Digital Leadership is a Team Sport
Why digital business requires new leadership behaviors across the entire C-suite.
Contributor: Heather Levy
In March 2016, when one of Google’s autonomous vehicles (AV) navigated around sandbags in the road, it bumped into a bus. Both vehicles were traveling at low speeds and although this was a minor incident, it was a reminder to all automotive companies investing resources in a smart vehicle future that digital business innovation involves complex scenarios that may involve legal, regulatory and ethical issues. And the issues don’t stop at strategy and business development. An organization’s leadership must evolve to accompany digital transformation, according to Mark Raskino, vice president and Gartner Fellow.
All organizations have a deep-seated bias toward perpetuating business as usual.
“If a car company’s legal, finance and engineering leaders are not deeply and intimately involved in digital change, how can it happen?” Mr. Raskino asked. If customers fear self-driving cars, the marketing department must focus on helping drivers overcome their trepidation. When the company needs top artificial intelligence (AI) talent, the creative and competitive competency of the HR department becomes essential.
Digital business changes customer propositions, business models, industry models, financial models, culture, regulation, talent and more. For that reason, digital cannot be owned and executed as a single departmental function, Mr. Raskino noted.
“Winning in digital business will be a team sport,” he said.
Few executives involved in digital change
Yet, many companies still struggle to bring their top leaders along on the digital journey. When Mr. Raskino and Gartner research director Graham Waller held a webinar to discuss the key behaviors, or personas, that are necessary to lead digital business, they asked the audience about the level of digital business engagement across their organizations’ C-suite. The audience of business and technology executives across industries responded that few executives in their organization are involved in digital change.
Every leader plays on the digital team
It’s tempting to think of digital as distinct and separable into specialist enclaves. All organizations have a deep-seated bias toward perpetuating business as usual and repelling forces that try to change conventional and well-honed best practices. Here’s how three C-level roles must play together to win at digital.
Chief executive officer
Digital business change can quickly alter the fundamentals of the business, including what customers want, what the product can be, what the industry is, and what the company structure and mission should be. These are matters that only the CEO can deal with, in conjunction with the board of directors, investors, executive team, customers and other major stakeholders.
If the CEO does not own and drive the biggest and hardest decisions, then change will be superficial and weak.
Leading from the front is essential. “If the CEO does not own and drive the biggest and hardest decisions, then change will be superficial and weak,” Mr. Raskino said. Digital business cannot be delegated, and it will not resolve itself.
Chief financial officer
The company’s CFO must adapt the financial model to the new cash flows that digital brings. Factors like balance sheet structure, capital investment profile, free cash flow, revenue recognition timing, gross operating margins and tax optimizing methods can change radically when digital disruption occurs. As Mr. Waller said, “The thing you are monetizing and the way you do it will often change, too, for example, from a product sale to a service subscription or an intellectual property licensing fee. Only the CFO can make these changes and judge how to time them.”
Chief operating officer
The COO will have to lead the transformation to new operating models, or perhaps change the nature of what he or she is operating. New competencies will need to be incubated for 3D printing, cloud-based services or digitally enabled products, and these new areas will need to find a home on the organization chart. Existing areas will feel threatened, so dealing with active and passive resistance will become a key leadership issue for the COO.
Play the same game
All leaders must be involved in the same digital sport. As Mr. Raskino said, “R&D can’t beta test digital products that Legal isn’t ready to sign off on. Sales can’t confidently sell online services that IT can’t quickly evolve and properly maintain, and the CEO can’t promise customers a bright new tomorrow if the team can’t deliver. Importantly, the board can’t convince investors to stay loyal if the company looks like it’s on the victim list in the next wave of industry disruption.”
To learn more, download Chapter 1 of Digital to the Core, Remastering Leadership for Your Industry, Your Enterprise, and Yourself by Mark Raskino and Graham Waller (Bibliomotion, 2015)
Assess your digital leadership quotient by taking the Digital Persona Quiz.
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