Leadership Debt: The Hidden Barrier in Tech-Driven Organizational Transformation

In the modern organizational landscape, the introduction of modern technologies often highlights existing issues within a company, such as technical debt, financial debt, and organizational challenges. These issues share a common origin: the human factor. Therefore, it is important to consider the concept of "leadership debt," which refers to deficiencies in leadership that impede the full potential of technological advancements. As the Anna Karenina principle suggests, one failure can threaten the entire system, just as leadership debt can hinder progress from innovative technologies. This article examines the nature of leadership debt, its impact on organizations, and practical strategies to address it.

The Gym Equipment Analogy and the Anna Karenina Principle

Allow me to share a metaphor that I employ in my courses and webinars to illustrate the complexity of organizational transformation. Imagine an organization as an individual striving to improve their health and let us translate this into organizational terms. Acquiring gym equipment (technology) alone will not yield results. Do you know anyone who loses weight simply by purchasing a stationary bike? Unfortunately, numerous organizations perceive technology in this manner. It requires new habits (organizational equivalent to processes), such as waking up early to exercise, and new ways of thinking (organizational equivalent to culture), such as viewing the bed as a place for the sick rather than indulging in late sleep. Furthermore, it demands new attitudes, like considering exercise pleasurable rather than medieval torture. Similarly, to achieve the desired improvements in an organization, it is essential to adopt new processes, new ways of working, new culture, alongside the introduction of modern technology. Failing one of these dimensions will lead to failure, as the Anna Karenina principle explains: failure in any one aspect can lead to overall failure. Thus, even with advanced technology, leadership debt can result in less-than-optimal outcomes. Without addressing the underlying leadership and cultural issues, organizations risk failure despite technological advancements.

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Modern tech for old management

Many companies attempt to introduce advanced technology but continue to operate with outdated management styles rooted in the industrial era, possibly due to what was taught in universities. Some pathologies of such outdated approaches are the vertical structures where leaders lead by rewarding and punishing subordinates, creating - at the team level- the "green light" situation, where team members only report good news. This culture of punishment and blame fosters an environment where individuals seek personal credit for team efforts, rather than collaborating for collective success. Such leadership debt not only hampers innovation but also creates a toxic work culture.

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A quite common mistake is to believe that modern companies have modern management styles just because they develop modern products, or because they are disruptive companies with innovative products, leaders in the regional or global market. They often have leadership like traditional industrial-era organizations. Skilled professionals may lack basic leadership concepts, even from industrial-era management. Remember, it is not the tech that transforms the people magically; the development of advanced technology does not automatically result in advanced management styles. As previously mentioned, just like using a static bike alone will not necessarily lead to weight loss and improved fitness, modern technology alone does not guarantee modern management practices.

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The "King's New Clothes" pathology

Another symptom of leadership debt is the "King's New Clothes" scenario, where there is an appearance of support for transformation initiatives, but little actual change occurs. Individuals may pretend to play a role in navigating an environment where their responsibilities are unclear. This appearance of transformation can mislead stakeholders and hinder genuine progress. Executives may present themselves as visionary leaders because of the belief that adopting modern technology equates to modern leadership.

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Four recommendations for addressing Leadership Debt

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1. Adopt the DNA of the business agility: Autonomy, Mastery, and Purpose

?Instead of relying on rewards and punishment, focus on fostering autonomy, mastery, and purpose among employees, the three elements proposed by Dan Pink. Autonomy empowers individuals to take ownership of their work, motivated by the fulfilling feeling of putting their mastery at work. It not only encourages continuous skill development but also implies breaking the olde model of command-and-control, where every step is controlled by the leaders, making the individuals just like pawns. Rewards and punishments work well for training dogs (Pavlov) of mice (Skinner), but ignores – at least-, the hierarchies of needs of the humans (Maslow) and their role in motivation (Herzberg). Does the innovative and disruptive hi-tech company motivate its workforce with perks and salaries? This author has advised unicorns, which were losing one of each three talents and in the best scenarios, talents were using the company as a platform to land better paid jobs. This happens because motivation is more complex than offering good salaries and unlimited perks. ?

The third element, purpose, aligns individual goals with organizational objectives and has the motivational power to encourage individuals to invest their efforts and talents willingly. This approach intrinsically motivates employees and drives sustainable performance. I call the Pink’s three elements, “The DNA of the business agility”, because they foster autonomy over bureaucratic verticality and prioritize collaboration over a "secrecy-based leadership" model, which operates on the principle that "knowledge is power" and restricts critical information to leaders alone.

