Transforming an organisation is never an easy task, especially when competitive pressure becomes merciless. There always seems to be a faster, better, bolder, brighter business model emerging in the digital age: Asset-light and hyper-agile new businesses attack incumbents and fight for market space and customer attention. Competitive advantages erode even faster because (almost) everything can be copied. This digital business landscape demands different, agile and hyper-aware leaders and forces organisations to transform and adapt at an ever-increasing speed. But how much agility can one organisation generate? When does it become breathless activism? And how do agile leaders manage their energy and resources? Is it time to pair agility with resilience?
Agile leaders are, first and foremost, good learners. Research shows that the qualities of nimble leaders match traits associated with people who are successful in learning1 2. Both have a clearly defined long-term aspiration that enables them to effectively manage short-term uncertainty. They are self-aware and do not become defensive when receiving feedback. Instead, they humbly acknowledge that others know more than they do and adjust their way of working and thinking. They remain curious and are willing to take risks, such as making a mistake or appearing non-expert in public. Their inquisitive mind keeps them ahead of the knowledge curve3.
In addition, agile leaders are hyperaware. They scan internal and external environments constantly to anticipate and navigate opportunities and threats in a disruptive, digital environment. They take evidence-based decisions, making use of data and information, and execute fast, often valuing speed over perfection4. Agile leaders engage with others, motivate and inspire.
Transforming organisations towards more agility
In a recent study5, we asked how C-suite leaders transform their organisations to make them fit for the digital age. The overwhelming response was that cultural components by far outweigh technological aspects. Ultimately, digital transformation is about the people involved, their cultural readiness, and the mindset for transformation.
Four components emerged from the study that shape cultural transformation in the digital age:
1. Corporate values that drive collaborative behaviour and continuous learning
2. An adaptable organisational structure with in-built flexibility
3. Processes that connect the organisation synergistically
4. Advanced communication protocols that connect individuals
Agile leaders need to build their individual traits into the organisation. This can be most effectively achieved through engaging and effective communication. The mindful use of digital tools can amplify reach and serve to create a community. At the same time, it is important not to cut back on human interaction and to be aware of silos that can be created by an overemphasis on technology.
For teams that are widely spread out and work mostly virtually, leaders need to create familiarity and psychological safety to achieve results. It has become good practice to visualise communication norms and protocols, such as hanging the rules of communication on each conference room wall. Such gestures help to create a community and cultivate a sense of belonging in a virtual world.
Digitalisation means speed. Firms need to be faster at implementing their ideas and bringing them to market. The customer experience is about instant fulfilment. Organisations must be equipped with the ability to make rapid decisions – on all levels. Incumbents strive to cultivate the entrepreneurial spirit associated with a start-up culture to drive innovation. Many organisations encourage small-scale experiments and prefer them to enterprise-wide approaches. A proven concept is to rapidly construct a hypothesis, build prototypes, test them, gather and analyse data, and refine. This data-driven decision-making culture has to be embraced and modelled at the top of the house to be successful.
At the same time, the ‘hardwired’ structure of an organisation is critical for its digital readiness. While clear roles and responsibilities are required, having built-in flexibility is key. In such an environment, teams form and disband quickly and continuously. New structures emerge and vanish out of, and into, ambiguity in response to customer and market trends. Roles become location agnostic and hierarchies become less steep; they move ‘from pyramid to pancake’. Fluid and flat becomes the new normal. In a fluid organisational structure, traditional hierarchical relationships become less important, and the formal structure needs to reflect the distribution of accountability. At the same time, leaders need to decentralise empowerment and localise responsibility clearly. Central governance guides and acts as a counterbalance. Behavioural differences and cultural barriers do not disappear in digital transformation and need to be addressed and managed. If leaders manage these cultural differences well, digital transformation can overcome barriers. In our study5, we found that digital transformation provides the opportunity to overcome existing cultural barriers or legacy rifts to create organisational alignment.
For the digital world, Arie de Geus’ statement rings true that the ability to learn faster than the competitor may be the only sustainable competitive advantage in the future6. Agile leaders inculcate a culture of agility and learning, rather than protecting. With traditional structures and business models disappearing, entire organisations are dealing with ambiguity and insecurity on a larger scale. They are in learning mode and out of their comfort zone most of the time – if not constantly. From psychology, we know that it is pain or a sense of urgency that motivates us to change and learn. Change is critically important for survival. However, most people hate change that is imposed on them; they question and resist it. And if you don’t get a chance to ‘refreeze’, you may never know what worked or not. How can leaders keep up with this continuous sense of pain and urgency without burning out the workforce?
Taking a step back and reflecting (in silence) becomes as important as driving and accelerating. Despite the perceived ‘need for speed’, learning and experimentation will take time, may lead to mistakes, and will be productively ‘unproductive’. Changes in customer-facing functions might require a higher speed, whereas safety-related processes may not. New value propositions need time to develop. Leaders need the discipline to execute and deliver results, while, at the same time, making space and time for learning and experimenting7.
Bouncing forward
In a fast-fail, experimental work culture, leaders and organisations alike need to be resilient and to have the ability to bounce back. Resilience is the ability to fully recover after hardship and adversity, to accept negativity as a reality in life. Theory concurs that resilient people possess three characteristics8:
• Firstly, they have a clear sense of reality and are aware of what is going on. They keep on asking themselves if they truly understand – and accept – the reality of their situation. They do not fall into coping or denial mechanisms but face reality, as grim as it might be.
•Second, they hold a deep belief that life is meaningful, supported by a strong purpose9 and value set. Resilient people can see meaning in hard times and emerge from catastrophes even stronger. They see hard times as an opportunity to learn, not to whine.
