Skillsets do not scale.
3. Transformation is part of everyday business strategy, which requires new skills.
4. Businesses remain focused on talent acquisition vs talent development, despite the costs of double digit turnover rates.
5. Employees are actively seeking solutions for evolving their own capabilities and ways of working.

The data contained within this report confirms that employees’ skills are
not up to speed. Most businesses do not have the capabilities needed in
their current role, much less to advance within their organization.

Skills matter and so does the truth about those skills.

Table of Contents

1 Welcome
2 Cha-Cha-Cha-Change
3 Learning Investment
4 Learning [R]Evolution
5 State of Actual Capabilities
6 State of Actual Capabilities (cont.)
7 Capabilities that Matter
8 Capabilities that Matter (cont.)
9 Talent Transformation
10 Get started
11 Bibliography
WELCOME.
In 2018, the spirit of reinvention is contagious. The savviest businesses have moved to a more
iterative, responsive and customer-focused way of working. “…Companies need to become more
like living businesses, building and sustaining symbiotic ties with their customers…”1 The skill sets
required to succeed in marketing and advertising have changed. Digital and technology – from
voice to blockchain–continues to challenge how we work, what we create, and who we hire and
retain.

Employee capabilities, i.e., their skill set, mindsets, behaviors, and habits, are at the center of
organizational transformation. Businesses change when people change. Rick Gomez, Exec VP and
CMO of Target was quoted in a recent Forbes article, “It’s our people—because people separate
great brands from average brands. So we’re investing more in growing and developing our team.”2
It’s the individuals that matter.

If talent is truly a company’s most valuable asset, then we must understand what
employees are capable of and continually help them evolve and improve.

At smith & beta, we have a privileged view inside leading companies. Our work, in any given year,
includes evaluating ways of working and designing training programs to address culture and
competitiveness. The 2018 State of Digital Transformation and Talent Report tells a story about
current capabilities at select companies across multiple categories.

The data in this report includes insights collected from over 1,100 employees of smith & beta
clients. We’ve also included data from a survey sent to CMOs and marketing leaders during the
CMO Roundtables produced by the Association of National Advertisers. This data is aggregated
from employees and leaders who shared their skill set levels, opinions about the state of company
transformation, and what’s needed to evolve.

So, let’s dig in.

1. John Zealley, Robert Wollan, and Joshua Bellin, “Marketers Need to Stop Focusing on Loyalty
and Start Thinking About Relevance,” Harvard Business Review, March 21, 2018.

2. Jenny Rooney, “Here’s What Will Command CMOs’ Attention In 2018,” Forbes, January 8, 2018. 1
 65
of employees say
% their company talks
Cha-Cha-Cha-Change more than it makes

How brands connect with customers looks different today.

“Amazon—which for years has been growing at over 20%

24
say their company
a year—is not slowing down. Instead, its growth rate is
accelerating.”3 But not all businesses are experiencing the % is threatened by
same Amazon-like acceleration. For example, Facebook’s technology
dominance is shrinking. “78% of 18- to 24-year-olds use
Snapchat, and a sizeable majority of these users (71%) visit
the platform multiple times per day.”4 Twitter is finally making
money, but their audience is not growing.5 Shifts in platform

52%
preferences are overwhelming and also expected. Customer
of employees do not know
centricity and experience design are prerequisites for success. the type of digital work
their company wants to do
Given rapid changes in technology, platforms, consumer
behavior, and new ways of working, companies are examining
“employee readiness” and investing in scalable transformation
efforts. Yet, our data reveals that some companies are more think their company
“ready” than others.

57% does not have the right

processes that involve
the right people

“ The digital world is critical to the consumer decision and

purchase cycle and not being in-touch with that makes

52
it harder for brands to be successful in today’s retail and do not believe their
%
digital landscape.
”
– ANON survey respondent company is fast
and iterative

3. Peter Cohan, “3 Reasons Amazon is the World’s Best Business,” Forbes, February 2, 2018.

4. Aaron Smith and Monica Anderson, “Social Media Use in 2018,” Pew Research Center, March 1, 2018.

5. Jacob Kastrenakes, “Twitter lost users in the US again, but it finally made a profit,” The Verge, February 8, 2018. 2
 Learning
of marketing leaders Investment
96% want to evaluate
their team’s
capabilities in 2018
Are capabilities evolving quickly enough? A good indicator
is a company’s investment in and commitment to learning.
Many leading companies are actively reinventing skills,
processes, and structures which requires a dedicated talent
development effort. Learning is not a single workshop, but
part of everyday work.

