7 New Leadership Skills for the Digital Economy
Imagine an organization with a fully digital customer and partner engagement & experience ecosystem, fully automated digital processes, a complete set of digital products and services and a complete digital workplace environment. An organization defined by software, fueled by data and run through AI and machine learning algorithms. This is the digital nirvana every organization is pursuing.
The transition to this complete digital organization is proving challenging for many organizations. The main inhibitor is that managers and leaders throughout the organization lack the right combination leadership skills required to make the transition to a fully digital organization and to lead in a fully digital environment. And Leadership matters! The difference between a leader with the right combination of skills and one that doesn’t have those can be staggering in terms of business performance. The pervasiveness of technology, the fact that all companies are becoming software companies, is driving the need for new leadership skills many managers do not have. Furthermore, these skills are not yet taught in business schools or through corporate manager and leadership development programs. There is an urgent need to change this for all functional managers to succeed with digital transformations.
“Classic” Leadership skills evolving
But why do we need new leadership skills to succeed with the digital transformation? Are “classic” leadership skills not sufficient? No, they are not sufficient. Change is the constant in leadership as a result of the digital transition. “Classic” leadership skills are no exception to this. “Classic” leadership skills are a combination of functional role-specific skills and cross-functional leadership skills. Functional role-specific leadership skills are skills such as marketing skills for someone working in the marketing organization, sales skills in the sales organization or product skills for someone in the product organization. These are often skills that are part of someone's educational background. However, omnipresent software, digital ecosystems, data, and algorithms are changing these skills, making some irrelevant as they are taken over by software and introducing new digital functional skills. This is very apparent in areas such as marketing with digital marketing but is now also become common in HR, Finance, and Sales with the emergence of algorithms driving certain tasks.
Then there are cross-functional skills, such as budgeting, people management, strategy planning, change management, project management, etc. They too will have to evolve due to the impact of technology in the organization. It is all in the changes that technology drives and causes. There are several such changes. First, processes are now completely defined by software and are changing the rapid clock speed. This drives the need as a functional leader to understand agile business. This will impact how and when we do budgeting. Budgeting becomes continuous. It equally impacts how and when other cross-functional skills are performed. Secondly, with technology being pervasive, every manager is required to understand how technology impacts the business. Technology, specifically software, is part of all products and services, it’s an element of the foundation of an organization and therefore must be part of leadership skills such as strategic planning. Thirdly, with data as the core of the business, every manager needs to understand the business aspects of data science. How to strategically use data has become a core leadership skill but also changes existing classic leadership skills. AI and machine learning will perform tasks, people used to do. Consequently, it is part of people management, it is an evolving, not static element of products, how change management happens, budget planning, etc. The net effect is that “classic” cross-functional leadership skills of managers equally need to evolve.
The 7 New Leadership Skills driven by the Digital Transformation
However, in addition to changes in “classic” leadership skills, managers will also rapidly need to acquire and master 7 new leadership skills. Each is outlined below but all become necessary as a result of changes caused by the digital disruption. They are necessary for all managers to master if an organization is to become fully digital. The 7 new leadership skills are briefly outlined below:
TECHNOLOGY LEADERSHIP. The ability to strategically understand how different technologies can be applied to accelerated business or create new business opportunities.
AGILE MANAGEMENT. Leadership with a focus on iterative, continuous improvement using multi-functional re-combining teams driving positive business outcomes
DATA SCIENCE MANAGEMENT. The ability to understand how to collect data, analyze information and recommend solutions to a business as well as the ability to direct team(s) working with data and data analysis
AI LEADERSHIP. Leadership skills that allow for managing a combination of AI and ML algorithms and people as well as dealing with AI governance issues, for improved business outcomes.
STORYTELLING. An ability to effectively communicate virtual concepts to an audience with limited understanding of the topic covered and ensure the audience can execute the vision.
INNOVATION MANAGEMENT. The ability to introduce, manage and complete innovation processes and projects across an organization. Including developing leaders that exemplify this skillset
IDEATION MANAGEMENT. The ability to drive a continuous ideation mindset across the management team including getting all members to think as “product managers”.
The first four; technology leadership, agile management, data science management, and AI leadership are the broader and deeper leadership skills. The last three are more narrow leadership skills and not necessarily new as they have been around for years. However, they become even more important in the digital economy. All seven leadership skills should be considered as cross-functional skills and necessary for all managers
In subsequent articles, I will outline the details of each of the 7 leadership skills including a maturity model for a manager to assess progress in mastering the skill. However, it would already be recommended that actions are taken in organizations in evolving the “classic” leadership skills and planning for how to introduce, evolve and solidify the 7 new leadership skills.
Individual managers should consider a personal development plan that includes evolving their “classic” leadership skills and plan for a gradual learning plan for the 7 new leadership skills.
HR leaders especially Learning & Development managers should commence evolving existing leadership development programs to include the seven new leadership skills.
Hiring managers should consider building new leadership skills as part of hiring plans for managers and look for individuals that have started to evolve their “classic” leadership skills.
CEOs and the executive team need to understand that strategically the managers of the organization determine the success of the digital transition, not technology or flashy digital projects. They need to actively support the development of new leadership skills among all managers while equally personally finding ways to develop and evolve their leadership skills.