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Insights / Blog / Business

Digital transformation: Which leadership qualities are in demand?

June 10, 2015
Alain VeuveAlain VeuveManaging Director, AOE Switzerland

During the past two weeks I've been asked on more than one occasion which character traits are needed by leaders during the process of digital transformation. Reason enough to summarize some of my ideas on the subject.

Where do today's leaders come from?

Basically, one has to begin with an understanding of the overall economic context of digital transformation. I have already written extensively about why we continue to underestimate the massive changes brought on by digital transformation – and how new technologies will drive that change in the future.

Before we examine leadership qualities we must realize that, viewed in an historic context, the past 70 years represent an unusually prosperous economic period. The enormous postwar demand, combined with ever-accelerating technological progress, has created a pseudo-reality.

Security, predictability, guarantees and manageability are on the order of the day in this reality. Such was not the case to this degree before the World Wars and we are now experiencing that exactly these supposed fundamentals are no longer valid. I, for one, have no doubts that they will disappear. We can already observe this in various areas, for example in investments, where one cannot make large investments in proven technology without causing amortization over an extremely short time period.

The risk is far too great that a new technology will replace an existing investment at much more favorable conditions. This is just one of many examples that shows that the golden years are over.

Training in economic sciences?

Regarding today's leaders this represents an enormous problem, for they were schooled and socialized during exactly this exceptional era. In other words, their world view and options for action are based on concepts formed within this extraordinary time period. During this time it was crucial to minimize risk, emphasize controlling and create value through work, capital and real estate. In this way we have nurtured perfect administrators and corporate politicians during the past 50 years. And now? Well, now the environment is shifting in a direction where this exact skill set is virtually useless.

You don't believe me? Don't you find it odd that we have been talking about “difficult economic conditions” and “crises” for nearly 20 years? In a time where income and general prosperity including the average working time have increased yet again? What we are currently experiencing is not a 20-year crisis, but rather a time of radical change and a new beginning. But, economic theory is without adequate concepts and is not capable of correctly interpreting the signals. As a consequence, economic theory remains locked into the tried and true lingo.

And this economic theory is taught nearly unchanged; the value of such schooling declines continuously, and I think we can already see the effects in the labor market, at least in part.

Traditional business virtues are in demand: Entrepreneur instead of manager

I believe we need leaders with traditional entrepreneurial qualities in order to succeed in an economic environment characterized by rapid change and insecurity. These are:

A Willingness to take Risks

True entrepreneurs take real risks. A real risk is one that cannot be calculated in every detail. Taking such a risk must be understood as a bet on an entrepreneurial vision.

If you take a look at the extremely successful entrepreneurs you will find that they all have one thing in common: At one or several points in time they bet their entire business on a vision. An administrator would never act in such a manner, and it is exactly this which separates the entrepreneurial wheat from the chaff. If you want to be truly successful with digital transformation, you must be willing to place large bets. To just “adjust a little bit” or to take a “me too” attitude causes one thing – being steamrolled by the competition.

Think in Opportunities

How often do we read about digital transformation as a threat (“...somebody is stealing your business...”), as a challenge in the negative sense? To be honest, if you see it this way then your chances of failing are already at 80 percent.

The reason being that such a business model is not an asset that you own, but rather it's a wave you must recognize and position yourself against in time. You then can jump on the wave and try to ride it as long as it is profitable for you.

Business opportunities are like waves. Surf on them!

The difficulty is that you must be on the lookout for the next wave while still surfing on the current one. If you stay on the current wave and exclusively invest all of your time and energy into riding that wave as best you can, then you will end up lying in the surf.

Though it's true that the waves in the past 60 years (and this is precisely that which misleads us) were large and lasted (and continue to last) for a very long time, it's also true that all of them will end – without exception. If we once again take a look at traditional entrepreneurs we will find that they often tried themselves in many different industries, especially in the pre-war years. They were opportunists in the best possible meaning of the term and I think that today's leaders need to bring exactly this spirit to the table. They should be capable of recognizing opportunities, even the more unconventional ones, and to grab the opportunity. They should be able to surf.

Team Builder

Another important skill is the ability to build teams. That alpha managers lead their companies to fame and success as solitary warriors is a romanticized legend. It has always been and remains so that it is teams that perform extraordinary deeds. What is new is that teams are placed more front-and-center in external communications. Successful leaders are capable of creating teams that work in a certain direction - autonomously and decoupled from the entrepreneur. And good entrepreneurs hire people that are better than they are, while letting them “do their own thing” and learning from their employees along the way.

Passion & fractured Motivation

To be successful in the digital transformation process you must be passionate about what you do. In actuality, this always applies if you want to be successful at your work. But it is a particularly important trait that leaders should possess. If you aren't passionate, then do something else that moves you. I also consider something else to be important, your motivation should be fractured.

With that I mean that your motivation should comprise many different components. Some of these could be self-actualization, a certain view of the world (improving the world), enjoyment of the item itself (e.g. a passion for technology) or material motivation (even though that currently is somewhat suspect). The ideal alternative consists of a mix, for motivation and success promote further motivation. If your motivation is based on only one factor, then you risk losing your drive entirely, should this motivation be diminished (e.g. through failure). If your motivation is fractured, then that risk is lessened considerably.

Be a Tiger

Develop a self confidence that is larger than yourself. Think big and use the doubters to motivate you and strengthen your resolve.

Confidence is everything!

With that I don't mean blindly hanging on to an idea or vision when the facts speak against it. If, however, the facts support your vision, then mentally invest in that vision. Just because something seems surreal, doesn't mean it's unrealistic. Something is always impossible until someone actually does it. This is one of the most important aspects with regard to the culture and new technological possibilities in the future. There will always be naysayers who want to convince you that your vision is utopic. This is a good thing, since it shows you that your vision has a disruptive character. The boundaries between vision and utopia are increasingly disappearing in this era of high-octane, new technological innovation. You ambition is the deciding factor.

Back to the roots

I therefore think that we are well-advised to reflect back to an entrepreneurship such as the one to be found at the beginning of the industrial revolution. One of the achievements of our time is that entry barriers (at least in the Western world) are quite a bit lower than at that time. As we are currently in the process of completing the post-war period economically as well, at its core not much has changed for our leaders. What's new and positive is that leaders can actually live out these qualities as Intra- or entrepreneurs. I hope that we will see as much of this as possible in the future.