February 2017

BWC White Paper

by Denia Hegerfeld-Hellwig, Brigitta Wurnig

Digital Leadership – Company Leadership in the Age of Digital Transformation

BWC White Paper February 2017 by Denia Hegerfeld-Hellwig, Brigitta Wurnig

1. Digital Leadership – Company Leadership in the Age of digital Transformation

 

1.1 A New Era for Companies

The change into a comprehensively digitalised world has now become an unmistakable fact, and digital transformation is the most important focus of interest. Disruption – which is to say, having suppressed innovations and the creative damage that results from that – is seen as a driving force and is a much used key expression in the new age. Sooner or later, all sectors, businesses and special areas of skill will be affected.

„Whoever wants the world to remain as it is, does not want the world to remain.“
Erich Fried

Certainly the present changes, with their extraordinary paradigm shifts, are  disturbing many company leaders. It is becoming increasingly clear that not only the general pace in the business world has become faster, but also that whole business models seem no longer to fit, and have become obsolescent in the truest sense of the word. The new and highly proactive form of interaction between companies and their stake holders (work colleagues, shareholders, clients and business partners) is confronting management with demanding challenges and unfamiliar situations. The workforce is visibly or invisibly being divided into „digital natives“ and „digital immigrants“, and they are facing dangers never seen before, but also are seeing opportunities arising out of the need for sustainability, social responsibility and facing new competitors who are stepping onto the playing field. This is a daunting host of factors that have to be considered.

 

1.2 Changed Demands for Leaders

Just as familiar structures break down in many places, and new ones appear on the horizon, leaders are required to question their roles, in order to travel along new roads. To an increasing extent, it is becoming clear that the leadership approaches and qualities of yesterday will cease to be valid against the background of the factors mentioned above.

This fact raises many questions:

  • If real leadership means real vision and enterprise, how might these qualities look in an age of digital transformation? What bet are we making on the future?
  • What will be the tasks of the management floor, and what skills will be needed for them?
  • Where and how does the management of today and, even more, of tomorrow, position itself in regard to the various stakeholders of the enterprise?
  • What self evident truths are needed in this brave new world, a world which has so many opportunities, and also so many dangers?
  • How can company managers integrate themselves into the coming demands or, still more, into their future leadership Ego?
  • In short: How will it work? Or rather: how can it work well? Which is the road and where does it go?

 

1.3 What does Digital Leadership mean?

It seems easy to see the answers to the questions above. Company leaders are needed who have command of Digital Leadership, which is to say, who possess the leadership qualities for the digital age, with its very special digital processes and digital media. Yet what seems so simple is far from it, because the concept is hiding a need for comprehensive transformation.

Digital Leadership means, if you really think it through, that companies and their managements must radically rethink and change their organisations, their structures, their leadership principles and the ways in which they involve their staff, in order to do justice to digital requirements and developments.

And that the leaders themselves, in the wake of these changes, must extend and develop their abilities, and especially their attitudes, in a way that they have perhaps not known before.

We have always possessed the basic set of abilities, such as communication, poise, self-assurance and the capacity to manage conflicts. But never before has successful leadership had to deploy so many different facets, never before had to question itself so radically, and to transform and develop itself so thoroughly.

„Si cela n’est que difficile, c’est fait; si cela est impossible, nous verrons.“
Charles-Alexandre de Calonne (freely translated: “What ‘s difficult we’ll do immediately, the impossible takes a little longer.”)

 

1.4 What Demands does Digital Leadership impose on Leaders?

The VUCA Framework, which for a long time has been occupying the contemporary business world and the literature of management, describes with great transparency how fundamentally the working world and the business processes have changed[1]. Added to that are the demands of digitalisation, that management now must face.

BWC has identified the following challenges, after working with more than 100 executives from top management and senior management in the course of only the last three years, and carrying out independent research. These are the challenges that a Digital Leader must contend with in order to be successful in the long term.

