Seven steps to becoming a digital leader

Over the last couple of years there has been plenty of research into what makes a good digital business published. These studies typically classify the companies they cover into groups such as digital leaders or masters at one end of the scale and digital laggards or beginners at the other. Classifying the participants in this way allows the researchers to analyse what the leaders do differently to the beginners and hence provide insights about how to ensure a successful digital transformation.

A year ago I wrote an article called Vision and leadership key to digital success in which I discussed the findings of one such study by the Apigee Institute. The research found that digital leaders created and shared a compelling vision for the digital transformation of their organisation and also appointed a senior executive to lead their digital initiatives. Vision and leadership are often cited as being key to becoming a successful digital business; they are the first two things I talk about when running workshops for senior executives about digital transformation.

All transformations – digital or otherwise – start with a vision from the top. The CEO and the board need to create a credible and compelling vision for the business in the digital age. And this vision has to be shared with the rest of the business to maximise the chances of it becoming a reality. In Don’t wait for a crisis to go digital I described how creating a vision for the digital age required a fresh perspective on the organisation – the outside-in view.

In a recent interview about his new book, Leading Digital – Turning Technology into Business Transformation, Didier Bonnet explained that, in the course of conducting hundreds of interviews with organisations about their approach to digital, it became clear to him and co-authors George Westerman and Andrew McAfee that firms that struggle to become truly digital “fail to develop the leadership capabilities required to set and execute a digital vision.”

So what capabilities are required to provide leadership in a digital business? What attributes do executives need to ensure they can both set and execute a digital vision? Based on my work helping organisations to become digital businesses, here are seven capabilities that all members of the senior team will need to develop:

1. Strong business skills

Despite what some people may think the fundamentals of business have not changed in the digital age. Profit and loss, cost control, cash flow, customer service and retention, people and stakeholder management, commercial management, etc. are all still core activities in a digital business. Any executive that wants to be an effective digital leader needs a good grounding in all facets of business. And this can only be gained through first hand experience; there is no shortcut to becoming an effective leader of any business, digital included.

2. Comfortable with technology

Boards and senior executives need to become more engaged with technology. The leaders of a digital business have to be comfortable talking about and using technology, they have to promote its use and underline its importance.

It is no longer acceptable for a board member to be a self-confessed technophobe or Luddite. In a digital business every member of the senior team must be able to contribute to discussions about technology and they must also understand and be able to articulate the importance of technology to the organisation.This does not mean they need to be deeply technical or understand how the technology works but they do need to understand its capability and how it can be applied.

3. Digitally aware

Technology is key to the digital business. But being comfortable talking about technology matters is just the starting point as there is also a lot more to being a digital business than technology. Digital is about transforming the entire organisation, it is about creating new business models, products and services, generating new revenue streams, and creating a unique customer experience. And this may involve collaborating with other partners, suppliers and even customers to create new offerings and generate value for all parties. Leaders who think digital is just a technology project, or it is just about the organisation’s website or social media activity are not digitally aware and will not provide the direction required for a successful digital transformation.

Digital awareness starts with engaging with digital offerings and experiences on a personal basis. An executive that shows little interest in digital products and services will have little credibility across the rest of the organisation. They also need to understand what it takes to create and manage ongoing digital products and services that generate value for the business and the customer beyond the initial transaction. This is where the real customer experience and value lies. This involves taking the outside-in view of the business – looking at the business from the customer’s perspective – and being prepared to reinvent what the company does and how it does it based on this view.

4. Collaborative

Being a digital business means being a joined-up business. Digital does not stop at functional boundaries; it flows through the organisation to create integrated offerings and a seamless customer experience. Executives need to work together to identify and exploit opportunities in the digital world.

5. Open to new ideas

And not just open to them, the leaders of a digital business need to be actively searching for and introducing new ideas and innovation. It does not matter where the ideas come from, staff, partners, suppliers and customers are all potential sources of new ideas and innovation. Organisations need their leaders to create the right environment and processes for ideas to be shared, debated and acted upon. And they need to make sure this happens quickly – digital markets are more dynamic than traditional markets and they can be disrupted more easily. New features, products and services need to be introduced quickly to stay ahead of the competition.

6. Willing to take risks …

To survive and succeed in the digital world, businesses need to be agile; they need to be able to respond quickly and easily to changing market conditions, customer preferences or competitor activity. The leaders of a digital business therefore need to be capable of making quick decisions perhaps on minimal or imperfect information. And they also need to be prepared to take risks, try new things, test ideas and commission pilots in order to keep pace in the digital world.

This does not necessarily mean taking big risks; the most successful digital businesses regularly launch small initiatives to test new ideas, products and services. Instead of evaluating a new idea through board papers and business cases, these organisations perform their evaluation in the real world, with real customers but in a controlled way.

7. … and prepared to fail

With this approach comes the likelihood of failure; some ideas will not work and will need to be closed down quickly. Failure has to be an acceptable outcome for the executives of a digital business; there can be no stigma attached to trying something new but then realising that it has not worked as long as it is a small failure and a fast failure. The leadership need to set (realistic) boundaries or parameters within which ideas can be tested and assessed without repercussions in the event that they do not work.

Executives need new capabilities to lead a digital business. Without these they will not be able to provide the direction required for a successful digital transformation. But these capabilities must be built on top of, and not instead of, the core business skills that business leaders have always required. Organisations that develop these additional capabilities across their leadership team are far more likely to succeed in the digital age than those that do not.

If your organisation wants to develop a vision and strategy for its digital transformation, or if it wants to reinvent its business model for digital then please contact me or visit my website, axin.co.uk.

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