Leadership in the digital transformation – How to enable teams and organizations to co-create innovative solutions

Mastering the digital transformation requires organizations to leverage the skills of their members, solve problems in cross-functional teams, identify opportunities and challenges faster, and enable individual members and teams to develop. So we need to better understand the perception, behavior and collaboration of humans, from the individual and collective perspective. With that aim, we invited experts on team development and transformation to our workshop Managing and Leading in the Digital Economy at the University of Zurich’s Faculty of Business, Economics and Informatics to give us insights from the machine room of leading in fast changing times.

Entrepreneurial spirit and accountability are two of the most sought-after traits that established organizations would like to see in their members. This wish reveals that it is hard to foster these attitudes and keep them on top of the agenda, and that it requires active commitment to create organizational structures that foster innovation.

We approached the question from two ends: We first learned from entrepreneurs and trainers about the skills individuals need. We then turned to successful transformation leaders in established organizations to learn from their experiences.

Here is our synthesis of our two days together.

We learned that organizations are more likely to thrive in the digital transformation if they:

1)  Get and keep collaborative high performers on their teams to leverage the team's diverse backgrounds and skills.

2)  Build environments that enhance commitment, learning and productivity in multidisciplinary teams. Doing so means supporting and incentivizing collaborative attitudes instead of “star individuals” who succeed at the expense of their team and don’t help others grow.

3)  Ground their approach in observing “inwards” their strengths and good practices as an organization, while at the same time “keeping an eye out” asking for the actual needs of their customers and changes in their environment. This means constantly asking how to improve their value proposition and adapting it to new needs.

4)  Build from bottom up, in small steps but steadily.

5)  Make learning and collaboration a priority and tailor the organization to it. Give room for experimentation and iteration in adjusting problem-solving approaches to changing demands in the business environment.

6)  Understand the value of data and its limits. Being aware what can and cannot be inferred using data, and how its collection may influence what's legit to conclude.

7)  Consider that learning and collaboration attitudes may be equally applied in manufacturing settings as in knowledge work. And they might already be prevalent among some of the organization's members.

8) Adopt a mindset to embrace change and collaboration. Done well, digitalization can actually help the organization to focus on the value proposition that it uniquely can deliver, and thereby foster innovation.

Even if digitalization provides us with a new toolkit, at the core of any value proposition is an idea brought to life by humans.

Moritz Delbrück and Jonas Jankus highlighted important factors of how to build a high-performing team, and Katherin Kirschenmann introduced us to the Do School method for getting entrepreneurial ideas up and running. Niels Rot followed up with illustrative examples from his experience as a co-founder of the Impact Hub Zurich on how to scale a vision.

“Do not let the vision get in the way of taking baby steps”

For those just starting to build their new venture, the first of Niels Rot’s major takeaways was: “Do not let the vision get in the way of taking baby steps” – so, build the new organizational backbone first before inviting others to join, instead of assembling the ship on the ocean while already being in the middle of a storm. The second one: Scaling the impact of an idea does not always require scaling one’s own organization or unit necessarily. Instead, visions or ideas can also be shared and spread into existing structures within a company or organizations across society that adopt them and collaborate on achieving a goal together.

What makes a high-performing team? We asked Moritz Delbrück and Jonas Jankus, who provided a compelling summary based on years of expertise in building successfully performing teams for more than 20 startups. Our main takeaway: an extreme commitment to quality and accountability that they expect all team members to contribute, but in turn also expect from the organization to deliver. 

Their goal is to recruit 70-80% A-players for a given unit. Those individuals are hired for their specific strengths that add to the profile and needs of the team. While this is ambitious, it can be self-reinforcing because A-players like to perform in an environment with other good people around, so that they can contribute their strengths, but also continuously grow and learn together with others in their team. This provides an ideal mixture to innovate together.

Not only individuals need to commit to quality and accountability -

the organization needs to follow through as well to be credible

Therefore, their first and most important person to hire is the people manager, who puts together the team for the developing company. In decisions whom to add to the nascent team, the candidate’s attitude and integrity are more important than their subject-matter knowledge. An important part of that attitude is accountability. This is not only expected from the employees, but also from the founders and all organization members who commit to helping all other members of the organization grow. All members need to share the same values of the organization, and growing the team needs to add diversity in skills and views that help to navigate the more complex environment companies face nowadays. 

Providing clear feedback and holding oneself to the same standard are key elements to skills development. Therefore a classic from organization theory makes a comeback: A personal scorecard for each team member describes their key contribution and their most important tasks. However, the goal is not to “score” the team member’s performance, but use it as a description in how far a person’s strengths and contributions fit their assigned role. Of note, somebody may be a high performer in one role, but in case of a mismatch may not shine so much in another job. Hence in case a person’s core competencies and contributions don’t match the role they were hired for, they transfer ideally to another role in the organization that is more fitting so that they can perform at their highest level in a topic they care and can do most about.