As underscored in the 2017 report The Digital Talent

Gap—Are Companies Doing Enough?, employee education
centered around digital skills and fluency are needed more
than ever before. Over half of all respondents identified the

“ Skill set and capability evolution is a natural part/need

of daily job execution
”
– ANON survey respondent
digital talent skills gap as a major contributor to missed
business opportunities.6 Learning, particularly in areas of
digital and technology, is the new business currency.

Shifts in how employees work each day require new types of

skill sets across every department. Companies cannot rely
on hiring superstars to solve for lack of overall capabilities.
Experts simply do not scale. “It doesn’t matter what business

“ I think we want to have a culture that supports evolving

our digital capabilities, but the infrastructure is not in
you’re in, superstars, by themselves, don’t scale.”7 There’s a
new focus on skill distribution, which allows for generalists
place,
”
– ANON survey respondent to shine and build new skills daily.

Despite the need for new capabilities, if you ask most

employees, they believe that change is not happening fast
enough. Speed is important, but so is getting employees
involved in the capability transformation process. “Only
around one third (36%) of organizations say both senior
executives and middle managers share a common vision of
digital transformation.”8

6. Nick Kostov and Stacy Meichtry, “Ad Industry’s Digital Upheaval Rocks WPP; Shares Tumble,” The Wall Street Journal, March 1, 2018.

7. John Winsor, “5 Ways to Save Agency Holding Companies From Becoming Irrelevant,” Adweek, March 12, 2018.

8. “Understanding Digital Mastery Today,” Capgemini Digital Transformation Institute, 2018.

3
“ Please describe the ocean in which we are drowning.
– ANON survey respondent ”
96 % say training is needed
to evolve skill sets

Employee
Learning [R]Evolution
34
say they’ve attended
There is a learning revolution happening in the % training at their
workplace. Particularly with a younger demographic. current company
A recent ManPower Group survey of 19,000 working
millennials across 25 countries found 93% see
ongoing skills development as important to their future
careers. 80% rate the opportunity to learn new skills
as a primary factor in considering a new job, and 93%
want lifelong learning and would spend their own time

“
and resources on further training.9
I believe employee training and
Employees are actively seeking new learning development is an afterthought and
opportunities at work. “Most companies already have often eliminated when budgets are
a suite of online learning modules that employees can
access on demand. Although helpful for those who
have clearly defined needs, this is a bit like giving a
reviewed.
” – ANON survey respondent

student the key to a library and telling her to figure

out what she must know and then learn it.”10 It’s not
enough to invest in online learning and hope for the
best. Talent development requires a consistent and

47
say their company is not
varied effort, with a focus on application of skills.
% prepared for the future
work of the industry

9. Mason Stevenson, “5 Learning Trends and Strategies to Watch When Developing

Millennials,” HR Exchange Network, June 18, 2018.

10. Peter Cappelli and Anna Tavis, “HR Goes Agile,” Harvard Business Review, March 2018. 4
State of Actual Content Strategy
9% 12% 17% 35% 21% 6%

Capabilities
Employee opinions about organizational-level 73% “Middle of the road” or below 27%
shortcomings remain consistent among those
we surveyed. Capabilities do not match demand. Cross-Platform Storytelling
Employees are being asked to do more advanced 9% 10% 15% 34% 22% 10%
and complex digital work, yet do not the right skills.
Despite these shifts, some businesses are not
taking the steps necessary to address individual and
organizational deficiencies. Employees overwhelmingly 68% “Middle of the road” or below 32%
acknowledge the need to improve their work and learn
more to keep up with evolving needs of clients and User Experience
customers. 8% 15% 21% 34% 15% 7%

