Future of Leadership in the Digital Economy
IN COLLABORATION WITHCognizant
What to Read Next
What will it take to become a great leader in the digital economy? What will be the differentiating skill sets (what individuals will need to do) and mind-sets (how they will need to think and behave) that will shed light on what it will take to lead next-generation organizations effectively? We have set out to address these important questions as the foundation for MIT Sloan Management Review’s newest Big Ideas Initiative: The Future of Leadership in the Digital Economy.
Since it is impossible to know the future with certainty, we started by establishing a hypothesis about what skills and attributes this future leader might possess. We laid that hypothesis out in my first blog post, “Leading Into the Future,” in which we indicated that there will be both contextual elements (meaning fit for purpose for the digital economy) and core enabling elements (meaning traits that are so important that they form the cultural fabric of an organization). Merged together, we believe these core and contextual elements will help define what great leadership will look and feel like in the digital economy.
This was a good start, but an insufficient one, because we need to bridge the gap between what we know to be true today and what we believe will be true tomorrow. To help build that bridge, we fielded a global survey to thousands of practicing managers and leaders from around the world to get their views on this matter. We have also been conducting in-depth interviews with CEOs, C-suite team members, heads of digitalization, senior line and functional leaders, and other thought leaders in all things digital.
Leadership Characteristics: Identifying the Usual Suspects
Go to any management conference today and you’ll hear a litany of the now-familiar buzzwords about the qualities of the leader of the future. To begin testing our hypothesis that would guide this project, we decided to formulate our own top 10 list of future leadership requirements to see how closely our assumptions about future leadership effectiveness in the digital economy will align with the survey responses and with the views of those whom we’ll be interviewing. Here’s our list, and we’d love to hear how close ours is to yours:
- Change mastery: Mobilize resources to do things differently, faster, better, and more efficiently.
- Managing smart innovation: Launch small, frequent experiments — fail fast, learn, then reset.
- Execution excellence: Visions are only powerful if executed well for customer value enhancement.
- Technical/analytical savvy: Understand the power of analytics and design thinking.
- Nurture relationships: Optimize networks, embrace ecosystem partners, and collaborate to win.
- Empower to engage: Unleash the energy in your team — next-generation talents won’t have it any other way.
- Authenticity: Know yourself, be yourself, and bring that person to work every day.
- Empathy: Diverse, inclusive teams will require new perspectives and approaches to leading.
- Encourage dissent and transparency: Make questioning everything a two-way street.
- Clear-minded communications: Make it clear, frequent, honest, and engaging.
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How Mind-Sets Enable Skill Sets
I’m guessing that our list comes pretty close to yours. Yet, it’s one thing to rattle off a list of desired leadership qualities and quite a different thing to understand the forces that are driving and enabling these characteristics to take hold in people and, with nurturing, help future leaders grow and flourish. This brings us to the other half of our hypothesis — that the leadership skill sets that will be identified as critically important for the digital economy will have little chance of gaining traction unless they are supported and enabled by a leadership mind-set that will help these new behaviors become the company’s normative behaviors.
This means that people will be less likely to innovate if innovation is not valued and modeled by the company’s leaders. We have identified four of these enabling leadership mind-sets that we believe are critically important for effective leadership in the digital economy. In addition to taking on a demanding set of new skills, leaders in the digital economy will set the tone in their organizations by showing up every day and demonstrating these enabling mind-sets: results focused, resiliency wired, purpose driven, and trust based. Moreover, they’ll need to be passionate about cultivating these mind-sets in their teams.
Why these four?
- Results, because customer loyalty is fast becoming a quaint concept from the olden days, whereas achieving superior results never goes out of style.
- Resiliency, because despite how brilliant you think your business model might be, you can bet there are teams of people dedicated right now to making it obsolete.
- Purpose, because the best and brightest next-gens are inspired not only by interesting work but also by feeling that their work is contributing to making the world a better place.