 

1.4.1 Communication and fast Flow of Information

The means of communication have been totally transformed over the past two and a half decades, by mobile telephony and the internet.  Social networks and new contact channels have deeply revolutionised communication. The information flow has dramatically increased in speed. If something happens on one side of the world, it is known a moment later on the other side of the world, e.g. through Twitter. What is new in a company in the morning, already can be obsolete by the evening. Rigid meeting routines are gradually losing significance and are being replaced by new technologies.

New Leadership Requirements: the work force and other stake holders wish to be informed no less quickly and thoroughly about changes in the company.  Knowledge is shared by means of agile technologies and no longer hoarded by a few people in the company. The slogan is intelligent networking instead of a passion for collecting information.

 

1.4.2 Curiosity/Flexibility

The VUCA principles make it clear that 1+1 no longer have to make 2, but that equations have many unknowns. The most varied directions must be explored, also unusual scenarios with unusual solution approaches must be worked through. Often, newcomers to a sector are strangers to the sector and show, for that reason, a new point of view that is different from the traditional way of looking at things.

New Leadership Requirements: a lifelong habit of learning is now becoming, more than ever before, an absolute requirement, in order to stay on the ball, not only technically but by keeping pace with the spirit of the times. Standing still is no longer an option, and is being replaced by the readiness to test oneself in new situations, and to test the worth of the unknown.

 

1.4.3 Leading „Millenials/Digital Natives“

Colleagues born in the years from 1980 to 1999 are called Generation Y. These show a marked affinity with technology, since most of them have grown up with internet and IT. But they bring new aspects into the workplace in addition, which reveal themselves as social tendencies. For them, Work-Life balance is not a focal theme, but taken for granted, like new role models in family planning.  Status  for them tends to be unimportant and they document their political views by their consumption patterns and their decisions. In their jobs, they wish to find meaning, and quickly evaluate advantages and disadvantages for themselves.

New Leadership Requirements: A leader who continues to cling to received attitudes and concepts will be overtaken by this younger generation and the technical developments, because they demand entirely changed leadership behaviour with the largest possible measure of orientation towards colleagues and continuous differentiated feedback. The art is to give areas of free space and, just as much, to promote a sense of belonging in the company. Leadership does not shrink but rather grows in size, but in a changed form.

 

1.4.4 The Speed of new Developments

Uncertainty about market developments is increasing. What passed as a secure foundation yesterday can be completely different tomorrow. The clients of today will be unlike the clients of tomorrow. The amount of knowledge is increasing and, at the same time, the knowledge is devaluing faster by the day.
Faster development processes demand faster decisions. The cycles will become significantly shorter and prototypes will be tested ever more frequently. Perfectionism will be displaced by experimentation and purposeful failure will be willingly accepted, because failure opens up room for learning.

New Leadership Requirements: The slogan “Simply do it” is increasingly replacing long drawn out and complicated decision processes. One must have the courage to take an 80/20 decision, instead of hiding behind the 150% solution.

 

1.4.5 Working closely with Clients

Every company management in future will have to orientate themselves to a much greater extent towards client wishes and needs, and this will require new structures and modes of thought, but also will show up market developments on the enterprise radar at an earlier stage. The clients of today are much more active and critical, because of the virtual opportunities they have today. They state their opinions, wishes and needs in social networks and on company platforms. The feedback is accessible to everyone and can be spread about in seconds. The client is no alien, abstract being, but has become an active partner of the company.
The requirement is to understand his wishes and needs entirely, and to direct the force of the company towards putting them into effect. “The customer is the king” must be rediscovered in the actions of all levels of the hierarchy.
New Leadership Requirements: The client focus will become the rule, and the measure of progress and success. Leaders must instil this consciousness in their colleagues and see that it is permanently anchored in them. Their actions must be directed permanently towards the satisfaction of the client.

 

1.4.6 Hierarchy and Organisation Changes, and flexible Work Formats and Work Places

Traditional processes and control approaches no longer function. Hierarchies increasingly are becoming not only flatter, but often are being replaced altogether by flexible work groups or teams that reach into several different work departments. Home Office and Desk Sharing, Job Sharing even at management level – work times and formats change drastically. Distance leadership is becoming indispensable and requires other goal agreements and work formats. Traditional control mechanisms and personal presence in companies themselves will be seen less. We will see open organisation structures and self-driven actions.

