Mastering and role modelling digital dexterity will enable leaders to guide their organisations to success in a digitally enabled world, write Heidrick & Struggles’ principal Yulia Barnakova, partner Steven Krupp and partner Scott Snyder.
Fewer than a third of companies are sure they have the talent they need to thrive through digital transformation, according to a recent survey we conducted.
However, when pursuing technological expertise, too many overlook the skills their most senior leaders need to change mindsets and guide their companies towards becoming ‘tech enabled’.
We call the mix of leadership and organisational acumen that leaders need ‘digital dexterity’. It combines adaptive, strategic, innovative and executional skills to support both the technological and human side of transformation.
Many leaders have mastered some elements of digital dexterity, but few have the full package. Knowing what skills are needed and why they matter will help teams build a long-term digital advantage that accelerates their companies’ performance.
Superaccelerators
Our research identified an elite set of organisations (among the world’s largest 500 companies by market capitalisation) that consistently outperformed others based on compound annual average growth rate (CAGR) for organic revenue.
These ‘superaccelerators’ differentiated themselves not by industry, geography or strategic focus but by their ability to mobilise, execute, and transform with agility – what we call META. At its core, META means the company adapts and pivots faster than its competitors, which is critical for the digital age.
Leadership teams have an outsize effect on company performance. Our research shows that the senior teams with the highest performance on the META performance factors (among the 3,000 teams we studied) had, on average, a 22.8% higher economic impact than other teams.
To develop digital dexterity, senior leaders must therefore learn the art of mobilising, executing and transforming with agility.
Mobilising
Developing a clear understanding of emerging technologies and non-traditional competitors that could disrupt their industry is a crucial first step.
For example, one healthcare chief operating officer we worked with assigned her leadership team different market areas to monitor, including patient preferences, regulations, and technological innovation, then set up a regular time to triangulate weak signals and adjust the company’s strategy as needed. This led to an early spotting of an emerging trend of using blockchain to support the interoperability of electronic healthcare records, allowing the company to prepare a strategy before competitors could.
Leaders should also leverage the collective scanning power of the organisation, all the way down to the front line, by systematically capturing, disseminating and adapting strategy and tactics based on new market signals.
Another best practice for staying on top of change is regularly exposing the leadership team to disruptions. Tom Gorman, former CEO of shared-logistics company Brambles, did this by taking his board and leadership team to Silicon Valley to visit emerging start-ups and discuss digital innovation challenges with other established companies; the company eventually launched a digitally focused outpost in the area.
Gathering this kind of information will help senior teams not only develop new offerings but to reframe their mission.
GM CEO Mary Barra and her team have been preparing for disruptions such as autonomous vehicles, connectivity, and sharing via acquisitions and investments in companies such as Cruise Automation, Lyft, and Maven. With these steps, Barra is working to transform GM from a car company to a transportation company, revolutionising customer value in the process.
Executing
While reframing an organisation’s purpose and designing solutions customers want in response to new technologies can be tough, taking all that to market may be even harder. The problem is talent: our recent survey found that only 27% of small companies and 29% of large companies believe they have the right talent for digital transformation.
Senior teams must ensure that they themselves have the right capabilities and that throughout the organisation the right people are cultivated internally or hired. In addition to bringing in external talent to drive change, leaders must provide current employees with ample opportunities for learning and job mobility to reinvent both themselves and the business.
It is important to find ways to elevate employees’ roles by integrating artificial intelligence (AI) solutions and other automations into key processes to reduce repetitive or manual tasks, empowering people to do more strategic and problem-solving work and helping them upskill.
At AT&T CEO Randall Stephenson has championed a transition to more wireless technologies, which requires new skill sets, including those in cloud-based computing, coding, data science and other technical capabilities.
Realising the shortage of technical talent in the market, from 2013 to 2016, the company spent $250m on employee education and professional development programmes and more than $30m on tuition assistance annually. While the full ROI has yet to unfold, speed and efficiency have already increased and AT&T has continued to invest in upskilling its employees, helping to transform the education sector in the process.
When executing strategy, a final issue to consider is that, in trying to drive innovation and develop new products, leaders often create complexity, which ultimately slows or hinders the improvement they hope to achieve.
A classic example is LEGO, which doubled its number of unique bricks and diversified into computer games, clothing, and theme parks in the 1990s. These innovations added complexity to its supply chain, increasing out-of-stock challenges, and confusing customers. In 2004, then-CEO Jørgen Vig Knudstorp pared down products, streamlined processes and increased collaboration among teams to speed up decision making.
Transforming
Typically, companies need to upend at least some of what they’ve always done to become tech enabled, and this requires leaders to fundamentally change their understanding of the organisation’s business models and sources of value.
Domino’s Pizza is one example of a company transforming its understanding of its own business – from that of a pizza company to a technology company that sells pizza – by embracing a variety of technologies to support the goal of an improved customer-ordering experience.
Other companies even embrace ‘smart cannibalisation’ or find ways to continue to benefit from the core business while simultaneously reinventing. Netflix is a classic example: CEO Reed Hastings upended, but did not discontinue, the DVD-by-mail business model when he introduced direct streaming as a head-to-head offering.
Netflix is also adept at strategically leveraging data. To serve customers better and gain competitive advantage, it develops original content based on preferences in users’ viewing patterns as well as insights from creative talent. Recently, it has started using data even more deeply with choose-your-own-adventure episodes.
Finding new angles to approach innovation is crucial to making transformative changes, yet many companies struggle. One recent study from CB Insights, for example, shows that less than half of large companies have a formal innovation process, which is a key part of engaging employees in innovation.
Staying agile
One of the most common challenges we hear from leaders trying to drive digital transformation is that their organisational culture and mindsets are stuck in the status quo.
Reinventing the organisation requires leaders also to reinvent themselves and learn constantly. This can include formal learning via a coach; informal and continuous learning, such as listening to podcasts; taking online executive development courses, or going to conferences that expand beyond the traditional topics for a given industry.
Leaders who consistently bring new knowledge to the table not only help their companies look ahead to gain a competitive advantage but act as role models for the organisation.
The CEO and senior team must also continuously shape the culture to support their digital ambition. Useful ways they do so include sponsoring and role modelling innovative thinking and cultivating a learning-orientated, nimble culture; acceptance of failure in the pursuit of brave ideas is a part of this.
Conclusion
Leading digital transformation means being part of a team that can inspire the whole organisation to accelerate, drive continuous and disruptive innovation, and redefine the customer experience. No one person can do it all. Just as business models and critical roles shift with acceleration, so does the mix of digital dexterity skills required.
However, by cultivating their own digital dexterity and making it a priority for their teams to do the same, senior leaders can help themselves, and their organisations, to thrive in a digitally enabled world.
- Read Building digital dexterity in your leadership team
- This article has been adapted from an original piece by Changeboard’s Future Talent 2019 partners, Heidrick & Struggles