Katherin Kirschenmann pointed out in her keynote the importance of having a strong team, not a solo player, to create innovative solutions. She regularly advises potential founders to find a co-founder or better even a team with whom to pursue their ideas so that multiple perspectives on a problem are considered. This makes it easier to not fall prey to typical traps in innovation, such as just thinking about one solution that seems obvious because it is close to one’s expertise (but might not be the best solution, see our report on workshop day 1). Or to cut short the cycle of testing and iterating a potential solution to explore its fit. And most importantly, “not to fake a value proposition by thinking you know already what the customers value.” Often this turns out to be not the case, and then resources go to waste without achieving a solution.

Two practical tips for testing solutions were also to prototype only features, not whole polished products, in order to be faster. And she gave a firm advice for creating complex solutions, for example in social innovations: “Don’t do A/B testing!” Instead, it is much more instructional to listen to actual users while they are testing out the solution, in order to figure out its strengths and weaknesses.

Agile transformation in practice:

Starting small,

considering unique needs,

thinking systemic

In order to better understand how transformation works in existing organizations, we heard from Dominic B?chlin, who introduced us to the agile transformation journey at Axa Switzerland, and Janos Hee, who described his learnings on how to transform a traditional high-quality manufacturer, Zimmerli of Switzerland.

The challenge in transforming organizations is threefold:

1) to get everyone on board of the development journey,

2) identify and keep what is working well,

3) while at the same time shifting mindsets and structures to create capabilitites for responding timely to the requirements of today’s fast-changing business environment. 

“The Axa Switzerland Journey” of transforming a traditional insurance company into an agile delivery organization provided several clues on how to take the members on board during the change process. Not only did the team guiding the transformation come up with a common language that connected to the culture of the organization. It also started small, with a committed team, and tailored its solution delivery framework for every unit that they onboarded in the process, so that unique needs could be met.

Several themes from our first workshop-day re-emerged: In this new style of working, it became vital for each team member to be able to lead themselves, topics, and their team members alike. It is equally important that members learn to adapt their leadership style. Dominic B?chlin likened this adaptation process to a reaction to the current “weather situation” – most often, when all is sunny and bright, it is a good time to trust, coach and provide help for self-help to others. When from time to time, fog and drizzle come up and it is not so clear in which direction a team member should go, it is time to provide and enhance clarity. In the infrequent case of a severe disturbance like a thunderstorm, it is up to the leader to intervene and correct actions so that the team can take back their autonomy in better conditions.

“A lot of agile teams do not make

an agile company”

Yet as Dominic B?chlin reminded with a quote of Lean Kanban pioneer Klaus Leopold, “a lot of agile teams do not make an agile company,” and as the organization’s environment keeps changing, the journey continues. On the level of the organization, teams and collaborations need to be set up in a way to support new ways of working together. This applies to prioritizing tasks and knowledge sharing, operational capabilities and technology driven business operation.

Ultimately, an agile transformation also means to re-think the organization as an ecosystem for innovation – with matching strategic and financial planning, product and business ownership. The organization needs to adapt by developing new strategies, and the execution of strategies requires prioritizing values and adapting architecture and governance structures to the new paradigm of collaboration.

Janos Hee showed in his talk how important it is to understand from the organization’s perspective what its success mechanisms are. Learning from members of the organization delivers key insights to understand what matters, and what can be improved to ease collaboration and production. For a midsized premium manufacturer, digitalization doesn’t have to mean acquiring expensive custom software solutions and roll out a massive online sales campaign head first. It can start as simple as introducing digital collaboration tools that make working together easier. After all, innovation is a journey in which new solutions are created together and the experience of all company members, including the expertise of their manufacturing specialists, plays an important part in defining what could be a promising opportunity.

An approach to test – measure – learn for innovation building on data requires that data is collected. It also needs to be organized in a way, on which decisions can be based. Who are the customers, what is the value proposition they buy into and what might they be interested in next? Not all companies today can answer these questions based on own data. An online shop can provide data, but it’s at the same time a challenge to convey through this channel the quality of the garments that need to be experienced in order to decide whether to pay the premium for a handmade product.

And so transformation could also mean running with a hybrid model for a while – handmade goods that are at the core of the value proposition, but they are delivered by an organization that can take advantage of technical developments and modern logistics to spend their money on innovation and leveraging the skills and knowledge of their members. 

In summary, resolutions to the innovation dilemma that we observed were first to innovate in small steps, starting with the existing workforce and enabling it to work better together. And second, in order to create wiggle room financially, it can be useful to save some cost on the non-core business, and use the resources that are freed up for innovation on the core value proposition. One of our participants in our feedback session at the end captured the spirit of the digital transformation that she or he would buy into: “When digitalization just means process optimization, it is boring. When it means taking new opportunities, it is exciting!”