The trend towards more project work is already clearly to be seen now. An investigation by Trendbüro has shown that colleagues spend a third of their working time in projects[2]. Colleagues are being pulled together flexibly to form a variety of teams, for particular themes, where they can apply their specialised knowledge.

This demands that Digital Leaders engage in intensified communication with colleagues and subordinates within their own departments, and in communication that overreaches the boundaries of work departments in the company. Good communicators and net workers are most successful at bringing suitable people together for themes and projects.

New Leadership Requirements: Technical expertise is being superimposed onto the fact of merely belonging to an organisation, and Special Interest Communities are exchanging their knowledge. Terms like holocracy and democratisation are being applied increasingly often, because they match the goals of the Millennial High Potentials. Company leaders must know their colleagues well, not only at a technical level but also at a personal level, in order to build sustainable working relationships. In the same way, they also must dispose over a network of colleagues outside the department, so that they can draw these into the team, in case of need, to work on a particular theme.

Ultimately, the greatest challenge for leaders in the process of digital transformation is to give up control, but at the same time to hold on to the leadership.

Markus Köhler, Senior Director Human Resources and member of the company management of Microsoft Deutschland, describes this process in a striking way:
“In order for companies to react faster to market changes, company leaders must give more responsibility to the teams, who work near to the market and to the client, and leave their colleagues more free play to make their own decisions. Managers should do more coaching and less controlling in future.”

Also, Frank Kohl-Boas, Head of HR Northwest, Central & Eastern Europe at Google, formulates similar demands in an interview which was part of a study on Digital Leadership[3]. “Adding to networking and deploying new IT systems is of little use if the leadership mentality remains a traditional one” He goes on to say: “Saying ‘Keep going, it’s working’ can quickly lead into the comfort zone – and that can become the danger zone.” He explains:”The deciders do not have to push everything through or try them out in detail themselves, they should allow much more than they have in the past.” This ‘joyful abandon of control’ applies for all company leaders, and the example is set right at the top. A manager today asks the right questions and uses the collective intelligence of the organisation to find the answers.”

The leader as coach urges colleagues to analyse themselves and to take personal responsibility, recognises potentialities and enables them to be developed, by acting as a framework giver, and as an enabler. But to be active in such a way, a new leadership mentality is needed that can only grow by analysing one’s own personality, e.g. values, attitudes, convictions, stress behaviour, strengths and weaknesses. Only in this way can a leadership operation be authentic, bring good results for the company and secure its success and survival in times of rapid market development.

[1] VUCA  (abbr.)
v-olatility (impermanence: a company needs innovation, to keep its clients.)
u-ncertainty (insecurity: especially in relation to planning measures for the market.)
c-omplexity (state of being in a network, there are many possible combinations)
a-mbiguity (equivocation:  causes uncertainty because no clear solutions are possible.)[2] Bettina Dobe “6 Trends for the Work of the Future” (www.cio.de/a/6-trends-fuer-die-arbeit-der-zukunft,2893745)[3] Van Dick, Gross, Helfritz, Holz, Stickling: “Digital Leadership – The Future of Leadership in Companies”

 

2. Keeping Pace with new Developments – Developing the Personality and Skills of a Digital Leader

With an eye on the challenges of the new working day and on contemporary approaches to leadership, BWC asked itself how leaders could master the demands of the new digital age. Two leadership models offered interesting insights.

 

2.1 The first model is so-called “two-handed leadership”.

Authors Rosing, Frese and Bausch[1] set out how the connection between opening (transformational = right hand) and closing (transactional = left hand) leadership is a meaningful approach for keeping the future development of the company in view and, at the same time, for managing the present daily business that generates turnover.

The daily business process needs clear instructions with solid planning and shared rules and goals, and careful and faultless execution must take first place to achieve optimal results. Innovation and creativity are kept as far away as possible. This is more the classical management approach, that puts administration, goal-directed actions and solutions, and the appropriate control mechanisms, in the foreground. Well known leadership instruments are applied here, such as delegation and goal agreements.

