Thawing the frozen middle

Close to US$3.8 trillion was expected to be invested by businesses in digital transformations in 2019, up 3.2 percent on the previous year, as companies try to transform the way they work in the face of technological change, market disruption, and unrelenting competition. But what kind of bang are these companies getting for their buck? Global productivity is all but stagnant in the biggest economies, and barely half of organizational transformations and 40 percent of technological transformations achieve their goals. The urgency has never been greater for businesses to diagnose the problem and make the most of this capital spending: The pace of technological change shows no signs of slowing, but, according to the International Monetary Fund, economic growth is hitting the brakes.

The assumption has always been that when something goes wrong with a transformation, it’s the implementation, rather than the original strategy, that’s at fault. Top management has a vision; the vision is translated into detailed plans. So far, so good. But somewhere along the way, the change stalls — and accusatory eyes turn to middle management. Yet there’s evidence that middle managers, who need to be the agents of any transformation, engaged in the right way, can deliver outstanding results.

The key is unlocking the skills that will produce the returns. We would argue that these skills are the ones that augment automation and are not replaced by it: emotional skills such as creativity, problem solving, and resilience. We would argue further that it’s not just middle managers who need upskilling in their ways of working. Leadership has to understand its role in motivating and incentivizing its workforce to embrace new ways of working and find ways to redeploy talent into value-creating activities once it is freed up by automation.

In his study of a major transformation program by a large telecom company, Quy Nguyen Huy, professor of strategy and management at