The impact of the Digital Transformation on leadership is very often underestimated. Leaders are not only driving the Transformation, but are also impacted themselves: the brand experience can be destroyed by good willing, but wrong acting employees, their reputation could be at risk due to privacy and security issues, network positions are changing, transparency in and outside the company changes the management process and even the roles of CxO’s will change. Leaders might not like all new developments, or they don’t agree. However, leaders cannot ignore the imminent change anymore.
In all Digital Transformations people should be in the heart of the transformation. Although Digital Transformation sounds like a technology driven change, the technology is nothing more than an enabler. Customers choose products and services which suits them most. Companies, who are the most responsive to the relevant customer needs, will be the winners. To fulfill the customer needs effectively and efficiently, much more is needed than just starting a new webshop or a Twitter account. This potentially impacts all dimensions of the business and operating models of the organization.
The Digital Transformation starts with a clear understanding of the impact by leaders. Leaders should not focus only on customers, processes, systems and the people, but they should also understand the impact on their own role. Especially on the leadership dimension, which happens to be the first critical success factor for each transformation project!
Of course the Digital Transformation is a big opportunity to for any organization to improve the business with benefits like increased business agility, direct contact with customers, new revenue opportunities, opening up new markets, higher quality products and services, relevant customer offerings, cost reductions and more efficiency. But it will also have a deep impact on the daily activities of leaders. Especially leaders, as ‘the drivers in the front seat’, can’t afford ‘to fall out of the bus’ by underestimating or misunderstanding the impact of the Digital Transformation on their own job.
Below I will describe the top 10 leadership impacting factors which come from a digital transformation. I would like to encourage you to give me your remarks and views on this top 10 of impacting factors:
- Dialogues with the customers in the heart of the organization
By the increasing trends of self-service and co-creation, the customer will be in the heart of the organization and the operations. Thereby deeply impacting the entire organization. How do we manage and control employees and processes with have had no direct experience or relation with the customer? How do we maintain a consistent brand value? How do we enable the dialogue with the customer? How do we keep it both lean and effective? The role for the leader is to guide and inspire employees and to define and discuss which processes must be redesigned. This includes matters like new governance rules, delegation responsibilities and empowering employees. - Reputational risks
The internal and external reputation of a organization can be seriously damaged due to ‘new’ privacy and security issues. These can potentially cause personal or integrity damage to leaders. Integrity, as well as thought solutions based on facts and content are crucial for top management to survive. They cannot hide with “I or more commonly used, WE did not know” (if this was already true, they should have known). Leaders must ensure solid and secure procedures in their compliance and governance. - Shifting roles in the value chain
The company will be a player in a network of partners, especially in the digital area. Even employees can become partners. Roles are and will be shifting. The same person can be a partner, a customer, a competitor or an employee at different moments in time. This means that a leader must have a high level of authenticity and cannot rely only on his or her position and political influential capabilities. Otherwise he or she will lose all personal credibility. - Enterprise-wide acting
Silo-thinking cannot be tolerated anymore. Stand alone decisions will be transparent for all parties involved and communicated very quickly by internal (or external) social media. This means a need for a more holistic approach for decision making by leaders. - Facts based decisions
The quality of decision making can be improved by having more facts available, externally (data of customers and their customer behaviors) and internally (internal benchmarks, data of employees, data analysis and their behaviors). Leaders should be able to handle and talk about facts. Good analytical capabilities are becoming a must. However, leaders should prevent to become ‘too much’ fact based, or to become too much of a micromanager or bookkeeper. Real understanding on both a conceptual and practical manner and maintaining curiosity to look behind the facts, remains essential. - New rules of the games
The political reality and the rules of the games are changing. Layers in the organization can be easily skipped, by having more information and transparency within the organization by utilizing internal social media. The voice of the employee will be heard through the whole organization. Also by the organizational leaders. What does this mean for leaders themselves? On the one hand, it means handling more directly with issues and questions of employees. On the other hand rethinking how to deal with middle management and their roles in processes. Leaders have to decide when they will go into the details and when they will not. This looks like a paradox between control and trust. This is complicated by a higher level of transparency of the leaders own actions for the total organization. - End of the age of instructions
The age of instructions will end. Employees will be empowered with the same tools, data and information as their leaders. Their content expertise will be even deeper than that of their leaders. So instructions will be replaced by guidelines, inspiration and trust.
The leaders will be the example: a role model. Leaders will have to demonstrate their fighting spirit in fulfilling the customers’ needs and connecting and empowering employees. - All at the same time
With all the changes that will come across, agility will be key. Very often it won’t be “or”, but “and”! In other words, it will not be a choice, but it will be an obligation. This requires priority setting, taking sound risks and making clever decisions. Vision in leadership will be a crucial requirement. Without it, the organization will be only able to work react on short term issues. - New change management approaches
Change management will be different. Not only virtual tools and ‘new ways of working’ will be used, but also the fundamentals of the change approaches will be altered.
Next to traditional ‘design’ approaches (managed gaps between the ‘as-is and the to-be’ in a structured way), agile ’development’ approaches (start quick and small by testing & piloting) will be used.
Leaders will have different roles in both the approaches. In the ‘design’ approach they will make their decisions only after a solid preparation, including alignment with all relevant people. Leaders will need to show their vision and guts to invest in those big projects. Project managers can execute those changes in a structured way.
In the ‘development’ method, leaders will be dealing more directly with the business. More agile and chaotic, with a higher need for committing people to make progress. The leaders will have to take a lot of efforts, not just once, but throughout the total transformation program. - Changing CxO roles
Functions and roles will be changing, till the highest level. The need for existing CxO’s will disappear and new CxO’s will appear, requiring the boundaries to be permeable and porous. Leaders will need to know how to organize their business and people to mirror the new structures as they are put in place and would need to have the visionary skills to define the right strategy. A high level of personal leadership will be required to deal with this uncertainty of their own role.
To sum it up, leaders in the digital area will stand in the heart of the operations. They need to be: good listeners to both customers and employees, they have to be authentic, genuine, inspiring, curious, they should be able to adapt to their new role model and be flexible in leadership styles. Leaders must be able to act on facts, look behind the facts, connect people and change the rules of the game. All this, while the leader’s own role and position is changing and also highly uncertain.
We, Arja Kapitein, my Capgemini colleague Dirk Mulder and other colleagues of the Digital Transformation and HR Transformation practice, are looking forward to hear your opinion and views