Leaders must develop new skills to effectively guide their organizations into the uncertain future of the digital age.
Strong digital leaders are very much in demand, as our digital business research clearly shows. We asked more than 4,300 global executives whether their organizations need to find new leaders to succeed in the digital age: 68% indicate that their organization does, in fact, need new leadership to compete. Even more striking, there is surprisingly little variance across maturity categories for these responses: 77% of respondents from early-stage companies report that they need new leaders, as do 55% of respondents from maturing companies. On the whole, more than half of digitally maturing companies still say they lack strong leadership.
Organizations shouldn’t simply lament the absence of genuine digital leadership, however; they must recognize that finding and developing the right talent is truly difficult. In a continually changing competitive environment, leaders constantly face new challenges and must adapt both the organization and their leadership style to this new environment. Successfully meeting these challenges requires new skills and capabilities that leaders have not needed in the past.
What Do Digital Leaders Look Like?
We asked executives what traits they wished leaders had more of to help their organizations navigate digital trends. Somewhat surprisingly, the traits cited were similar across maturity levels.
- Provide vision and purpose. This is the most desired digital leadership trait. Clear aspirations serve as a compass to guide employees as they work, especially in distributed environments where they often have greater decision-making autonomy. Yet, vision itself may not be sufficient; leaders must also provide opportunities to execute it. “To drive digital transformation, you need a very strong vision for where you’re going and how it’s going to be different,” says George Westerman, principal research scientist at MIT’s Sloan School of Management. “You also want to strongly engage your people in owning and then fleshing out that vision. And you need to have very strong governance. What capabilities are we going to develop so that we can move transformations forward over and over again?” Providing vision and purpose in a digital world does not require in-depth technical knowledge, but it does require basic digital literacy so that a leader can understand the environment sufficiently to develop that vision.
- Create conditions to experiment. Executives want leaders to exhibit curiosity. Our research identified experimentation as the biggest challenge organizations face in a digital environment. One executive at a consumer products company noted that to be more experimental, his company (1) hired risk-tolerant employees, (2) created an environment where people were encouraged — and even rewarded — for trying intelligently and not succeeding, and (3) put virtual or physical platforms in place where people could experiment with new ideas and business models, including with other parties such as universities or entrepreneurs. Nobody fully understands how the digital environment will evolve. To keep up with the digital trends and figure out how they apply to your business, experimentation is essential.
- Empower people to think differently. Thinking differently involves knowing not only what employees see as possible but also what customers expect, and being prepared to respond accordingly. Cisco’s digitization senior director James Macaulay says his company senses that “customers want to consume differently; that is, they want more cost value, experience value, and platform value. We know we must change our stripes.” In many ways, this trait is the flip side of the first one and empowers others to have a vision and voice as well. Effective digital leaders need to not only cast a vision but also foster inclusive leadership.
- Enable collaboration across boundaries. When we asked organizations to share their biggest barriers to collaboration, they primarily noted culture, mindset, and silos. Our interview subjects thought about collaboration across boundaries in broad terms. Dr. John Halamka, CIO of Beth Israel Deaconess Medical Center, speaks of collaborating with other innovative organizations. Brent Stutz, senior vice president of commercial technologies and chief technology officer of Fuse by Cardinal Health, champions collaborating with partners including hospitals, biopharmaceutical companies, delivery networks, payers, and independent pharmacy owners. Stanford assistant professor Melissa Valentine articulates the need to learn to collaborate with “cobots,” or collaborative robots. The digital world both demands and enables collaboration beyond simple intraorganizational communication.
Digitally Maturing Companies Develop Their Talent Into Digital Leaders
Our research finds that digitally maturing companies are distinguishing themselves from their less mature counterparts through the development of talent into inspiring digital leaders. While 63% of maturing companies say they are effectively cultivating the types of leaders they report needing, only 33% of developing-stage companies (and a paltry 13% of early-stage companies) say they are effectively developing these kinds of leaders. All types of companies lack qualified leaders to effectively lead their companies amid digital disruption, but maturing companies are far more likely to do something about it and actively develop those leaders.
Although responses suggest that leaders need to understand technology, technical skills per se are not a prerequisite for effective digital leadership. Digital leadership is about leading in the new business environment created by digital disruption, not about mastering technology. People report that being change oriented or having a transformative vision is more important. Furthermore, the research suggests that these traits build on each other. Taken together, they paint a compelling composite picture of what effective leadership looks like in a digital environment.
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Digital technologies have changed the competitive and organizational environment. Leaders must develop new skills to effectively guide their organizations into this uncertain future. The bad news is that few leaders have the necessary skills to do so today; the good news is that many are beginning to develop them. If you want to be a digital leader or, like 68% of others, feel like your company needs more of them, it’s not too late. The time to start is now.