Speech Leadership in an Age of Digital Disruption
Chief Information Officer
Speech at the Committee for Economic Development of Australia (CEDA) Digital Bytes Breakfast 2015
Leadership with a digital mindset
Good morning and thank you to CEDA for the invitation to speak here today.
In my speech for CEDA last June, I addressed digital disruption and the opportunities it presents for innovation and growth in the Australian economy. I also covered the imperatives that executives and boards face in dealing with disruption to ensure their organisations flourish in this ever-changing landscape.
Today I will examine how leadership styles have also been disrupted, with a new digital mindset arising, and how this differs from the traditional leadership approaches we have all become accustomed to over time. While the fundamentals of leadership remain unchanged, there are some vital differences to come out of the digital environment we operate in.
These differences arise from technology being applied in many different ways. At the start of the digital revolution, we saw technology being used primarily to bring productivity improvements, or put simply, doing things faster and more efficiently, with improved quality.
However, now through the application of digital technologies, entire business models are being changed or are disappearing within short timeframes, and new models are appearing just as quickly to address unmet consumer needs – often that were not known of before. The examples of this are numerous and well discussed, and I will not go into these in detail. At a glance, though, we have Uber redefining the taxi industry without owning any cars; Airbnb, which has more rooms available to travellers than leading hotel chains and yet does not buy or build hotels; and Freelancer, where members can submit and bid for project work on a global basis purely via online interactions.
But within the context of this technology disruption that is transforming traditional business models, there is another key factor at play that is also challenging traditional leadership – and that is the behaviour of the people in the workforce, including their expectations, skills and needs. All generations have experienced their unique challenges from a leadership perspective. Generation Y entered the workforce in 1995 with a basic knowledge of the first wave of computer technology as the internet was becoming mainstream. The leadership challenge around that time was in computer skills development, cross-training and new work practices. But Generation Z, often referred to as ‘digital natives’, who will be entering the workforce in the next 10 years, will bring greater uncertainty, as it is the first generation truly growing up in the mobile and internet age. While we can look at the children of today and speculate on their habits, expectations of and behaviour in the workforce, only time will really tell. There is, however, no doubt that while generations X and Y will continue to talk about ‘digital disruption’, generation Z will come along and wonder what all the fuss is about; to them what we see as disruption is likely to be business as usual!
Being a leader in an organisation in this era brings some interesting challenges when it comes to dealing with the impact of digital disruption. Marrying traditional leadership with newer approaches to people management is a key success factor in today's economy given the change in behaviour, attitude and expectations of the new digital workforce. The technology of the day is not really the issue here in terms of having to understand it; however, having knowledge of technology at a conceptual level is a must.
So, in this context, let's examine some of the leadership traits that are emerging in an ever-changing digital era. Over the next 15 minutes, I will cover three key aspects of digital leadership: Collaboration, Courage and Culture. Clearly there are many more traits we could discuss, and some may even argue that these are no different from traditional leadership traits, but given the emergence of digital natives in the workforce, and the lessons to come out of organisational successes and failures in recent years, I think these three present a good starting point for the leadership discussion.
There is a saying which goes along the lines of, ‘it's not who you work for, but who you work with'. This, in essence, sums up the imperative for leaders to encourage collaboration not only within their organisation, but, more importantly, across the industry. A leadership style that inspires discussion, idea generation and inquiry becomes crucial in the context of digital disruption. Many of the organisations that have prospered in this digital age have had a strong approach to engagement across their industry, either for harnessing ideas and possibilities, lining up partnerships for increased market share, research and development, or tapping into the talent pool around the world. This collaboration is in addition to, not at the expense of, a mindset that protects the core intellectual property and know-how of the organisation in a highly competitive environment.
The approach of inventing it all yourself is one that has not prospered when you look at organisational successes. There are many examples of this: Apple, that actually only designs their devices, and does not physically build them but depends on sophisticated upstream and downstream integration of suppliers; Google, that relies on daily customer feedback on their online services and then reacts and adapts to that in a matter of weeks; and numerous telecommunications companies that collaborate with phone manufacturers and retailers in launches, plans and unique value propositions.
In the digital economy, the difference in collaboration and engagement required for leaders stems from the fact that ideas and threats may not come from your own competitors, as was the case in traditional leadership where one maintained a healthy network of related business partners and competitor know-how. The insights and ideas may arise from an unrelated sector or an entrepreneurial source that can scale a start-up with unprecedented speed. Clear examples here include the fact that Uber was not started by bus companies to compete with taxis; Airbnb was not set up by a leading hotel chain; Apple was not a music company when it disrupted the music industry; and Amazon was an online book store, and yet it is now one of the leading IT cloud providers and is challenging the traditional heavyweights of computing.
So, what is important for leaders in this era of collaboration? It's a clear understanding of the broader operating environment in the digital economy.
Courage has always been a key aspect of traditional leadership, but as recent history shows, this is now being tested even more so. Think about the Kodak discussion that hid the digital innovation they invented; or the choices in front of companies like HMV, Blockbuster and Borders, as the market turned digital – should they fight or take flight? Clearly, some of these companies chose to wait and see, and we know what the end result was.
Leaders in the digital economy need that extra dose of courage more now than ever before. They need an approach that is nimble, adaptive and, if required, can reconfigure or reimagine the business model.
