Leadership in the Digital World – Charles V Firlotte
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Leadership in the Digital World

On May 11th, 1997, a chess-playing IBM computer dubbed “Deep Blue” beat grandmaster Garry Kasparov. The Russian prodigy had won the first game, lost the second, took a “draw” on the next three, and lost the final. Incredulous, he suggested that the computer had been controlled by a human grandmaster. Though few realized it at the time, the incontrovertible evidence that a computer could interpret data logically, reason, and make decisions accordingly forever changed the way we live and work. Kasparov’s doubt notwithstanding, Deep Blue represented the forward march of what some twenty years later we know as “big data.”

Whether it is the emergence of such disruptive technologies as the Internet of Things, 3-D printing, robotics, or the convergence of social, cloud, and mobile computing technologies (to cite just a few examples) the unstoppable march to digitization has changed the way just about every company operates and how they and their customers interact. Mastery of the digital landscape – which for many organizations requires a complex transformation of everything from IT to supply chain to customer service – is necessary to capture opportunity and to compete, and it has CEOs and their entire workforces scrambling to keep pace.

There are no hard and fast rules for how to adapt to or survive in a digital world. Companies spawned in the digital age have no legacies on which to rely. More traditional companies may be hamstrung by management theories that originated in the industrial economy. Any company counting on tech-savvy millennials to guide them through the wilderness must accept that even those weaned in the digital age are products of educational systems designed in and for another era.

While the need to adapt to technological advances is not new – indeed, it goes back at least as far as the dawn of the industrial revolution – what is different now is the pace and scope of change. In his book, Digital Disruption – Unleashing the Next Wave of Innovation, James McQuivey points out that while economists focus on trends that reduce barriers to entry, in a digitally disrupted world, the barriers can be all but obliterated.

Even those rare companies that aren’t “digital” now or identify themselves as such will be.  According to recent research from Accenture, 82% of business leaders expect their respective organizations to be a digital business in the next three years. Yet that same research suggests that business leaders are less than confident in their abilities to lead in a world gone digital. Only 34% of those surveyed felt well prepared in leadership acumen and vision to tackle the digital economy.

I have seen this gap in my own industry. Some twenty years ago the utility industry saw a significant shift in technology and the need to adapt to it. In the water sector we migrated to automated treatment plants, and about a decade later our field personnel began utilizing mobile devices, giving them real-time data that allowed them to respond more quickly to customer needs. Today, it is non-negotiable that our employees be comfortable with increasingly sophisticated technology that allows us to detect a greater number of contaminants more quickly and to treat the product to meet ever more stringent health and environmental standards.

Whither Leadership?

With chief executives not overly confident of their ability to wage strategic offense to stay ahead of the digital tsunami, and with few if any clear boundaries and rules to determine winners and losers, how can corporate leadership create a sustainable plan for survival and growth?

You should begin by accepting that you may be in unchartered waters, and they may be shark infested. Market entrants with little experience and limited capital are capable of unraveling your strategy and catching you broadside. This is just as true for traditional corporate institutions as it is for online-only upstarts. The unraveling can and will likely occur in every industry. Uber, Airbnb, and Amazon have already disrupted traditionally low-tech businesses: taxi companies, hotels, and corner grocers (the latter just one of many being disrupted by Amazon).

I recently participated in a discussion on strategy and growth in the electric utility industry, once a bastion of tradition and sameness. The discussion was not about building generating stations, but rather how to pivot to the digital economy, and how the competitors of tomorrow could be companies like Apple or Comcast, rather than the obvious threats from within the energy or utility sector.

Three Steps Leaders Can Take

Initiate the discussion in the boardroom

Mavens of corporate governance have long complained about the dearth of knowledge in the boardroom for anything to do with information technology. As a result, most corporate boards will have spent little time on the subject of digital transformation and the implications for their business. It is imperative you begin this discussion. Consulting firms large and small are establishing digital transformation practices. Consider jump-starting the conversation and journey with one of them. And hire a tech-savvy board member who can be your digital knowledge source.

Check your bench for digital brainpower

The digital world is not necessarily going to be driven by traditional IT pros. A “CDO” – a chief digital officer – may be required. Just as you need a digital champion in the boardroom, companies need an individual to champion these initiatives until they are mainstream. There is need for digital expertise, and if you do not have it within your staffing profile, then you need to find it somewhere.

Digital Success needs a Digital Culture!

Those of us in the C-Suite charged with plotting corporate success have long thought about our organizational culture in traditional ways. Most of us attempted to inculcate the organization by preaching and rewarding values such as respect, responsiveness, dependability, and honesty. The result of adhering to those ideals would accrue to both our employees and our customers, and the organization would reap the benefits of constituent loyalty.

And while we would always want to strive to adhere to such values, the digital culture is demanding something different. It would suggest that it is technology and the Internet that significantly shape how we think, behave, communicate, and interact rather than those values we have long espoused and encouraged. We have boundless access to information as a result of a continuous feed of new products and services.  In the new world order it is technology that heavily influences our value system. Welcome to the digital world.

The influence of culture by technology requires a bit of different thinking. It does not mean that we must forsake our traditional value set, but it does suggest that the forward trail is not business as usual. Companies that succeed in the digital world will need a culture where faster is essential for responding to market shifts and demands, and this will require employees who are both agile and flexible. That in turn requires hiring people who have a hunger for learning, growth, and innovation, and maintaining a managerial bench capable of motivating this talent.

Given Gallup’s recent research suggesting that only 33% of U.S employees are engaged at work, vs. 70% of employees of the world’s best organizations, our ability to engage the workforce to ensure “all hands on deck” could be one of the greatest challenges facing American industry. And as we are only too well aware, the digital world waits for no one.

  • Jess
    Reply March 1, 2018 at 8:47 am

    Absolutely agree that digital success needs a digital culture!

  • Charlie Slack
    Reply March 1, 2018 at 7:14 pm

    Great piece. Essential reading for businesses seeking to bridge the digital divide. I loved the detailed analysis hard-won from Firlotte’s personal experience. Even better are the three steps any manager can put to work immediately at their company.

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