Leadership in Digital Markets – part 3

Summary

When a static analogue business model evolves into a dynamic digital business model, the leadership style has to evolve with it. Similarly, when a native digital startup matures and starts to diversify, the leadership team has to be infused with new skill sets. This last part covers the transition from the current leadership style to one optimized for dominating hybrid and digital markets.

You can find the first part of this blog on leadership in the digital age here and the second part here.


 

Team members expect a lot from their leaders. They are considered a source of innovation, passion, vision, personal development and trust. Compared with leaders, managers have a fairly easy job as they are expected to focus on maintaining the status quo, improving efficiency, achieving short-term goals and day-to-day control. Nevertheless, a leader is still a human, as pointed out by Maddock and Fulton (I):

“They put their pants on just like the rest of us do. They have both good and bad traits. From time to time, when things are going badly, their old character traits slip through and they become irritable, angry, irrational and capricious. They behave in immature ways. They exhibit traits that amaze us and we say, “I always thought of him/her as a leader! What’s going on?” They disappoint us.”

Disappointment is also all but inevitable when we expect a leader to excel in every situation. Everybody has her/his strengths and weaknesses, a fact often overlooked when a company is faced with the disruption of its market. When the current CEO has a strong track record in brick-and-mortar retail expansion, she/he likely struggles to a) sense and b) act decisive and effective when customers shift towards mobile-first shopping.

Evolving leadership 101

Regardless of the technology-density of the companies’ business model, every manager should strive to become a leader as they are far more valuable to a company. Today’s highly educated employees no longer need somebody to tell them what to do next while several industries are actively substituting employees with either robots or contract workers. Combined with the ability to automate increasingly complex management tasks, the traditional manager is quickly turning into an endangered species.

The most differentiating capability of a leader is the ability to build trust. Trust that you as a leader:

  • balance the interests of the company, employees and your personal objectives
  • provide clear and inspiring goals and a strategy to achieve them
  • empower and coach individual team members to make decisions and learn from them
  • involve team members in conversations early in the decision-making process

From personal experience, I know that the third and fourth bullets look good on paper, but are difficult to translate into day-to-day practice. As everybody is blessed with a unique set of strengths and development points, a leader has to determine the willingness and ability of every individual team member to perform a certain task (‘situational leadership‘). There is no single “best” style of leadership.

To improve the ability and consequently self-esteem of junior team members, many leaders launched apprenticeship programs as they focus on solving real life problem, learning from people of different ages, applicable know how and socialization into the company. Investing in coaching and mentoring programs is another powerful way to help team members to grow as a leader or professional.

When discussing the future of long-term team members faced by the imminent transformation of their business processes, leaders focus on the potential of that individual. The pink slip is considered a last resort. Managers react differently. Most are unable to look beyond the current tasks and responsibilities, using the pink slips an easy way out.

More importantly: true leaders prevent the company from ending up with its back against the wall in the first place.

Evolving from analogue to digital

As late as 2012, CIO.com reported that:

“There’s a dangerous lack of confidence in the board’s digital literacy, revealed in our exclusive survey of 250 IT leaders. Sixty-four percent say the board “doesn’t do its homework” about technology matters and 57 percent say directors rely heavily on what they read in the press to evaluate IT strategy. Some 40 percent say board members “don’t really care about IT.” 

Due to the ongoing shakeout in many industries, boards had no choice but change their tactics, hiring 30- and 40- somethings to help them make sense of digitalization. These technology-savvy high-potentials are able to translate technology into business value by linking a new technology to an emerging market need. They are individuals who understand that no technology can transform a market without a solid business model (II).

Besides these IQ-related skills, leaders score high on Emotional Quotient (EQ) and get out of their functional silos as digitalization requires an end-to-end approach. In other words,

“a leadership model that is less autocratic but more of an authoritative and networking nature.” (III)

Last but not least, effective leadership starts with self-reflection and understanding one’s personal strengths and weaknesses. Shorter product and technology life cycles, culturally and geographically dispersed virtual teams and less predictable customer demand are only some of the forces at work today. Only leaders who sense the impact of these and other forces and adjust their long-established intuitions will be able to emerge on the winning side.

Closing words

This blog only activates the left side of the brain, the IQ part. From an intellectual perspective, it is fairly easy to identify the traits that make a good leader. However, managing and especially leading is truly a profession in a sense that it requires the mastery of a complex set of soft and hard skills through practical experience, mentoring and being blessed with talent.

Reading books, articles, blogs or even formal education cannot create effective managers, let alone leaders. Teal expressed it as follows in his article  The Human Side of Management:

“And still the troublesome fact is that mediocre management is the norm. This is not because some people are born without the management gene or because the wrong people get promoted or because the system can be manipulated—although all these things happen all the time. The overwhelmingly most common explanation is much simpler: capable management is so extraordinarily difficult that few people look good no matter how hard they try. Most of those lackluster managers we all complain about are doing their best to manage well.”

Hence, leading in the digital is first and foremost about identifying, attracting, nurturing and retaining those unicorns that score high on both IQ and EQ. They in turn can identify, attract, nurture and retain the rest of the winning team.


Notes and references

(I) Maddock, R., Fulton, R., Motivation, Emotions, and Leadership, 1998.

(II) In their article The Transformative Business Model, Kavadias, Ladas and Loch argue that new technologies alone cannot transform an industry. Nicholas Carr made a similar observation in his famous article IT Doesn’t Matter in 2003: the ubiquity of information technology prevents it from being a source of sustainable advantage. In time, every new technology commoditizes or is replaced by a more capable substitute.

(III) Kets de Vries, M., Evolving Leadership in the Digital Age, 2016.

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