- Trust, because we feel safer taking risks, innovating, and speaking our minds when doing so in trust-based environments.
At first glance, both the skill sets and mind-sets mentioned above could be perceived as important for just about any company, regardless of the level of digitalization of its business model. So, let’s take a closer look at just one of these enabling mind-sets, trust, to see why this is so critical to leading effectively in the digital economy. We will visit the skill sets and the other three enabling mind-sets with this same intent in future blog posts, so stay tuned!
Trust: The Coin of the Realm
“Even though Tencent was born digital, that doesn’t mean we aren’t facing continuous disruption and transformation challenges,” states Arthur Yeung, a senior adviser who sits in the Executive Committee Meeting of the Chinese internet and social media giant. “If you think of it, in a very short time, technology has evolved from typing to touching to voice to thinking. We grew up thinking that the internet was mostly for consumers,” he notes. (Tencent is one of the world’s largest online gaming companies, and its messaging apps, WeChat and QQ, dominate the Chinese user community.) Yeung continues: “But now we see the new opportunity in empowering operational efficiency and customer intimacy for businesses. We need to think about the ABCs: artificial intelligence, big data, and cloud.” But moving from a B2C to a B2B business model holds a number of risks and challenges, not the least of which is betting that the company’s talent pool will be able to make the change to a rapid innovation and experimentation mind-set.
“In the past, companies usually hired leaders who were good at creating standardized processes, formulating five-year strategic plans, and establishing a series of controls for people to follow those plans in order to win in business,” says Yeung. “But now, in the digital economy, we realize we need to hire leaders who can create an innovation-minded culture that fosters creative thinking, agility, and speed. We can’t do any of those things without building a solid foundation of trust and empowerment.”
Yeung’s points ring true. Will Tencent’s talent own up to the fact that their skills might be lacking as the company moves increasingly into the B2B world? Will those leaders who have built their careers and reputations at the company trust that they won’t be cast aside if they acknowledge they need digital upskilling?
Yeung makes one additional point: “At Tencent, we want people to feel and think like owners, not to work like employees under command and control. If people start to lose [the] passion and initiative to create new opportunities, then they won’t be a good fit with our future, but if they are willing to experiment and grow, we will invest in them. Trust is a two-way street.”
Another executive with whom we spoke was Hariolf Wenzler. As chief strategy officer of Baker McKenzie’s German and Austrian offices and the head of the company’s new Innovation Hub, Wenzler co-led one of the firm’s newest initiatives: “ReInvent Law.” Unlike Tencent, which is a company that was born digital, most law firms come with a long heritage and standardized ways of doing business, as one might expect. And with those standardized ways of doing business, standardized ways of working and a culture that hasn’t been kind to those that have tried to innovate have emerged.
The law firm has seen that AI and machine learning are poised to radically transform its industry, and to its credit, Baker McKenzie’s leaders have been pursuing the profile of the “lawyer of the future” for some time now, given the transformative changes in the industry on the horizon. But while Tencent’s transformation was more business model centered, Baker McKenzie’s transformation challenges are more cultural in nature. Wenzler reflects on the qualities of the leader of the future for Baker McKenzie, given the digitalization of the industry: “There is great wisdom in listening to and observing how millennials think and behave, and what they value. They want their voices heard. They want to work in a transparent environment; in fact, they appreciate radical transparency. But we have to understand that to have radical transparency, you must build a culture of radical trust. Trust is the new coin of the realm. Will a young associate speak up if she feels there is a better, more innovative way to serve our clients but also wonders if her bosses might resent her for questioning the status quo? Our accountability used to be to billable hours. For us to break away from our old ways of thinking and working, we need a new accountability, and that is to trust one another even more.”
These two company examples illustrate the importance of embedding core leadership mind-sets, such as being results-focused, resiliency-wired, purpose-driven, and trust-based, to facilitating the development of new skill sets, such as speed, experimentation, design thinking, and empathy, needed to lead effectively in the digital economy.