For the future development of the company, the so-called left hand approach offers no solution, because this merely optimises the status quo and cannot provide space for innovation.

And so the mechanisms of the so-called right hand must be used to create an open climate for innovation, creativity and change. The colleagues should feel inspired to develop new concepts and ideas, apply their own interest, sense of responsibility and appetite for experiment, without having these rated as impracticable or rejected as defective.

Using this approach, the leader is more an inspiring enabler or catalytically functioning coach, who must encourage trust and flexibility, and who motivates instead of controls.

As a digital leader, one is required to apply both hands, which means to combine the transformational and the transactional leadership methods.

 

2.2 The second model is the Focus Approach ( D. Goleman)

The founder of the Emotional Intelligence (EQ) approach, Daniel Goleman, emphasises the importance of a clear, personal focus for leaders, and he divides this into three areas.

Of special importance here as a leader is the need for a triple focus:

Focussing on one’s self: self perception and self control
Focussing on others: perceiving others with empathy, and building relationships
Focussing on the world as a whole: perceiving the world and the surrounding systems with a strong outward focus and strategic alignment

This model – also used by BWC  – shows how decisive it is for leadership success to develop inter-personal, empathetic and self analysing skills, as well as technical, analytical and operative skills.[2][1] Rosing, K., Frese, M., & Bausch, A. (2011). Explaining the heterogeneity of the leadership-innovation relationship: Ambidextrous leadership. Leadership Quarterly, 22, 956-974
[2]Goleman, D. (2013). “Focus!” A Guide to Modern Living.

 

3. How does one become a Digital Leader?

Models are an excellent way of grasping and seeing into situations. But every future Digital Leader in the end has to undergo the transformation process personally, and this requires having the courage to abandon the comfort zone and follow new paths.

„What we think, we must also say. What we say, we must also do.
And what we do, we must also be.“
Alfred Herrhausen

As the above mentioned study on Digital Leadership has found, many leaders know their defects, but have little inclination to invest in extending their own skills and those of their colleagues. Instead, new technology confronts them, and they have to prove their compatibility with the technology by putting it into practice. According to the study, few companies plan to adapt their leadership structures and processes to the demands of digital transformation. In the same way, formulating new principles of leadership tends to be rated as low in priority, even by the work force. Attention is directed at action, the work of the day. Certainly a shared, goal-oriented action by all leaders of the enterprise would be a daunting endeavour, especially in times of transformation, if no shared understanding of Digital Leadership was created and there were no shared guidelines.

How, then, can a continuous and promising development process be made to succeed? Undoubtedly, this process has to come from the top management, which is itself engaging with new approaches and applying them in their thoughts and actions.

 

4. Growing in Stages into a successful “Digital Leader” with the BWC Digital Leadership Model

For this purpose, BWC has developed an approach, designed to be applied in practice, recognising that digital transformation brings with it the need for personal transformation. Such radical changes in the organisation must be accompanied by extensive changes of the attitude and self-image of the company leadership, in order to deploy the changed culture.

 

4.1 Inner Focus

For authentic leadership behaviour, we must know ourselves well and learn to command ourselves. If we direct our focus inwards, we will recognise our own inner drivers and inner laws. Each person thinks differently, because of unique life experiences, and expresses this unique thought pattern in language and behaviour. It is clear that we influence others with what we say – but HOW do we want to influence them?

And so it is meaningful always to make a pit-stop, to check your own mindset, with its personal convictions, values, fears, reservations, feelings and inhibitions and, if necessary, subject yourself to a thorough overhaul.

 

4.2 Empathy

Real connection with our own needs and aims – inner focus – flows into empathy towards other people. Out of our inner focus, we develop a self-awareness that gives us confidence to approach others openly and without inhibitions. We encounter our surroundings with more curiosity and develop the need to know other people and other worlds of thought. Empathy becomes our driving force, when we are communicating and networking.

Empathy towards others is not empty piety, but is urgently necessary for finding shared goals and solutions to serve the great whole, i.e. the project or the company, by virtue of properly understanding others. For we are shaping our future, all for one, and one for all.