“ Digital is changing so fast. To do it

right, we need to be thinking, testing,
constantly learning and applying that
78% “Middle of the road” or below 22%
Presenting Digital Ideas
knowledge to different situations

”
13% 16% 17% 29% 19% 6%
and opportunities. – ANON survey
respondent
“Totally Unfamiliar”
75% “Middle of the road” or below 25%
“Total Newbie”

Presentation
“Novice”
28%
11% 15% 34% 21% 34% 40% 15% 13% 7%
“Middle of the Road

“Semi-Expert”
“Expert” 47% “Middle of the road” or below 53%

5
 of survey respondents

34%
said their organization
does not know how
to collaborate among
multidisciplinary teams State of Actual
Capabilities
Employees are being asked to work in new ways and change how they interact with each other. At smith & beta,
we are often asked to design learning experiences that improve employee connectivity and group dynamics.
Often, when an employee is asked to learn something more technical (or just not close to their core expertise),
weaving in topics like courage, curiosity, flexibility, and other mindsets are critical.

“Totally Unfamiliar” “Novice” “Semi-Expert”

“Total Newbie” “Middle of the Road” “Expert”

Risk Taking
11% 47% 42%

58% “Middle of the road” or below 42%

Conflict Resolution
6% 35% 43% 15%

42% “Middle of the road” or below 58%

Providing Feedback
7%
8% 32%
15% 21% 43%
34% 15% 18%

39% “Middle of the road” or below 61%

6
 “Totally Unfamiliar” “Novice” “Semi-Expert”
“Total Newbie” “Middle of the Road” “Expert”

Social Media: Platforms, Behaviors, and Culture

9% 9% 19% 32% 20% 11%

73% “Middle of the road” or below 27%

Mobile Advertising Strategy
14% 18% 26% 28% 11% 3%

86% “Middle of the road” or below 14%

Mobile: Platforms, Behaviors, and Culture

Capabilities 9% 14% 22% 29% 19% 7%

That Matter
74% “Middle of the road” or below 26%

When employees possess the capabilities required to data reveals that 86% of survey respondents claim
succeed, they are more connected and engaged. They they are below expert in mobile advertising strategy.
remain in their positions and have greater impact long- Very few are comfortable navigating mobile platforms,
term. Culture shifts. Employees are more optimistic. devices, or consumer behavior in their current position.
The collective shift in employee knowledge creates a Lack of mobile knowledge is more common that most of survey respondents

85
groundswell that impacts everything from financials to leaders care to admit.
meetings. % claim to be “Middle of the
road” or below in Mobile
Social Media is another capability that many leaders
Design or Development
Without a doubt, many of the new capabilities required assume is a strength versus a weakness. Social is an
at companies today are connected to digital and integrated part of daily life. Nearly 70% of Americans
technology. “Digital” capability building is a priority for are on social media - including 86% of 18 to 29-year
training often with a focus on data, metrics, social and olds and 80% of 30 to 49- year olds.11 Yet, many
mobile. With a device in almost every pocket if you employees lack a deeper understanding of social
don’t know mobile, you don’t know marketing. Yet, our media platforms.

11. Aaron Smith, “Record shares of Americans now own smartphones, have home broadband,” Pew Research Center, January 12, 2017.

7
Capabilities That Matter
Some capabilities are more valuable than others. For most businesses, the ability to prototype ideas, leverage
customer data and produce relevant content is essential. When these three capabilities are distributed across an
organization, there is more creativity, connectedness and confidence among employees.
“ Over the years clients have agreed
that prototyping is important, but often
struggle with applying this skill to
everyday work. We’ve seen a dramatic
Customer-centricity and experience are also important capabilities. Some companies, like Sephora and Zara,
change in ways of working and output

”
are leading the way. “For Zara, it is all about the customer—experiences for the customer, exchange with the
customer, Evangelism through the customer, and being every place for the customer.”12 Designing customer when prototyping is adopted.
experiences is not new, but experience design is not a common capability outside of software and design - Allison Kent-Smith, CEO smith & beta
departments.
“Totally Unfamiliar” “Novice” “Semi-Expert”
“Total Newbie” “Middle of the Road” “Expert”

