Leading in the digital age

What does it take to lead in digital business

I closed out in last week’s blog that we are in the next industrial revolution, the digital age.  Technology is disrupting all things in business and society and that the need for a ‘different type of leader’ will be key to success.

Leadership has always been about people who had reached the top of their organisations and were “in charge” through the good old fashioned promotion ladder approach.

Business leaders must recognise that they need leaders at all levels of their organisation.  No matter the position, or responsibility, everyone has to be accountable for creating value for the customer.  Experts in leadership have been adding new leadership characteristics such as authenticity, emotional intelligence as well as the abilities to establish relationships and build trust as essential for today’s leaders.

A study by Westerman, Bonnet and McAffee looked at what 184 organisations from multiple industries are doing in response to the opportunities offered by the digitalage.  They analysed the organisations in 2 dimensions:  1. how much time and money they are spending in implementing new digital capability, 2. If they were also building new leadership capability required for the Digital Age.  Using these two dimensions, they grouped theorganisations into 4 groups as represented below.

“Source: Capgemini consulting adapted from the book “Leading Digital: Turning Technology into Business Transformation”, Harvard Business Review Press, 2014″

Beginners: Have not yet invested in the leadership capability or the digital tools to effectively use Digital Age tools.

Fashionistas: Have invested in digital tools, but have not invested in developing the new leadership capabilities needed in the Digital Age.   

Conservatives: Are developing new leadership capabilities, but are not sure which digital tools they should adopt, and are not able and willing to spend the time or money investing in what is needed. 

Digital Masters: Are developing new leadership capabilities, and then using them to select and implement the digital capabilities needed for success. 

The difference in the financial performance of these 4 groups showed strong evidence of the importance of investing in developing Digital Age Leadership capabilities in order to select the most effective digital tools for your company needs.

Many organisations have already introduced  good leadership programmes and these should not be replaced, but rather businesses should seek to enhance them by introducing 5 new capabilities. 

To introduce the 5 Leadership Capabilities and illustrate why they are essential, lets quickly review 4 primary types of organisations that have evolved since the start of ‘modern business’, up to the present.

The Functional Hierarchy was formed to optimise value during the industrial age to bring the value of scale.

The Matrix organisation was formed to better meet the needs of customers, providing more variety and flexibility in product offerings by leveraging the tools and capabilities of the information age.

The Alliance organisation was formed to respond to the increasing demands of doing business globally in a world where communication and information technology both demanded and enabled faster response to customer’s needs.

The Value Network organisation was formed to leverage the opportunities of the digital age to optimise stakeholder value by placing the customer in the centre of decisions and actions to act on the customer insights gained from customer intimacy.

No matter what your job, or what industry or vertical of business you work, you are no doubt feeling the effects of the Digital Age.  Those effects will only increase and accelerate.

Let’s now drill into the leadership capabilities needed to win in the digital age.

Capability 1: Leading Beyond the Edge: The digital age leader must have the abilities to lead beyond the edge of their formal authority. They now have to lead cross-functionally but still within the edge of their organisation.

Capability 2:  Building Trust, rather than relying on formal authority, as the basis for leading:  Leaders can no longer rely on formal authority as their source of authority to lead members of their teams studies of highly effective cross-functional teams revealed that the ability to build and maintain deep trust relationships was more effective as a foundation skill for leadership.

Capability 3:  Forming and Leading Virtual Teams:  Virtual teams are teams or groups that slice across departments, organisations, skills and can be geographically dispersed.  Members can occasionally meet in person, but most often coordinate their work through information and technologies in order to achieve a common goal.

Capability 4:  Collaborating and Co-Creating:  Collaboration is more than just working together or cooperating with others.  When people collaborate and co-create they must trust one another and share expertise willingly to achieve a common goal.

Capability 5: Finally learning dynamically: if everyone has the digital age tools and processes available to them how does any one organisation win? The ability to constantly learn and adapt from every customer or business interaction, gaining insights and then acting on them, being the first and the best at creating customer value.

‘The purpose of the modern business is to optimise and create value for all its stakeholders’

  • Customers
  • Employees
  • Shareholders
  • Partners
  • The societies within which they operate

As we travel further into the digital age these leadership capabilities we have discussed will be ever more critical.  Evolving to effectively create stakeholder value whilst facing ever changing customer needs and exponential advances in technology.

