Leadership in Digital Markets – part 1

Summary

Leaders are considered a source of innovation, passion, vision, personal development and trust. They enable the other team members to turn technology into a source of value.

The topic leadership is part of the first principle: less defensive, more defensive.


 

Technology is abundant, easy to copy and therefore unsuitable as a source of sustainable competitive advantage. It requires creativity, intelligence, perseverance and all those other traits only humans possess to turn technology into a differentiating hybrid or digital value proposition. Brain Solis, principal analyst at Altimeter Group made a similar observation (I):

We already found that companies that lead digital transformation from a more human center actually bring people together in the organization faster and with greater results.”

Transformation is equal to change and only leaders can effectively influence the behavior of the people surrounding them. Managers and bureaucracy cannot.

This statement is as relevant for the business as it is for IT. Throughout the whole value chain, progressively complex manual tasks are automated, driving down cost and improving agility. What remains are high added-value activities like:

  • objective and strategic settings
  • spotting and pursuing (un)foreseen opportunities
  • spotting and pursuing (un)foreseen risks
  • research and development
  • business development, marketing, and
  • customer service

They are activities that business and IT perform in isolation when the company pursues slow moving analogue markets. In fast-moving hybrid and digital markets, the business and IT teams have no choice but to converge or even fuse their human Key Resources (II). Only together they can effectively transform analogue value propositions, channels, customer relations, and business processes.

One only has to look at Silicon Valley to see the impact of people as a key driver of company value. According to AnnaLee Saxenian, professor at the University of California, Berkeley, the success of Silicon Valley is firmly based on people, culture and connections. In her book Regional Advantage: Culture and Competition in Silicon Valley and Route 128, she explains why other regions aspire but were never able to replicate its success. In Silicon Valley job-hopping, peer-networking and sharing were the norm, fostering innovation and consequently value creation.

In Silicon Valley, companies have to compete and collaborate at the same time. They understand that only as part of an porous interdependent network they can turn complexity and uncertainty into a sustainable business model. Individual persons or companies cannot.

 


Notes and references

(I) Kapko, M., Enterprise Collaboration Will Drive Digital Transformation, CIO.com, July 2014.

(II) ‘Key Resources’ is one of the building blocks of the Business Model Canvas from Alex Osterwalder. Covered in the book, it provides the foundation for the IT Business Model, a canvas optimized for IT teams that want to converge their operating model with the business more effectively.

(III) Mastenbroek, W., Verandermanagement, Holland Business Publications, 1997. (Dutch language)

Background information and further reading

In literature, people as a key source of corporate success is part of the ‘resource-based view‘ on strategic planning. From a resource-based view, it is a company-specific combination of resources (e.g. skill sets, technology, intellectual property) that allows the company to differentiate itself from the competition. These differentiating combinations of resources are the ‘core competencies’ of the company and should be retained and nurtured.

The article What is the Difference Between Management and Leadership? describes the important difference between leaders and managers. Both are linked and complementary, but not the same thing.

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