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2. Foster psychological Safety

Firing CEOs is uncommon, but there was a famous case of one who did so, partly because they created an environment where employees were forced to hide problems and only report good news, known as "green bias," corporate pathology. But the consequences of leadership behavior had severe consequences for both employees and the organization. Let′s remember the “great resignation” in 2021, where near 4 million of worker quit their jobs, 40% due to burnout and 28% quit without having a job lined up (Limeade research findings). Industrial-era management would try to reverse the situation using rewards but ignoring, - consciously or unconsciously-, the core issue of poor leadership, some cases, toxic leadership. ?Neither systems nor processes could cause the stress that motivates the people to leave, as the leader who threatens the employee with punishment or losing their jobs. This affects the most essential of human needs (Maslow). ?It is essential to promote psychological safety, where individuals feel safe sharing ideas, taking risks, and admitting mistakes without fear of punishment, blaming or losing their jobs. This culture encourages experimentation and learning, driving innovation and growth.

One key element comes from Carl Rogers' concept of "unconditional positive regard," creating an environment where employees feel valued and respected, regardless of their performance. Tolerance to errors leads to the principle “fail fast and learn fast” – instead of blaming and punishment, which is fundamental to perform in complex, volatile and uncertain scenarios.

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3. Avoid the five deadly sins of the leadership

Research has identified five common attitudes among leaders that contribute to project failures, even when projects have all the elements needed for success.

To avoid the five deadly sins of leadership, particularly those that contribute to leadership debt, it is crucial to avoid hubris, increase awareness of human factors as causes of failure, and acknowledge the limitations of one's knowledge. Overconfidence, fueled by market success, often leads companies to believe their management skills are infallible, blinding them to potential pitfalls and new challenges. This arrogance can result in ignoring critical issues like high voluntary turnover, preventing leaders from recognizing the need for improved understanding and adaptation. Furthermore, leaders may fall into the trap of ignorance by interpreting situations solely based on their experiences and education, overlooking the limitations of their knowledge, and failing to seek diverse perspectives. Hubris can make leaders resistant to feedback, while unclear objectives lead to confusion and misalignment within the team. By being mindful of these pitfalls, leaders can navigate their teams toward success and avoid catastrophic failures like the Titanic disaster.

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4. Assess Leadership and Organizational Readiness

Before embarking on major technological transformations, it is essential to assess leadership and organizational readiness. This involves evaluating the current leadership capabilities, organizational culture, and processes to identify areas that require attention. Engaging external consultants for this assessment can provide an unbiased perspective and reveal hidden issues that may not be apparent internally. Avoid the myopia of looking only at the tech aspect. Organizations are ecosystems with various elements which are interconnected, interrelated, and interdependent. It is a mistake to excel in one element and neglect others. As the Anna Karenina principle reminds us, failure in one aspect led to failure of the entire system, and that is especially true when the element is leadership. By thoroughly assessing readiness, organizations can develop targeted interventions to address leadership debt and ensure a smoother and more successful transformation journey. Actions may include investing in ongoing leadership development programs to ensure that leaders have the necessary skills and knowledge to manage the complexities of modern organizations. This includes training on emotional intelligence, adaptive leadership, and change management.

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Addressing leadership debt is essential for organizations seeking to leverage modern technologies and drive meaningful transformation. By updating management styles, fostering a culture of trust and collaboration, and investing in leadership development, organizations can overcome leadership debt and achieve optimal results. The journey to transformation requires a holistic approach that considers both technological advancements and the human elements of leadership. Organizations must recognize that great technology alone is not enough. The hidden barrier of leadership debt must be addressed to unlock the full potential of technological innovations and achieve lasting success.

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References:

This article was developed with the help of Microsoft Copilot, an AI writing assistant, to improve the quality and coherence of the content. The author crafted ideas, metaphors, and recommendations. References to previously mentioned points can be found in the following citations from the author:

1.?????? About losing weight and organizational transformation in “Change Management tips for Digital Transformation”, ?https://www.youtube.com/watch?v=JbzmM5Su7UQ ?

2.?????? Anna Karenina and project management ?(Portuguese) https://www.amazon.com/Murphy-Projects-projetos-preveni-las-Portuguese-ebook/dp/B0120Q7RV6

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3.?????? ?Webinar, “Beyond the king’s clothes: unmasking the challenges of business transformation”, https://www.projectmanagement.com//videos//894025/beyond-the-king-s-clothes--unmasking-the-challenges-of-business-transformation

4.?????? “How change management skills improves your transformational leadership” https://www.youtube.com/watch?v=BOhauEjKZ5k&t=795s

5.?????? The Titanic and the Five Deadly Sins of the Project Manager https://www.projectmanagement.com/webinars/359991/the-titanic-and-the-five-deadly-sins-of-the-project-manager

6.?????? APMG′s change management certification courses, https://ipa.improving-performance.com

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