This comes from an attitude that encourages a test and learn approach. This is where seed projects and ideas may be allowed to grow and prove themselves, as long as there is also the courage to either stop them as a write-off if they do not deliver value, or, if projects show value, then courage and leadership to implement them, even if they have the potential to redefine the business in non-traditional ways. This is not as easy as it may sound. Often the easiest decision is to continue the investment until the project ends, that is not stop it, or protect and safeguard a traditional business model with a historic revenue stream, rather than implement a new model, for fear of risk in the new world.
There are many examples of this courage and I am sure you face this as leaders too. The ones that come to mind include: Apple re-sizing the iPhone to make it larger when previously the direction was to head the other way; Microsoft, traditionally a software company, entering the hardware arena with Surface tablet devices; and the many newspapers challenged by the choices between print or digital offerings. I suspect all of these directions would have demanded some courageous decisions in the face of some strong internal debate that challenged a long-held status quo.
Culture is an aspect of leadership that has been important for a long time, but now has more prominence within our digital economy due to a younger more tech-savvy workforce and the fact that many new ideas arise from them. In the past, the top-down management approach driven by a clear vision statement was the dominant leadership style. Today's employees don't just need a vision statement; they also need a challenge or a mantra they believe in, particularly one that allows them to compete. This includes having a very clear articulation of ‘why’ the challenge or need exists and what fulfilling this will do for the organisation and its customers.
So creating an environment that actively seeks input, encourages new ways of doing things and offers a challenge for teams becomes vital. Coupled with this, and a major source of differentiation, is leadership that allows ideas to flourish and progress without hindrance.
Similarly, leadership that encourage employees to question and debate options, and arrive at a better solution through a diversity of views is just as important. With disruption occurring faster and with more impact, both for risks and returns, leadership that ‘tests and refines’ ideas in this manner becomes vital.
This approach also feeds the new thirst the digital natives in the workforce have for feeling engaged and valued, and wanting to express their view. Often, feeding this can lead to many other related untapped ideas and views being captured. This was seen so visibly in the recent viral phenomenon #thedress, which started off as simply getting a view on colour, but then generated far more discussion on perspectives, diversity and attitudes across many societies and dimensions.
Leadership on culture requires focus across two dimensions. The First is ‘hardwiring’, which includes the policies, regulation and rules that govern a society or organisation and enables it to succeed. In a society or community sense, this is about leadership in laws and rules that encourage start-ups to flourish without inhibitors, and allowing their home presence to be retained as they become successful. It's also about leadership in education curriculums that encourage and develop an entrepreneurship skill set in schools, TAFEs and universities. For organisations, ‘hardwiring’ is about leadership agreeing the digital strategy up-front in a conscious and clear manner. For a Board, this is now as important as the risk appetite statement seen historically: will you be a leader of change and disrupt your own and others' business models, will you be a fast follower of another firm's innovation, or will you simply focus on incremental continuous improvement through the adoption of technology for efficiency and effectiveness? These are questions that have material consequences to the viability of an organisation, and demand a deep understanding of the threats and opportunities that may arise in the digital era.
The second dimension is ‘softwiring’, which refers to the behaviours and attitudes necessary for dealing with the digital era in a societal or organisational sense. In a society, this is about developing a culture that accepts digital change, which supports budding entrepreneurs to pitch ideas, gain feedback and grow. This requires a mindset change; an acceptance that start-ups may fail and an attitude that it's okay for them to start over. For many in Silicon Valley, the number of start-ups an individual has been part of is seen as a valuable saleable credential, not a black mark on their ability. This clearly is a new paradigm for leadership which traditionally may see this as a failure. Organisational softwiring is about a culture that leaders create in order to encourage and motivate people to pursue their passions both within the workplace and personal environment.
There is a lot of talk about work-life balance, but the disruptive world creates a blurred line between these aspects when the company vision becomes a belief that also allows a personal passion to be pursued alongside of this.
Digital mindset in leadership
To conclude, in this age of digital disruption, leadership needs to evolve to embrace new approaches demanded by the digital economy. This is not about forgetting the traditional approaches, but building on them. You could call this two-speed leadership. Successful leaders in the digital era prosper most with a new focus on Collaboration, Courage and Culture.
With Collaboration, it's actively ensuring this happens; with Courage, it's being able to make the difficult decisions, often very quickly with many unknowns; and with Culture it's extending the vision to a passion for staff to own and drive.
In particular though, leadership in the digital era is where business-savvy technologists and technology-savvy businesses coexist; this doesn't mean you have to be able to do the job of the other profession, but it requires people to have an appreciation of the cross-over and value each adds, while allowing the relevant expertise to continue to be respected and applied without barriers. Understanding the concepts and possibilities of social, mobile, data and cloud becomes a necessity for the business; and an appreciation of funding, cost and customer needs becomes the technologists' imperative.
Some may argue the leadership required in the age of digital disruption is no different from the past, and it's about vision, strategy, people and delivery. They may well be right. But when you look more deeply, then leadership today requires a lot more. The speed and nature of the change we experience now warrants this, and when traditional leaders are afraid of technology, or don't quite understand the opportunities or threats it brings, the difference required in leadership becomes much clearer.
I would like to thank Veronica O'Gorman for her contribution to this speech. [*]