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What Digital Leadership Does

May 25, 2017

Leadership has been an indispensable factor in any business development. As businesses undergo digital transformation, Stijn Viaene offers exciting insight on digital leadership, the different leadership personas required for its execution, and the crucial role digital leadership plays for a successful digital transformation.

The digitising economy is compelling business leaders to cultivate a profoundly new mind-set and invest in new technology-driven capabilities for winning. Many are engaging in digital transformation: a form of end-to-end, integrated business transformation where digital technologies play a dominant role. These transformations involve rediscovering the nature of value creation, growing new core capabilities, and developing new skills. They are executed against the backdrop of a volatile, uncertain, complex and ambiguous (VUCA) business environment, catalysed by digitisation.

Digital transformation leaders position their organisations to lead with Social, Mobile, Analytics, Cloud and Internet of Things (SMACIT) technologies, but also to be led by them in their search for organisational agility – their organisation’s capacity to routinely identify and capture opportunities more quickly than their rivals. One way to understand how to lead a digital transformation is by studying how effective business leaders connect ideas and people to develop opportunities and capabilities. I use this 2×2 framework (Figure 1) to synthesise my views from working with digital transformation practitioners:

Figure 1: Leadership personas enabling digital transformation

Digital transformation leaders position their organisations to lead with Social, Mobile, Analytics, Cloud and Internet of Things (SMACIT) technologies.

According to this model, successful digital transformation leadership, a matter of action rather than position, requires a combination of 4 leadership personas: the vigilant, the voyager, the visionary, and the vested leader. Adoption of these personas by you and your team will enable you to effectively capture value from digital transformation.

The Vigilant Leader

It’s not enough to have the courage and confidence to take a team out into new digital territories – in times of turbulence, vigilance is required. This means being constantly alert, curious and attentive to changes in customer behaviour, digital affordances, competitors, market disruptions and new entrants, and being ready to pivot when necessary. Winners are forever sharp-eyed, fascinated and circumspect. Their watchful demeanour allows their organisation to act quickly on the earliest, most feeble signs.

Mirosław Forystek, Chief Information Officer (CIO) at ING Bank Śląski (Poland), is an example of a vigilant leader. One of his IT group’s key responsibilities is to make sure business leaders across the board are aware of emerging technology options. This allows them to become digital leaders. The IT team constantly monitors the market for promising start-ups and new technologies:

“Our radar identifies trends and positions signals from outside. Using these data we try to figure out, for example, what digital start-ups are doing. We combine data from multiple sources, including reports from companies like Gartner, Forrester, BCG and others, but also use input from meetings with our vendors and from scouting at events. We are aware that the vast amount of data sources cannot possibly all be scanned manually. That’s why we are trying to use machine learning and data mining to help us filter and summarise.”

Senior management at ING uses this “technology radar” capability to spot and assess threats and growth opportunities on a quarterly basis. The vigilant practice is designed to create awareness and inform ING decision-makers, as well as to strengthen alignment.

More than data hoarders, leaders, like Forystek, are data sense-makers. They enable the organisation to make sense of what is really happening beyond the periphery, seeding idea generation with interesting perspectives, connecting weak signals and ideas, and uncovering possibly underlying hypotheses or opportunities. They decode the VUCA environment for others by helping to build a common frame of reference for talking productively about what is out there. Good framing avoids distractions and makes it easier for everyone to see interesting future scenarios, agree on a focus, and plan the collaborative transformation journey ahead.

Vigilant leaders understand that they must foster this observant, mindful behaviour in others. They lead by example, encouraging others to look outside the organisation and focus externally, stimulating exploration and external expeditions to develop strategic foresight and perception. Smart leaders don’t wait for these reflexes to develop by accident – they purposefully create tools and practices that are embedded into the organisational fabric. They fully commit to exploiting the power of readily available digital technologies to monitor, analyse, synthesise and share a wide array of data to stay current and identify business opportunities in a real-time world.

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The Voyager Leader

Whilst the vigilant leaders chart a map of the interesting unknown, it’s up to the voyagers to take the first steps. Voyager leaders are the entrepreneurs who connect and team up people to make ideas tangible, bundling creativity to show opportunity at work. They take imagination, the abstract, and make it real – inventing new ways of moving the business forward into a concrete mode of implementation. Today’s winners do this faster, cheaper and better than their rivals by deploying digitally enabled collaboration tools that support a lean and agile business experimentation process.

