Digitization is one of the Megatrends currently going on. It changes the way we live, we work, we play and we learn and it is dramatically changing the need for companies to rethink how they do business in order to not just sustain their market positions but to secure their survival. Whether it is the Internet of Things (IoT), Artificial Intelligence (AI) or other segments and technologies: The world is changing dramatically and so does business. Hence, business leaders have to change as well. Actually, leadership as a skill and function has to be reinvented!
Digitization is not just another buzzword. It is the hypernym for what consumers started to do with the incredibly increased use of smartphones for social interaction but also doing daily life tasks like banking, shopping etc. Apps and services like Facebook, Twitter, WhatsApp, Amazon, PayPal and so forth have enabled the commoditization of Digital Services. With the introduction of the IoT, AI etc. digital technologies have found their ways into the business world. Digital is everywhere and allow businesses to optimize processes drastically, discover completely new business opportunities and disrupt existing business models. Digitization is THE GAME CHANGER!
It’s by far not about technology only!
This creates also a big challenge for Leaders. If Leaders do not prepare their organizations for those drastic changes, these organizations will lose or even disappear. It was never so easy for new players to disrupt existing and so far stable markets. It was never so easy for small companies and startups to compete with big companies or even to destroy their business. We’ve seen many examples of well-known companies who were leading their markets and then, all of a sudden, after missing to react to a big change within their industries, they went bankrupt and/or finally disappeared e.g. KODAK and Nokia.
Many of those cases have been significantly created because of the leaders of those companies retained the “Principles Of Scientific Management” written by Frederick Winslow Taylor in 1911: In easy words, this concept separated work into Planning and Executing and organizations into Thinkers and Workers. The main goal was aiming for maximum efficiency in work. Leaders were the Thinkers, the ones who plan. Their job it was to break down work into the smallest and simplest possible pieces. The worker’s’ job it was to execute on that work which they should be able to without long training. Also, it made them easily replaceable. This concept was made for large scale manufacturing and assembly-line businesses that consist of high predictability and massive repetition of the same tasks. And it was good for that time and that business as we can easily proof by the growth and successes of many companies.
Leadership capability is key!
With the progression of Digitization the nature and the structure of value chains is drastically changing: More and more steps in the value stream process is going to be Digital: The shopping experience happens in the webshop, the payment is being processed electronically, the distribution and planning is arranged by intelligent software and only the delivery happens still to be done by human beings who have to drive a car. But even this we can see already changing in the near future as logistics companies do experiment with drones, driverless car concepts etc. Production work is about to get fully automated so that there is only thinking work left to human beings. Hence, Thinking (Creative) Work is is already for years a key success factor for businesses and where the place where the real value creation process starts. Hence, Human Capital is the BIGGEST asset of companies! And in order to form the conglomeration of all the talents, their personalities, their expectations to a powerful organization and to spark the maximum leverage of it, Leadership capability is the most important key success criteria.
Why? On the one hand side, there is technology that enables all these opportunities and possibilities. On the other hand side, we have the people, all kind of people. The ones who are used to work in a command & control environment, the ones who want to take decisions themselves, the ones who have all technical and commercial skills, the ones who haven’t etc. They all have expectations how they want to be treated, what employers should offer them in order to feel satisfied and fulfilled in their jobs in order to unleash their full potential. In order to be able to unlock the maximum potential of an organization, it requires the combination of all the different capabilities of the individuals. And it is the responsibility of Leadership to build an environment that allows forming such an organization. An organization that performs at its best with people who can be creative, who are trusted, who are given responsibility, who can development and who are intrinsically motivated. Leadership more than ever has to lead!
Leadership has to change!
Because of all these changes, the required skill profile of Leaders is changing. Well, finally only Leaders who are willing to adapt the appropriate skills can become successful (good) Leaders. In the past, the Leader was “the one brain” that commanded and controlled the workers. Empathy was not existing, it was almost not known. Today it’s the opposite. It is about leveraging the “Collective Brain”. Building Teams that are fast, agile, responsible, focused and value oriented. That requires Leaders to be empathic, to have a vision, to create a framework of values and principles, to be positive, to live and lead by example, to be decisive, to communicate clear, to accept Teams as equal, to be transparent, to formulate clear and meaningful goals, to be reliable, to trust, to see failure as chance, to be willing to develop more leaders around them and finally to focus on her role as a Leader: Leadership means to focus on people!
The Big Picture!
Business happens between people (and this will stay for quite a while), hence, Leaders have to understand people. They have to rethink how they want to approach their teams and talk to them in order to make them performing. I trust most of us can confirm that we feel best, when we feel understood by the people surrounding us and when we do understand WHY we’re supposed to do something. And as I mentioned before the different level of skills and backgrounds of people it is important to find one level on which they all feel and understand the same. I talk about the Big Picture, the Vision & Mission a Leader has and which touches all of the people. The Big Picture includes not just our Dream but also our Values and Principles, which expresses what we’re standing for, who we want to be seen as and what is important for us besides numbers and facts. Sidenote: I know, using the word Dream in a business context is a big tricky… but remember: All great Leaders had/have a Dream, not a Plan! This is the starting point of every great movement and all great business do have that as well. Plans without a Vision on top are very likely to never get achieved because the people don’t believe (in) them.