DQ needed to lead and succeed in digital age

Adapting to the many waves of digital disruption that businesses will experience in the coming years requires a new set of leadership traits. Currently board members and the C-suite are challenged to understand the impact of digital disruption on their business or sector. Imminent disruption threatens 50% of established Irish businesses, according to one study.

The pace and nature of the disruption will affect businesses across all sectors and geographies and at all stages of maturity.?They will present ground-breaking new opportunities as well as considerable risks.?They will challenge business leaders in ways that many may not have been challenged before.

Such predictions may seem extreme, but are grounded in insights from several thought leaders, research from multiple authoritative sources and feedback from business figures.?They are particularly relevant to businesses, which have:

• Under-invested in digital technologies and skills to date
• Done so but only to create silos or to roll out disjointed projects or to fail to deliver real business value (or indeed all of the above)
• Senior figures who are disinterested or sceptical about whether this all really matters to their businesses

Surviving and thriving in the digital era requires different mindsets and approaches to those that have served businesses well in the past.?Traditional leadership skills of IQ and EQ are not enough.?DQ or Digital Quotient capabilities are also needed.

Fourth Industrial Revolution

The starting point is about understanding the macro environment.?Throughout 2016, beginning at the Global Economic Forum in Davos , the implications of what is being termed the Fourth Industrial Revolution have been getting increased air time.?Consider these perspectives:

?“Every industry and every country will be tech-driven.?GE is a tech company. Walmart is a tech company. Verizon is a tech company. ”?

– John Chambers, Executive Chairman, Cisco.

?“We have barely begun to see the level of disruption we are going to go through in the next decade. That will represent an existential crisis to every business in the world.?At board level there is not enough understanding yet.”

– Laurence Buchanan, EY Digital Lead Advisory EMEIA.

?“The changes are so profound that, from the perspective of human history, there has never been a time of greater promise or potential peril. My concern, however, is that decision-makers are too often caught in traditional, linear (and non-disruptive) thinking or too absorbed by immediate concerns to think strategically about the forces of disruption and innovation shaping our future.”

– Klaus Schwab economist and executive chairman of the World Economic Forum.

?“We are seeing the Fourth Industrial Revolution emerge in a series of waves:

• ?The digital consumer, who enjoys more interactive and personalised experiences thanks to SMAC (social, mobile, analytics and cloud) technologies
• The digital enterprise, which leverages SMAC technologies to optimise the cost of corporate functions and to transform enterprise collaboration for greater productivity and
• The emerging digital operations wave, where companies are truly revolutionising business with the use of artificial intelligence, robotics, cognitive computing and the industrial Internet of Things.”

– Pierre Nanterme, CEO, Accenture

?Disruption already here

If all of that is remote from your businesses, then think again.?Disruption is already underway – and not only from new start-ups that have shaken up sectors like hospitality, media and transport.

Social media is but one of many examples of disruption that has affected businesses across all sectors.?It has empowered customers and is fundamentally changing their relationships with companies and brands. Senior business figures are often detached from social media and don’t understand the business impacts.

?A CEO once confided in me that the closest he came to social media were the rows with his teenage daughter about no screens at dinner time.?He freely admitted he had no knowledge about how customers were engaging (or not) with his company and brands on social media.

Some established businesses are pursuing transformation agendas to leverage SMAC and other technologies.?They include those that would be perceived as laggards in the past but have been making strategic decisions that would have been considered absurd a few short years ago.

Who would have thought that blockchain – the technology which has the misfortune to be best known for powering bitcoin – is being taken seriously by banks?

Blockchain, which digitally records data in packages called blocks, is undergoing ‘proof of concept’ trials in banks, including some in Ireland while a blockchain lab is being set up in Dublin by a leading technology consulting house.?The reason??Because it can be used with existing systems within banks to change processes and drive down costs.

Banks are also acquiring early-stage fintech companies, as much to tap into the technologies they are developing, as to acquire the “human capital” with different mindsets to those in banking.?Even Central Banks are getting in on the act.?The Canadian Central Bank is working with the country’s largest banks to develop an electronic version of the Canadian dollar.

The Internet of Things (IoT) is moving from what might seem to be the stuff of sci-fi movies into practical applications with tangible benefits.?Wearables are showing their worth not only beyond fitness and lifestyle applications for consumers but in a host of different settings.?For instance, smart helmets and watches which track fatigue and other risk factors are already showing an impact on industrial accidents.

Dublin is becoming an IoT test bed and has multiple projects which are being piloted.?One is at Croke Park, which is using sensors across a range of different applications – forecasting flooding risks, managing crowds and even monitoring the state of the pitch.

Age of you

So far and so removed (possibly) from your everyday business life.?But wait.?Your customers have higher expectations and can no longer be relied on for loyalty.?Businesses need to move faster than they have ever before to win customer interest.

Welcome to the world of what Interbrand calls the Age of You. “As consumers and devices become more connected and integrated, the data being generated is creating value for consumers, for brands, and for the world at large.”?Jez Frampton, Global CEO surmises. “Brands that seek to lead in the forthcoming Age of You will have to create truly personalised and curated experiences.”

Research on how prepared companies are for digital disruption doesn’t make for pleasant reading.?There are consistent themes around absence of digital knowledge at board and executive levels, skills shortages, legacy technology and processes and fear of new market entrants from new and sometimes unforeseen sources.

An Irish study by Kingram Red found that 70% of Irish businesses surveyed are already experiencing some degree of digital disruption with another 20% expecting to be disrupted within the couple of years.?Just 20% of the sample of traditional businesses had mapped the complete customer journey, a detailed process which involves putting the customer’s lens on a business rather than an organisational one.

The survey’s conclusion??More than 50% of Ireland’s businesses are under threat of imminent and major disruption. Typically, such businesses don’t have a strategy, have not broken down silos and are not sufficiently nimble to meet customer and marketplace changes. Projects that should be transformative can get bogged down in internal politics, in roll out problems and ultimately in not delivering business value.

Leadership and DQ

Digital’s strategic significance can sometimes be lost on some business leaders.?One business figure told Kingram Red : “When we discuss ‘digital’ with our management team and with the board the eyes glaze over in seconds and people start to check the messages on their phones. They just don’t get it. They don’t see the threat that faces our business.”

Boards and senior management cannot divorce themselves from digital disruption or expect their IT or marketing departments to compensate for their lack of interest and knowledge.?Leadership will require what McKinsey and others are calling DQ attributes such as:

1. ?An attitude of openness and a thirst for knowledge
2. A recognition that leaders need not possess all or even some of the knowledge needed. But they are sufficiently informed to understand the business impacts and pose the right type of questions of internal and external specialists
3. An ability to chart a path through a maze of data and potential complexity to create a compelling vision and buy-in from multiple stakeholders
4. An obsession with customers and their perspectives
5. A deconstruction of traditional hierarchal organisational structures and the elimination of silos
6. The creation of a cultural environment which values insights and ideas as much from the shop floor as the C-suite
7. An acceptance that competitors and new market entrants may become collaborators, through “co-opetition”
8. Acting fast in a rapidly changing environment and not being preoccupied by possible failure

That last point – a tolerance for failure – will represent a major shift for many businesses that historically have been risk averse.?While senior figures need to define or re-define their businesses’ risk appetite, the reality is that doing nothing is ultimately the biggest risk of all to take in the digital era.