Visionary leaders have a unique capacity to combine weak signals, ideas and experiments with great imagination and foresight into a strong business purpose.

Garry Lyons, Chief Innovation Officer for MasterCard, is one of these voyager leaders. He learned the trade when he was the CEO of Orbiscom, a leading provider of innovative digital payment solutions to the global financial services industry, prior to its acquisition by MasterCard in 2008. Lyons believes innovation should be a science as much as an art:

“Business innovation can, and should, be a repeatable process. Like any science, you need robust methods and structured techniques to get results. Our MasterCard Labs are constantly inspired by what others do, how they innovate. We love to borrow good ideas, but we never simply copy approaches. We exercise discretion to make them fit the context of MasterCard, without jeopardising their essence.”

MasterCard has been working hard for recognition as a premier digital innovator in global payments. Its long-term vision: to be the digital foundation of a cashless society in which every device is a commercial device. MasterCard Labs, a global network of digital innovation accelerator teams, is playing a pivotal role in facilitating this ambition by taking an outside-in view and by committing to win-win partnerships between internal and external agents as its default innovation operating model.

Like MasterCard, many digital innovators have drawn inspiration from Eric Ries’ bestselling book The Lean Startup to structure and accelerate innovation.¹ From his early work with high-tech start-ups in Silicon Valley, Ries has developed a methodology for creating businesses and products, with the aim of shortening product development lifecycles by adopting a combination of hypothesis experimentation, iterative product releases and validated learning.

Voyager leaders don’t assume that the way things have always been done is the best way to do them. They place high value on learning and capturing lessons from experimentation. Data-driven decision-making and learning by doing is built into the innovation process – with rapid, lean iterations between thinking and acting to progressively discover what shows potential and what doesn’t. The cycle of learn and unlearn is adopted, pragmatically, as an imperative. These leaders set out to explore the full potential of SMACIT to fuel that cycle by enabling better measurement, experimentation, information-sharing and decision-making.

The Visionary Leader

Just like vigilant leaders, visionary leaders make sense of things. But whereas vigilants frame what “is”, visionaries paint a picture of what “could be” and, more importantly, what is preferred as the “to be”. Visionary leaders have a unique capacity to combine weak signals, ideas and experiments with great imagination and foresight into a strong business purpose. This strategic intent allows them to focus resource allocation on the creation of aligned, winning configurations of core capabilities. Translating vision into core capabilities is necessary for business leaders to actualise their choices of where and how to play. They ask: What does our organisation need to do really well in this new environment to allow it to win?

Today’s business visionaries are able to paint an engaging and energising picture of the enterprise’s future that banks on the opportunities of the digital economy. They bring a shared focus and commitment to the organisation, advocating the adoption of digital technologies to attain a competitive edge and capture business value at scale.

That’s what Marc Benioff did when he looked at cloud computing early on and envisioned a grand opportunity for his new company – salesforce.com – to reinvent the enterprise software business “as a service”. That’s what agriculture equipment manufacturer John Deere did with its vision for smart connected machines using Internet of Things (IoT) technologies to revolutionise farming. That’s what Sree Sreenivasan, Chief Digital Officer at the New York Metropolitan Museum of Art, did with his ambition to create a virtuous circle between the online and offline visitor experience, creating an online experience that is so compelling that people from all around the globe put the Met on their bucket list.

Successfully moving into the digital age requires leaders to profoundly challenge their enterprise regarding their core capabilities. A good way to do this is to use a job-to-be-done questioning – introduced in The Innovator’s Solution by Clay Christensen and Michael Raynor – taking a customer-centric perspective on value creation at the highest level: Ask yourself what your customer really seeks to accomplish by buying from you?² What job do they really need – or better, deserve – to get done? It often turns out that what people think their core capabilities are, do not (or no longer) correspond with the jobs-to-be-done from a digital economy perspective.

In a digital business ecosystem world, partners successfully co-create and share value by combining complementary skills, services and capabilities in novel, digital ways.

Business visions for your future will have to include expectations for digital business ecosystems, where competition is based on creating new value from the collective power of digitally connected partners. In a digital business ecosystem world, partners successfully co-create and share value by combining complementary skills, services and capabilities in novel, digital ways. Partners are not selected just to get easy and cost-effective access to scarce resources, but also to accelerate learning cycles through co-creation, and to grow the pie together as a strategy.

