Driving Digital Transformation: Lifelong Learning and the Revolution in Corporate Skill Management

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The Challenge: Social ageing affects growth

It’s a well-known fact that we live in a world with an aging population. People aged 60 and older now make up 12.3 percent of the global population, and by 2050, that number will rise to almost 22 percent[1]. This is largely due to a decline in fertility rates and a rise in life expectancy in developed countries. A less known fact is that these aging populations are having a direct effect on economic growth. In fact, forecasts[2] suggest that we can expect to see very low gross domestic product growth in countries such as the US, Germany and Japan through to 2030 and beyond.

These trends are in turn changing the shape of the industry. While in the early 1980s, items such as food, clothing, and cars attracted a great deal of household expenditure, today medical care, transport and communications have by far overtaken them. Furthermore, increasing urbanization is shifting demand and technology into new sectors. While traditional industry remains slow, those businesses with more “urban” business models, such as security, telecoms, logistics, are currently outperforming the market. Older generations are changing too. The next generation of 60+ year olds will be the first to be heavy users of technology, in particular smartphones and tablets, which pushes an increasing part of our business into the virtual world.

Employers also have a challenging time in store. There is a looming shortage both of workers and skilled workers. Japan already has almost 40 percent fewer 5-14 year olds than its current population of 35-44 year olds and, in comparison to the 1990s, only half the number of students are leaving school today.[3]

Employers will not only feel the pinch from a much smaller workforce, they will also discover that the share of the trained workforce is shrinking even faster. When today’s 5-14 year olds enter the workplace, about the same number as today will have graduated from university or dropped out of education. However, the backbone of the workforce, highly trained individuals graduating from vocational training and colleges will have fallen by 66 percent in comparison to the current group of 35-44 year olds. In other mature economies, these demographic will only be mildly more benign. In Germany, for example, the “missing skilled workforce” will also be two-thirds smaller – but in this case only compared with the generation of currently 45-54 year olds, because the economy has been ageing more gradually, for longer than in Japan and much of Asia.[4]

How technology can fill the gap

Fortunately, there are steps that businesses can take to mitigate this future shortage in workers. Emerging technologies have the potential to step up to fill the deficit in the workforce. In particular, digitization and the Industrial Internet of Things (IIoT) are well placed to help increase productivity and reduce the otherwise heavy workloads that would otherwise inevitably result from a diminished workforce.

We’ve already seen a 20 percent year on year growth of the IoT market between since 2010 and we are on the cusp of a digital revolution where ever more businesses embrace digitization. Currently the IoT is predominantly found in consumer devices but other industries, such as transport, retail, utilities and agriculture are beginning to catch on.

Fujitsu has demonstrated how implementing smart technology can benefit agriculture, one of the oldest industries known to man. In Japan it is also an industry with the oldest population of workers, as the average age of Japanese farmers is now 67! The industry is also characterized by small, widely dispersed farms whose production costs per hectare is significantly higher than larger farms that are able to benefit from greater economies of scale.

Fujitsu introduced its Akisai cloud, designed specifically for the agricultural industry, into this challenging environment. Akisai allows farmers to use mobile devices to collect and store farming data, while having levels of access to environmental data at their fingertips, such as rainfall, temperature and planting information. Smallholders can also receive analytical services on input such as hours worked, output from employees and use of fertilizers, to the levels of insight that are on par with major businesses. Analysis of this data provides valuable insights that can help them improve efficiency. The same service also connects distributors, agricultural regions and consumers through an enhanced value chain that can only be matched by much larger farms with huge operations and the ability to invest into technology and market development.

IT-based lifelong learning will complete the workforce transformation

However, the availability of new technologies is only one important element of a successful digital transformation. Technologies and investment are only as good as their implementation by companies, managers and employees. How will companies manage in effectively implementing the current boom of new technologies with an increasingly older workforce? As the available workforce shrinks, we will not only see the corresponding drop in the number of highly educated workers, but also companies will have to innovate with increasingly fewer young people loaded with new ideas and technologies. Employers will have to keep their increasingly older workforce up-to-date for implementing the ongoing digital transformation. In other words: It is becoming clear that the so-called Silicon Valley Model of innovation and transformation, where young people come out of university and change the business world through ideas and innovation, is broken for most ageing societies. To make up for the shortfall in young talent and ideas, companies will be forced to focus more on the digital transformation for education and in relying on their existing workforce for co-innovation much more than in the past.

Traditionally, the majority of an employee’s education was formal, undertaken in school and university, before that individual reached the workplace. Today’s rapid changes in technology and business practices and the fact that individuals are likely to change positions – or even careers – more often while having to work for much longer in their lifetimes is leading to the reversal of this trend . Education is now shifting to focus far more on professional development and the informal learning that people do when working and living once they have entered the workplace.

To support the demand, we are already seeing a boom in online vocational training, and universities are now offering virtual classes and corporate programs to better appeal to businesses. In the US, 71 percent of colleges now have online offerings, and three quarters of these courses are recording the same or better results than traditional courses, while we’ve also seen an eight percent year-on-year growth in terms of e-learning. The increasing availability of massive open online courses (MOOC) also offers more opportunities for learning, because materials and entire seminars from the world’s top universities are becoming available for use in vocational training and training centers around the world. Georgia Tech, Udacity and AT&T, for example, have already teamed up to make use of top of the line MOOCs as well producing an online Master’s degree in Computer Science delivered through an MOOC platform of their own.

In parallel to the uptick in online educational opportunities, we have seen the exponential growth of corporate platforms that provide a convenient interface to opportunities for skill development and corporate education. Platforms such as Oracle’s Taleo, SAP’s SuccessFactors and Lynda combine new opportunities for formal learning with corporate IT. When you add social networks and peer groups to the mix, you have fully blended learning that allow for personalization and a much wider range of informal learning possibilities. Not only is content available via the ubiquitous smartphones, tablets and devices that we all carry, to be consumed at a time and location that is convenient to us, but we can also have it personalized to our individual requirements.

And it’s working. We are seeing a boom in university graduations in both the USA and Germany, many of whom are much older and already working students. In Germany, where university and college education has always been almost exclusively public, booming private colleges now cater to a much broader audience while offering a huge variety of skills, certificates and degrees. In the USA, we’ve seen a 200+ percent increase in students over the age of 35, while online and mid-career study options are lifting the share of students over 25 years old  to 38 percent of the population.

Strategies for the future

The evolving skills gap could prove to be a ticking time bomb if not addressed by business and governments by planning well ahead of time. Fortunately, technology and digital transformation are not only offering the opportunity to offset the future lack in manpower through higher productivity and efficiency. Digital transformation is also revolutionizing education and corporate skill management, beyond what has been possible in the traditional, school and university-based education system when only teaching young people at the start of their careers.

By embracing and developing lifelong learning strategies, enterprises can develop the necessary possibilities in augmented online learning, vocational training centers and continuous skill development, while unlocking the entirely new potentials of internet-based non-formal learning that the millennial generation is already enjoying today.

If you want to know more about how Fujitsu is Driving Digital Transformation please follow #Fujitsu Forum 2016 and the livestreaming of President Tatsuya Tanaka’s keynote on Thursday, May 19, 9:30-10:30 JST.

[1] United Nations Population Fund

[2] data from IMF-WEO, OECD

[3] MIC Statistics Bureau Japan (2016)

[4] Source: Puls(2015); German National Office for Statistics (Statistisches Bundesamt).

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