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Digital-Era Leadership

Global Leadership Forecast 2018

Digital-Era Leadership:

Ready or Not, Digital Competence Is Already Differentiating Winners from Losers

Joe Dettmann, Adam Canwell, Richard Wellins

The work world continues its metamorphosis as organizations increasingly leverage technology to modernize their business strategies. As the pace of change intensifies, many companies just cannot compete; 50 percent of the 2006 Fortune 500 companies no longer exist. Competition rains in from every direction. Looking ahead, technologies such as robotics and artificial intelligence (AI) are projected to affect two billion jobs over the next decade.* These trends represent both a threat and an opportunity. Organizations with digitally savvy leaders, the pioneers, are outperforming those organizations with less digitally capable leaders, the laggards. As our work world becomes increasingly digital, that performance gap will only grow.

Digital-Era Leadership

How Digital-Ready Are Leaders?

Global Leadership Forecast 2018 shows digital-era leaders focus their attention across five clusters made up of 16 competencies (see figure above). Averaging across all competencies, only 22 percent of leaders considered themselves effective in all five areas.

The right column of the figure shows leaders’ ratings of their own effectiveness. They’ve reported relative strengths in traditional leadership skills. However, the differentiators (digital capabilities and seeking out opportunities across complex ecosystems) are where leaders have gaps.

Where Should You Focus?

Not every competency has the same impact on an organization’s digital performance. The middle column of the figure at left shows the six competencies that have the greatest impact on performance. Of these six most critical skills, leaders are relatively strong in four areas, weaker in two.

  • Lead with digitization. Organizations need leaders who understand the impact digital tech can have on their businesses. They sense what is and isn’t possible and, more important, sense what will be possible. They look to standardize and automate processes to generate new insights they can leverage for differentiated capabilities. This is a relatively weak area for leaders.
  • Adaptability is a must. Digital leaders must be able to adapt to constant change or fall behind. They need to be learning every day, not getting caught up in “traditions.” This is a relative leadership strength.
  • Execution. It’s one thing to anticipate change. But it takes another set of skills altogether to turn new ideas into reality. This also is a strength.
  • Hyper-collaboration is about working relentlessly to break down silos. It’s getting people working together to solve customers’ and the organization’s issues. Again, this is a relative leadership strength.
  • Identify and develop new talent. Leaders need to spot and rapidly bring on board the digitally savvy talent of tomorrow. Leaders do relatively well in this area.
  • A 360 view. Leaders must be able to spot patterns and bring thinking together from multiple perspectives. This is a real weakness.

What Does This Mean for Performance and Potential?

We found that the pioneers, digitally savvy leaders, are more prepared than the laggards to meet emerging business challenges. Most notably, they’re better at anticipating and responding to the competitive environment, navigating through complexity, and using data and analytics to guide their decision making.

The digital leadership performance premiumIn the figure on the right, we also demonstrated a significant relationship between leaders’ digital readiness and their organization’s financial performance. Looking to the near future, every organization will need to embrace new technologies if they are to flourish. And, those with the most capable digital-ready leaders will continue to stay ahead of the curve. In another section titled “Accelerating the Digital Journey,” we focus on how to ramp up organizational and leadership digital capability.

* Frey, T. (2012, February), 2 Billion Jobs to Disappear by 2030, http://www.futuristspeaker.com/business-trends/2-billion-jobs-to-disappear-by-2030/

Where to Start
  • Start by identifying critical leadership roles and assess readiness of your talent to embrace and pioneer digital transformation.
  • Rethink your competency framework to include emergent knowledge and skills to focus leader development. Many companies going through unprecedented change have not reexamined their competency models.
  • Develop digital accelerator leadership-immersion programs. This is an excellent approach to building both technical know-how and leadership capability.
  • Move beyond simply “doing digital” via discrete technology implementations to “being digital,” an embedded leadership mindset and way of working.
How to Excel + Differentiate
  • Some of your current leadership bench will be unable to acquire a new mindset. They may need to be replaced with more digitally capable leaders.
  • Lead for the future of the organization. Nurture and develop leaders as much as those running the legacy business. New leaders will not only require a technical mindset, but also the imagination and vision of how technology can enable their organization’s competitive position.
  • Foster a digital ecosystem for leaders to thrive. This includes new approaches to learning, rewards, use of space, and elimination of hierarchies. Place great digitally ready leaders in a traditional culture, and they will surely fail.
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