We’ve already seen technology replace many simple tasks across industries, but what happens when more demanding tasks are delegated from people to systems? As AI and algorithms now enter knowledge intense businesses, such as law and audit firms, the traditional structures are challenged. Assistant Professor Frida Pemer explains what expertise that will be needed and how incumbent firms can prepare for a new future.
Frida Pemer was one of the speakers at Snapshot Breakfast: The Culture Cure for Digital. She is Assistant Professor at Stockholm School of Economics and currently leads a research project about digitalization of expertise.
One part of the project looks particularly into incumbent professional services firms – auditing and management consulting, engineering and PR/communication consulting, and legal services. What happens when a successful company, with a strong history, brand name and legacy, starts using AI and automation to a larger extent?
“Our first finding is that companies differ a lot in how they respond to digitalization and how they see culture as a means to transform,” says Frida Pemer. “Their response is mainly driven by their perceived sense of urgency.”
Auditing companies is furthest ahead, driven by external factors such as changes in regulations, technology and client demands. In management consulting, changes are pushed by internal factors to protect and preserve the expert role. Within legal, a lot happens in the US and UK while the Nordics is behind. PR/communication firms are not really affected yet, although some new AI and algorithm-based services are offered.
“One common consequence across industries, is the need for new tech competences,” says Frida Pemer. “Here we can see that culture is a big thing; incumbent firms have a strong culture, but now it gets in the way to change.”
How do you secure new tech competence then? Recruiting might be difficult; an established professional services firm might not have a strong brand name among data scientists or engineers. Reskilling is probably a better option but requires continuous work. It’s also necessary to keep the staff; even if you’re successful in recruiting it isn’t much worth of people quit.
What to do then? Stop focusing on seniority, recruit people directly from school and revise your reward system to retain employees. New competences aren’t captured by the old performance metrics. Invent new KPIs and new career paths to make it possible to move differently within the organization. Also, be prepared that all this will impact the company culture.
“The existing system has served some well, and the group lest willing to change are those who have invested much in the traditional system,” says Frida Pemer. “It’s important to get them onboard as well.”
The changes will challenge firms with a homogenous group of people, like law firms, on a structural level as well. Traditionally, organizations are structured as a pyramid with a clear path for employees. Now, many organizations start with dynamic, agile structures where cross-functional teams can scale up and down.
Any advice to companies determined to both survive and thrive in the digital era? Look outside your industry for inspiration and translate good ideas to your own business. Encourage bilingual skills (both in technology and the very profession) and reversed mentoring where tech savvy juniors teach seniors new skills. You also need to understand what happens when you start to tweak at different layers of the organization, and to be able to pinpoint your underlying norms and culture to be credible.
The millions of dollars invested in a company’s digital journey, is money wasted if the workforce isn’t onboard. Work cultures, however, can be complex, slow moving and complacent. Leaders need to intentionally reshape the organizational culture.