by Fabian Kienbaum and Dr Walter Jochmann
The digital transformation affecting our society and economy promises great commercial rewards. Before companies can reap these rewards, they need specialists and executives that can contribute meaningful digital competences on top of their traditional management or leadership qualities. Here’s the rub: Self-styled digital gurus are a dime a dozen. Every company – and every consulting firm – seems to have some. They all talk the talk of digitalization. Very few know how to walk the walk.
Find and Develop Bright Digital Minds
Companies need to ask themselves: How will I recognize genuine digital competences? How digitally competent are our managers? How can we promote digital leadership? From middle management to the upper echelons of executive life, decisions are being taken that will determine future business models and innovations. These decisions have to prove their worth even in a digitalized future. There is not much leeway for trial and error, because digital transformation has ramped up the pace in the markets and the intensity of competition. Digital leadership has become a critical factor in this time of change.
Digital leadership has long become a key management competence. HR management and executive management are on the frontlines when it comes to preparing and developing professionals in this area. Are current HR organizations ready for the challenge? Truth be told: Many lack the required competences.
Three Challenges for Digital Leaders
Companies will be facing three challenges on their journey towards digital leadership: First, they need to realize the benefits that digital solutions can offer and understand how these solutions can be put to strategic use. Second, their HR leaders and executive managers need to have a shared and detailed notion of what managers need to implement a comprehensive digitalization strategy. Third, they need the diagnostic means to be able to separate the digital wheat from the chaff when staffing management or key specialist positions. In essence, companies that are taking digitalization seriously need special digital audits or readiness checks to understand whether their people or their entire organizations have the competences required for making their digital transformation the success it could be.
Envisioning a new type of leadership across the entire organization – more often than not: across national borders – and across all hierarchies has become a standard experience for many successful enterprises. Doing the same for digital leadership is only the next logical step. Start-ups are the digital pioneers – even if many giants of the American digital economy have long left the proverbial start-up garage behind. The start-up scene has come up with a new way of business management that combines entrepreneurship and digital pioneerdom. Developing ideas and visions in collaboration, testing out new business models in safe sandboxes – these ideas from the lean start-up world can be used by HR professionals and C-level executives if they want to emulate these success stories of digital leadership.
Full Traction: The 4x4 of Digital Competence
To understand which competences make successful digital leadership, one has to understand the forces and requirements at work in digitalization in particular and in leadership and business management in general. As a structural transformation, digitalization needs a strategic approach and specific methods to put the changes to effective use. On the personal level of the managers involved, innovations need to be managed effectively, and behaviour needs to change to make room for new digital opportunities. The digital competences of managers rest on four pillars:
Each of these four pillars relates to four competences. This 4x4 of digital competences includes the strategic ability to develop digital business models, or the managerial ability to establish a culture of creative freedom and tolerance. New behaviour needs a new digital mindset. Special methods are needed, such as the ability to apply design thinking in innovation. At the same time, a universal phenomenon like digital transformation needs careful thinking and an eye for the details when it ‘touches ground’ in the form of specific changes happening in a specific company.
Now or Never: Make Digital Leadership a Top Issue
Difficult work lies ahead: Getting HR management ready for the new digital challenges, defining digital leadership, and then finding, developing, or recruiting the right minds for the job. Companies need to seize the momentum offered by the current hype surrounding digitalization to power innovations and use their resources for something they cannot do without: real digital leadership.