Customer Journey 2%
12% 12% 10% 38% 21% 7% 6%
8%
Prototyping
72% “Middle of the road” or below 28%
39% 1
2
Failing to meet
client expectations
27% 21% 21% 17% 9% 5% 3
4
5 Exceeding client
expectations

86% “Middle of the road” or below 14%

49%
KPI/Metrics/Data Analysis
15% 14% 23% 26% 15% 7%

78% “Middle of the road” or below 22%

Nimble Content Creation
12. Pamela N. Danziger, “Why Zara Succeeds: It Focuses On Pulling
32% 21% 17% 19% 8% 3% People In, Not Pushing Product Out,” Forbes, April 23, 2018.

89% “Middle of the road” or below 11%

8
The need to transform employees’ capabilities is

“
paramount to business survival. Many leaders and
Retaining great talent seems to be the

”
their staff feel the pressure to continually learn, but are
overwhelmed with where to start. At times, companies
one notable deficiency.
are paralyzed by the requirements of transformation - ANON survey respondent
and employees are experiencing the impact.

Most companies cannot hire fast enough to solve for Despite employers’ focus on hiring the right talent,
lack of capabilities across the organization. Yet, talent employees aren’t confident that their company is Talent
Transformation
acquisition still preoccupies human resources and making the right talent investment.
people operations strategy (and budgets) each year.
Companies often consider “buying talent” as the first Less than 50% of survey respondents believe
move to solve for lack of capabilities. Unfortunately, their company hires the best talent in the
hiring does not meet demand. There are still industry.
employees walking in the doors each day who need to
quickly evolve what they know.

“

Due to constant change, adaptation is needed to remain relevant, responsive, and effective.
- ANON survey respondent ”
True
False
We hire the best talent in the industry

57% False 43% True

of respondents state

32%
We challenge ourselves to evolve digitally that their company is
not challenging itself
32% False 68% True to evolve

We can anticipate the needs of digital execution

38% False 62% True

9
Three Critical Steps to Take
1/ 2/ 3/
Start with employee capability data Design work-connected learning experiences Measure the impact of learning
Many businesses lack the data on actual capabilities Once you understand more about the actual To ensure that learning becomes part of everyday
of employees. Begin with a simple capabilities capabilities of employees, design ongoing learning work, companies should measure the impact of
assessment across your organization. This simple experiences to support transformation. Program education initiatives. Measurement should focus on
survey should list the capabilities and mindsets that design should consider workflow, processes, culture, how processes, ideas and financials are changing.
you believe are most valuable. Think about now and and dependencies such as how employees would Take the time to understand what business areas
into the future, what skill sets are difficult to find but like to learn. Best advice: take the time to design could greatly benefit from improved capabilities
absolutely necessary for success? Ask employees to for application of skills and make sure to provide such as reducing rounds of revisions, increased
take the survey anonymously. Take a close look at the immediate opportunity to learn “back at the desk”. collaboration, or customer satisfaction – then measure
results, do employee’s self-reported capabilities match Application is key and can make all the difference in improvements in those areas. Put perennial systems in
business needs? your capability investment. place to measure progress.

Get Started

Capability deficiencies are not an isolated business condition, but a chronic one. At smith & beta we encourage
our clients to access the capabilities required and invest in continual talent development – ongoing. Evolving
capabilities is not a one time investment. Learning never stops. Consider the possibility of 25% to 40% of your
staff reporting their skills as “novice” in some of the most critical areas such as mobile, social media, data and
analytics. It’s okay to panic, but what’s needed is action.

No outside force can shape employees to be competent or innovative. There’s no magic workshop.

So, let’s get started.

10
Bibliography
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“Marketers Need to Stop Focusing on Loyalty and Companies From Becoming Irrelevant,” Adweek,
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start-thinking-about-relevance
8. “Understanding Digital Mastery Today,”
2. Jenny Rooney, “Here’s What Will Command Capgemini Digital Transformation Institute,
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11