• And lastly, they have a talent to improvise and adapt. They make the most of what they have, intuitively inventing solutions that help solve problems.
The parallels between characteristics of resilient people and the initially described traits of learners and agile leaders are not coincidental. It takes resilience to learn as the learner has to overcome the “slight” of admitting to not having known. And though some people are born with a greater capacity for resilience, it is a capability that can be learned and taught – on an individual as well as an organisational level. Studies have shown that resilience and transformational leadership are positively related to work engagement10. Resilience prepares us to cope with and adapt to future crises, chronic stresses and acute shocks11.
Organisational resilience is an organisation’s ability to absorb strain and preserve or improve functioning, despite the presence of adversity12. It is influenced by governance processes, leadership practices, organisational culture, human capital, social networks, and collaboration. An organisation’s capacity for resilience also enhances through preparing and planning, collateral pathways and redundancy. This is where the common concept of an agile organisation deviates: “Slack” (redundancy) and planning do not necessarily match our idea of agility. However, they make companies more robust and resilient. It becomes a strategic decision where to strike the balance between lean efficiency and robust preparedness for survival.
On an individual level, resilience training techniques can improve engagement and help people overcome their fears about change. Resilience is a way of combating stress factors at work and in life. It can help employees deal with adversity and change in a way that not only allows them to bounce back but to bounce forward13.
Building organisational robustness through individual resilience
Communicating purpose
An openly shared and well-communicated purpose continues to have the strongest impact on culture. Why are we doing what we are doing? The younger workforce wants answers to this question, and senior management needs to provide a credible response. Transmitting an organisation’s purpose and strengthening corporate social fabric requires skilful, engaging communication and positive relationships. Leadership qualities in such a purpose-led organisation include the courage to challenge the status quo, and to say “no”. Leaders who can effectively initiate and manage difficult and courageous conversations elevate their influence and are more productive. In this way, urgent issues are dealt with in an open, candid and appropriate way, even in challenging circumstances.
Translate ambiguity into clarity
Leaders need to recognise that digitalisation could weaken their organisation’s cultural fabric, and need to consciously address and manage the fear that comes with ambiguity and change. They need to translate ambiguity into clarity, converting unstructured events into an emerging and flexible structure. Crucially, this means developing the ability to solve complex problems and help people identify solutions to situations that others might find overwhelming or overly complex. A system thinking approach has proven useful in these situations.
Self-composure and self compassion
In the digital age, leaders must also be able to manage stress and remain calm under pressure. Simply recognising stress triggers is a good start in maintaining your own productivity. Composure helps people moving forward productively when faced with disruption – for example, by creating reflexive loops and moments of pause. Making room for breathing space for the self, retreating consciously to reflective loops and escaping the perpetual stream of work pressure is essential to stay focused. Introducing disciplines such as yoga, mindfulness, meditation and resilience training can help employees and organisations improve their emotional health. A simple technique is to dedicate a certain time – maybe the first 15 minutes in the morning – to one`s own agenda. Before answering emails, calls or other requests, sit down and work on agenda items that are important for you. Ticking these items off at the start of the day gives a deep sense of accomplishment and the feeling of being in control. For once.
About the Author
Katharina Lange joined IMD as Professor of Leadership in September 2019. She has taught executives globally, specializing in self-leadership and cross-cultural team leadership in times of Change. Before joining IMD, Katharina led the Office of Executive Development at Singapore Management University (SMU). Prior to her experience in Asia, Katharina was Program Director and Head Life Science Industries at the European School of Management and Technology (esmt), Berlin, where she directed and taught in executive and degree programs. Before her career in business education, Katharina worked 9 years with Arthur Andersen and Deloitte Consulting. Her PhD in pharmacology adds the empirical lens of a natural scientist to her profile.
References
1. Monique Valcour, “4 Ways to Become a Better Learner”, Harvard Business Review, December 31, 2015.
2. Erika Andersen, “Learning to Learn”, Harvard Business Review, March 2016.
3. Tiziana Casciaro, Amy Edmondson, Sujin Jang, “Cross-silo Leadership”, Harvard Business Review, May-June 2019.
4. Redefining Leadership for a Digital Age, Rainer Neubauer Andrew Tarling Michael Wade, IMD Global Center for Digital Business Transformation, 2017
5. Transforming your organization for the digital age, Katharina Lange et al, Asian Management Insights, Nov 2019 (forthcoming)
6. Arie de Geus, “Planning as Learning”, Harvard Business Review, March 1988.
7. Jeanne Ross, “Digital is about Speed–But it takes a Long Time”, MIT Sloan Management Review, April 5, 2018.
8. How resilience works, Diane Coutu, Harvard Business Review. May 2002, Vol. 80 Issue 5, p46-55
9. What We Can Learn About Resilience from Female Leaders of the UN, Monique Valcour, Harvard Business Review Digital Articles. 9/28/2017, p2-6.
10. Resilience, Leadership and Work Engagement: The Mediating Role of Positive Affect. Wang, Zhen et al, Social Indicators Research. Jun2017, Vol. 132 Issue 2, p699-708.
11. What Is Resilience and How Can It Be Nurtured? A Systematic Review of Empirical Literature on Organizational Resilience. Edwine Barasa et al International Journal of Health Policy & Management. Jun2018, Vol. 7 Issue 6, p491-503.
12. The Geography of Strain: Organizational Resilience as a Function of Intergroup Relations. Kahn, William et al, Academy of Management Review. Jul2018, Vol. 43 Issue 3, p509-529.
13. Changing how people feel about change, C. Mulqueen, Chief Learning Officer. Jan/Feb2018, Vol. 17 Issue 1, p40-43.
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