I’d like to close with a couple of stats and a question.  It’s a question I believe all business and people who truly want to succeed in this dynamic world should be asking themselves.

If recent studies show that ‘Digital Masters’ such as Nike, Amazon and Apple – who have highly developed leadership capability and digital capability – outperform the average profitability of other members in their industries by a whopping 26%.

Those organisations that have highly developed digital capability, but don’t have highly developed leadership capability underperform their industry peers average profit by a surprising 11%.

Isn’t there now a clear and compelling business case for developing digital age leadership capabilities in your businesses right now?

This blog was powered by two double espresso and Crosstown donuts……

Welcome, grab your coffee and donut let’s get started……..

I always advise people – Don’t wait! Do something when you are young, when you have nothing to lose, and keep that in mind – Steve Jobs

Now I’m not saying I’m young by any stretch of the imagination, but this quote pretty much sums up why I have finally decided to go ‘all in’ and create this blog…….  Hopefully I have nothing to lose and you won’t too if you’re willing to come along on this journey to rediscover the art of conversation in a technology driven world.

Just a quick disclaimer before I go on..  All topics, thoughts, opinions or rants are mine and mine alone they are in no way associated with the company I work for or anyone else…. just keeping that clear…

So with that sorted let’s start with who is Danny and why ‘coffee donuts and digital’?

Lead singer of a boy band?

So I’ve worked in numerous roles in technology for the last 24 years, in government, not for profit and currently at a FTSE100 organisation for the last 13 years.  I’m a huge family man and lucky enough to have a beautiful wife and 3 gorgeous daughters.

Although a gym bunny I love nothing more than a great cup of coffee a good donut and long conversations about how technology and this digital era we find ourselves in will truly change our world….  But then again who doesn’t?

Hopefully you’re now getting a sense of who I am and why you’re here so let’s get started, what shall we talk about?

Digital business is the creation of new business designs by blurring the digital and physical worlds – Gartner definition of ‘Digital business’

So ‘digital business’ quickly what the hell is it, what and how does this effect companies and what’s the big deal, does it really effect me that much? 

Well I am in the camp where I believe digital business as a ‘label’ is all well and good but ‘doing digital’ is not enough.  I believe if organisations are not looking at how technology and digital will reinvent their industry now they will not just fail, they will no longer exist.  Do you agree……. why?

Let’s consider this – which industry has not already been reinvented or truly disrupted by technology?  It’s like a tick box on a project managers gannt chart:

  1. Health care
  2. Insurance
  3. Transportation
  4. Hoteling & accommodation rentals
  5. Banking & finance
  6. Retail
  7. Real estate or Estate Agencies
  8. Technology itself (In the physical sense of the word)
  9. Government & their agencies
  10. Even the way I pay for my daughters’ school dinner tickets

The list goes on and on and on and ……. You get the picture

Digital business has the ambition of pursuing new revenue streams, new business models and finally new product and services.  It is also favoured by organisations that are adapting to a disruption in their vertical, or others that are hell bent on disrupting their industries but I have a concern.

What about the people?  I know, I’m starting to sound like Wolfie Smith, but businesses and business leaders can’t ignore this.

‘Power to the people’

I honest believe that any digital business and technology innovation its ultimate goal must be to enable people to succeed.  To transform their lives, to optimise business process and functions and make organisations more relevant and thus more profitable.  It must enhance and complement talented individuals, to empower them to make better and faster decisions, to solve problems quicker and provide the best customer experience possible.

We are not yet robots, we can’t always focus on being more productive and connected.  We need the work and life environment where our creativity can be enabled, nurtured and cultivated.

Companies being human-centric will mean at times disconnecting from technology but efficiency, production, value creation, customer experiences, the ways we work and collaborate although now primarily driven by tech in the end, nothing works when we ignore humans. 

We are in the digital era and it is transforming everything we do including how we do business and how we lead.  The need for new leadership capabilities is being felt in all organisations and by everyone globally.  

Next week I will be discussing specifically why digital business requires new leadership capabilities and what it takes to lead in the digital age.

I hope you’ve enjoyed this post and please do comment and join in the conversation.

“Is that the time………I must go?”