Back to news overview

Leadership in the digital age: 11 tips | NPM Capital

News
Date
July 21, 2017
Leadership in the digital age: 11 tips | NPM Capital

If you had asked a senior executive or director ten years ago what “digitalisation” meant for him or her, you would probably have been told things about their firm’s IT infrastructure. Nowadays, the answer might range from apps to big data and from 3D printing to “the cloud”. All those topics are relevant for directors – but in a specific manner, claim Liri Andersson and Ludo Van der Heyden, Guest Lecturer and Professor of Technology and Operations Management, respectively, at INSEAD. Because what matters more than the individual spin-offs of the digital revolution is their aggregate impact on today’s organisations, which are on the fast track to becoming increasingly “digital driven”

Andersson and Van der Heyden previously (2016) surveyed approaches to digitalisation among more than a thousand managers, directors and board members. This revealed that most of those interviewed had too little knowledge and vision to lead a digital transformation within their own firm. In fact, in many cases they did not even have responsibility for this.

Seeking to improve this situation, the researchers recently published a new report:

“Directing Digitalisation: Guidelines for Boards and Executives”. This report presents 11 strategic implications and recommendations for successfully navigating the digital transformation of a business. These recommendations are based partly on the earlier study and partly on the many years of experience of both researchers in education and consultancy. A summary is provided below:

1. Look at the external environment with fresh eyes

Andersson and Van der Heyden believe that leaders need to exchange the old “analogue” way of looking at the world for a new, digital paradigm. Michael Porter’s “five forces” model (competitive forces model) for determining the earnings potential of a market or industry sector is an example of an analogue perspective. Digitalisation is eliminating traditional physical barriers (information everywhere, always) or replacing them with new, immaterial barriers (such as possessing purpose, authenticity and trust).

2. Consider whether the firm’s mission needs to be reformulated

Digitalisation calls into question the “raison d’être” of individual firms and even of whole industries. Leaders should therefore consider whether their mission (and their business model and methods) are still future-proof and adapt them if required.

3. Try to clarify as much as possible what digitalisation means specifically for your organisation

The opportunities offered by digitalisation comprise not only new products and services, but also possibilities for developing a new strategy and organisational structure. As this is different for each organisation, there is no point in searching for a universal blueprint. Instead, leaders must develop a customised “digital road map” for their organisation, including its own vocabulary with key words, terms and concepts. This is by definition ‘work in progress’.

4. Digital knowledge and expertise are required across the firm

Digitalisation cannot be left to a few experts, but is a responsibility that lies with all positions throughout the firm. A successful digital transformation moreover requires close cooperation between young “born in the cloud” professionals and more experienced senior management.

5. Digitalisation must become part of the corporate culture

The digital revolution is as much a matter of culture as it is of technology. Like any other large-scale culture change, digitalisation will also have to be continually driven forward by the top management.

6. Digitalisation demands a greater level of collaboration and communication

Successful digitalisation cannot be achieved without continual collaboration and communication between shareholders, board members, managers and frontline personnel. Digitalisation is also blurring traditional borders between different industries, increasing the importance of cross-functional and external collaboration.

7. Digitalisation requires greater engagement with the public

In the past, the consumer was subordinate and it was the firms that decided which information they shared and what they sold to the consumer. But in a digital world, the consumer is in the driving seat. Not only is he able to leverage a good idea to create a competitive business himself without barriers, he can also destroy value for large corporations – tweet by tweet. It has never been more crucial to involve customers as co-creators in providing services or developing products than it is today. Businesses that position themselves as “facilitator of customer dreams” will own the future.

8. In the digital world, business strategy becomes a continuous process

The time when businesses were able to think in terms of strategic five-year plans is well and truly a thing of the past. In a world in which business trends ceaselessly succeed each other, strategy, tactics and operations need to be continually re-aligned with each other in a seamless feedback-loop.

9. Decision-making in the digital age is increasingly data driven

Given the abundance of advanced analytical and predictive tools that are available today for firms, decision-making on the basis of an “executive summary” with two or three options is no longer justifiable. What might have passed as a responsible “educated guess'” in yesterday’s world has now become a leap in the dark.

10. Digitalisation requires firms to explore uncharted territories

If you do not want to be caught out by disruptive developments you will need to continually explore potential new business models and sources of revenue. This means launching ambitious pilot projects and swiftly converting the learnings derived from them into new projects. To a greater extent than in the past, senior executives need to learn to be comfortable with uncertainty, ambiguity and risk.

11. Digitalisation is about continuous change management

In the pre-digital world, a one-off change management programme could sometimes generate revenue for years and sometimes even decades ahead. That is no longer viable in the digital world: executives must ensure that adaptation and change are built into the DNA of the organisation.

In sum: the digital revolution can (like all revolutions) be seen as a catastrophic threat or as a unique opportunity – depending on whether your loyalties lie with the existing order or that of the future. Optimism is a condition for survival. Digitalisation will compel leaders to reinvent themselves in numerous areas – with fundamentally positive results for both businesses and society. At the same time, it is unlikely that the traditional forms of organisational leadership will survive the digital revolution. This forces us to think about the kind of leadership that will be needed tomorrow.

How can you recognise your critical leadership capabilities? Jochen Dekker of LiDRS tells you how in this article.

NPM - Sfeer - 173 - clara tafel

Join our newsletter to stay informed of the most relevant updates