 

4.3 Communication

From a deep understanding of empathy comes good, goal-directed communication, which includes the concerns of the others and links those concerns to one’s own. This becomes especially clear and important in the networking and project structures that are being seen increasingly often.

Clear, understandable communication is based on the clarity of one’s own approaches and attitudes. Understandable, structured and goal-oriented communication, which also has target-group affinity, is decisive for personal success, and it is something that can be learned. Communication is whatever is taken in by the other person, and whatever we hear and understand from the other person.

 

4.4 Relationships

In future, networks will decide about the success of a leadership group. The better its network, the better are the teams that the leadership group can put together for their themes.

Networks grow not from roles but from relationships. One must actively shape relationships, which is to say, one must be in the position to build them up across department boundaries, culture differences, language barriers and time zones. Only a good networker is able to bring together people suited by their skills and personalities, and deploy them for themes and projects. This ability will decide over success or failure even more in the future than it does now. For this reason, the theme of building up relationships is in the long term an essential skill for a good leader.

 

4.5 Sovereignty

We see independence as an essential resource for a Digital Leader. By this, we mean an attitude that is as far as possible free from external compulsions and expectations. Leadership develops a view of the world of work that allows it to quickly recognise connections, dynamics and trends in the surroundings, and to take autonomous decisions.

It is a state of mind that one can see among animals in the wilderness. They lie in the sun, apparently relaxed, but their senses are aware of the surroundings, so that they immediately perceive changes, and decide whether the changes are friendly or threatening.

Such a state of mind succeeds best if one assumes an independent perspective. One is a part of a company system, but one frees oneself from assumed dependencies, such as status, controls or invasive demands.

 

4.6 Inspiration

From the interplay of the other factors, a condition emerges in which the Digital Leader communicates with all stakeholders in a transparent, inspiring way. Completely in the Now and composed, but also with ears and antennas alert to the concerns of everyone around, and sensing from them the future developments of the market.

He or she is now the inspiring impulse giver, devoted to sustainability, the captain close to his team, the visionary juggling with choices. The nonchalant enabler, who gives a framework to the flowing organisation structures of the future, who has a plan and yet remains fluid. And who, through his behaviour, his abilities, his convictions and values, his identity and his nature gives to the work force and all other interest groups a feeling of belonging to precisely this company.

 

4.7 Mindful Awareness and effective Leadership Instruments

A mindful awareness is always necessary, because it enables leaders to behave and to act authentically in the interplay of continuous self-perception, self-analysis and conscious self-discipline that results from it. In addition, well known classical leadership instruments come into play, such as team leadership and self-management. These have to be adapted, so that the personal development that has been experienced can be transferred to the daily practice of leadership.

 

5. Conclusion: The Future belongs to Digital Leadership!

We are going to have to extend ourselves further and faster. And precisely on the basis of our own values and the individual and optimised arrangements that create our structure. Whoever has an unstable basis will wobble – the more he extends himself, the more he will wobble.

The world is changing at a breakneck speed with new developments and technologies. And yet all of us are bringing this change about together. As always in the history of mankind, when traditional bastions start swaying, the system, and the personalities inside it, have reservations and resistances. That is a normal reaction, because leaving the comfort zone causes fear at first, even though it brings enhancement at the end. The rule is to let go of the resistances and to see the great development as a catalyst for one’s own development. In the process, one must identify fears in order to recognise the problems that lie behind them, and these are the challenges and goals that must be met. We become conscious of new abilities and perceptions, and these are discoveries that we would have never thought possible.

And when new demands are coming at us thick and fast, and we follow the guiding principle of mindfulness, we can master the coming challenges for ourselves and for the world.

Authors:
Denia Hegerfeld-Hellwig, Executive & Mindfulness Coach
Brigitta Wurnig, Geschäftsführerin BWC, Topmanagement Coach
Brigitta Wurnig Coaching GmbH (BWC), Neuer Wall 10, 20354 Hamburg

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Copyright: IDC, 2017.
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