For example, collaboration is at the heart of the UK capital’s Smart London plan:

“A long-term commitment to using the creative power of new technologies to serve London and improve Londoners’ lives. […] This effort will require new forms of collaboration between Londoners, government, businesses and academia to approach London’s challenges in an ever more integrated way.”³

A pivotal initiative, recognising the increasingly vital role that data-sharing among internal and external stakeholders plays in supporting sustainable city development, is London Datastore, the city’s open and free data portal, which contains over 500 data sets and receives 50,000 visitors a month. Since its inception in 2010, hundreds of apps have been created by a variety of parties using the trend-setting London Datastore. London recently launched a more comprehensive “data for London” city data strategy.⁴ The ambition is “for London to have the most dynamic and productive City Data Market in the world”. London’s smart city vision is truly a co-creation-of-the-future vision involving strategic commitments to make all users of the data platform winners.

The Vested Leader

Organisational capability emerges from the smart combination of skill, process, organisation and technology, brought together for the purpose of achieving a desirable organisational result. Today’s vested leaders enable their organisation to move beyond experiments and visionary tales and turn these into a productive, yet flexible, organisational machinery. Vested leaders act as the enterprise’s architects at the highest level. Enterprise architecture is an organising logic for an enterprise’s capabilities as a shared vision of how an enterprise should operate as a whole, as well as a process for working towards achieving that vision. It applies architectural principles and practices to guide organisations through transformation.

MIT’s Jeanne Ross and her colleagues underscore the importance of leveraging enterprise architecture for competing in a digital world with their study of Nordstrom, a leading fashion specialty retailer, whose vision is to “integrate the store and online experience to enable customers to shop seamlessly any way they choose”.⁵ The researchers emphasise two important success factors: the company’s strong strategic focus and its architecting capability which enables it to integrate new digital technologies in ways that empower both employees and customers.

The Nordstrom case drives home an important point: for established enterprises, successful digital transformation is not so much about throwing out an old business model for a completely new one – rather, it’s about mindfully and conveniently leveraging the parts that work and seamlessly integrating them with new digital opportunities. Which brings us right back to the voyager leader, who will be more than happy to take advantage of the opportunity to leverage these assets. When a vested leader builds a flexible architecture of loosely coupled, reusable information resources, a whole world opens up for voyager leaders to include these in the mix.

Equally important is that vested leaders create the context for – and facilitate – the capability building itself. This job revolves around creating organisational mechanisms for swiftly mobilising people and skills from a variety of disciplines and bringing them together to construct, improve and reconstruct capabilities. The vested leaders of the digital age are champions of crowdsourcing change, developing a different concept of an organisation, which is focused much more on empowerment, self-learning and networking. They move away from the deeply embedded command-and-control organisation to design an agile organisational architecture and culture.

Today’s business leaders enable others to come together and achieve results. They transform their organisations to create a context for empowered people to discover and adopt new organisational patterns of operating and problem-solving, and to unlearn outdated patterns whenever necessary. The context is designed to promote customer- and results-orientation, self-organising teamwork, open knowledge flow. It has just enough management structure to make productive adaptability thrive.

Conclusion

Successful digital transformation requires digital-savvy champions covering all 4 leadership personas: vigilant, voyager, visionary, and vested. It is the combination that will make the transformation successful. Indeed, the leadership types do not exist in isolation, they are intrinsically connected, interdependent. Without vigilant leaders, there’s no sensing for relevance or making sense of opportunities. Without the voyager leader, opportunities remain wild ideas or risky gambles at best. Without the visionary leader, there’s no focus, no shared direction or sense of purpose as an organisation. Without vested leadership, you will never commit to creating a flexible, adaptable organisational architecture.

The real trick to successful digital transformation is to connect all of the personas in a virtuous loop.

The real trick to successful digital transformation is to connect all of the personas in a virtuous loop. Organisational agility truly becomes a reality when the vested leader’s architecture effectively enables new, creative voyagers, guided by the outside-in framing of the vigilant leader, to leverage existing digital resources in new growth areas – thus effectively closing the loop on transformation leadership. I invite you to challenge yourself as a leader for the digital age with regard to each of the leadership personas described in this article. Combine your strengths with the strengths of others. In the end, it’s the team – not the individual – that makes the difference.

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About the Author

Stijn Viaene is a Full Professor and Partner at Vlerick Business School in Belgium. He is the Director of the school’s Digital Transformation strategic focus area. He is also a Professor in the Decision Sciences and Information Management Department at KU Leuven.