Six must-have skills for leaders in the digital economy

The impact of digital technology on how companies do business - and organise themselves to do business - has been as rapid as it has been profound. And when the organisation changes so dramatically it follows that so too must the role of manager. 

“The onset of the digital economy has utterly transformed business models, work flows, supply chains, service delivery and competitive landscapes.”

Here are six skills and attributes you will need to be a successful and effective manager in the digital economy.

Adopt a digital mindset

There may have been a time in the evolution of business technology when managers could convincingly argue it was not necessary for them to be steeped in tech know-how. But the idea technology is something which happens in the IT department won’t cut it anymore.

The digital transformation of businesses means the impact of technology extends operationally, strategically and culturally across every facet of an organisation. No matter which part of a business managers are responsible fo,r they will need to understand how the various data coursing through a company is essential to how business is done, strategies are set and opportunities identified.

Managers who fail to adopt a ‘digital mindset’ are likely to make less than optimal decisions and risk marginalising their careers.

Become a digital evangelist

Harvard Business Review credits the legendary Jack Welch, the former CEO of GE, with identifying the necessity for modern organisations to break down silos.

Welch understood the speed of globalisation and technological innovation in the 21^stcentury would require companies to rethink management orthodoxies to reflect shorter decision cycles, more employee engagement and stronger collaboration.

As HBR explains, Welch advocated for a “‘boundaryless organisation’ and to build it he initiated what became known as the GE Work-Out process – a series of structured and facilitated forums, bringing people together across levels, functions and geographies to solve problems and make decisions in real time.”

Welch was on the money but bear in mind this was in the 1990s. As prescient as Welch was he could not have imagined the past decade of digital disruption.

As persuasive as he and other management thinkers were about breaking down silos, large organisations have proven culturally resistant to change, whereas the baggage-free disruptor start-ups have taken naturally to it (indeed, their challenge will be to remain silo-free as they grow and in many cases are swallowed up by larger organisations).

Becoming a digital enterprise is a whole-of-company undertaking. Data informs every aspect of doing business, which once again heightens the importance of the ‘boundaryless organisation’.

This time, however, any business unit which does not embrace this digital imperative instantly becomes the weak link in the chain which could jeopardise the entire organisation.

In such an unforgiving environment it falls to every manager to be a ‘digital evangelist’, ensuring employees understand where they fit in the digital whole and the role they play in driving an organisation’s digital strategy.

As digital evangelists it is beholden on managers to create a compelling narrative on the organisation’s digital transformation, develop relationships with other strands of the business and provide opportunities for staff to contribute to an organisation’s digital intelligence.

Managing in an ‘open source’ environment

Managers are operating in a period of constant and often erratic change brought about by market ‘disruptors’, rapid developments in digital and intelligent technology, and profound shifts in consumer behaviour.

When management consultant CEB surveyed company executives from around the world, including Australia, it found the typical organisation had undertaken five substantial ‘enterprise changes’ in the previous three years. 

Of the change initiatives analysed, based on self-reporting, 50 per cent were a ‘clear failure’, 16 per cent were described as showing ‘mixed results’ and only 34 per cent were rated as ‘clear successes’.

CEB attributes these poor results to “top-down” approaches to change management in which leaders alone determine the strategic changes an organisation will make and the implementation plans employees will follow.

CEB believes the companies most likely to achieve successful change outcomes are those which take an “open-source” approach in which leaders engage the workforce as “active participants in making and shaping change decisions”.

The characteristics of open-source change include a more “inclusive and participative” approach.

Managers with an open-source approach cultivate the skills and capabilities necessary in their workforce and possess the ability to seek specific, relevant expertise when it is needed for a problem they are trying to solve or an opportunity they want to secure.

“Open source change is defined by three components: a co-created change strategy, employee ownership of change implementation plans and communications which ‘ask and talk’ instead of ‘sell and tell’,” CEB says.

Managers as guardians of corporate culture

An organisation which undertakes the enormous transformation required to compete in the digital economy needs to ensure its corporate culture is part of the journey.

There is much which can chip away at even the most rock-solid cultures: new ways of working and engaging with customers, uncertain career paths, the relentless pace of change, an ageing workforce which may feel increasingly isolated, and inevitable doubts about an employer’s strategy for competing in a rapidly evolving marketplace

While corporate culture has predominantly been an exercise for HR departments the stakes are now considerably higher. A renewed focus on corporate culture by regulators – particularly with the onset of the digital economy – has transformed what has been a mostly tick-the-box exercise to an absolute management imperative.

The Australian Securities & Investments Commission (ASIC) explains culture is a “key driver of conduct” which is why it considers a company’s culture as part of its risk-based surveillance reviews of the entities it regulates.

“Poor culture very often leads to poor outcomes for investors and consumers, impacts on the integrity of the Australian financial markets, and erodes investor and consumer trust and confidence,” ASIC commissioner John Price said in a speech last year.

“We are particularly focused on things like remuneration structures, conflicts of interest, complaints handling, treatment of whistleblowers, and timeliness of breach reporting to ASIC.”

The Australian Institute of Company Directors’ (AICD) most recent Director Sentiment Index shows nine out of 10 directors believe Australian business needs to make improvements to corporate culture.

When culture becomes a governance concern managers can be sure they will be held to account for any aberrant behaviour within their areas of responsibility.

AICD Chairman Elizabeth Proust makes clear responsibility for improving corporate culture extends well beyond the boardroom.

“A focus on culture over the long-term is critical for management and boards of all organisations. This is a complex task that requires sustained effort,” she says.

Keep your staff motivated

Being a digital-savvy organisation does not guarantee staff will be engaged and motivated. Indeed, ‘digital natives’ in a hurry to realise career ambitions may be harder to satisfy and more eager to join an organisation which values them.

It has always been important for managers to keep staff motivated but in the digital economy everything travels at hyper-speed - including employee attention spans and career expectations.

A recent staff retention survey by the Australian Institute of Managers and Leaders (IML) found the two top factors for driving staff turnover are ‘seeking new challenges’ (79 per cent) and ‘limited career advancement/progression’ (58 per cent)/. “Insufficient financial rewards” was the third-biggest factor at 46 per cent.

Managers need to find ways not only to stimulate employees but also to create opportunities which will help achieve their personal and career goals. Providing access to quality education and training is one avenue but is not always in a manager’s gift.

Leaders need to be creative in developing informal but nonetheless structured programs which will retain and develop their best employees. This is a task for managers, who know their staff better than anyone else, not HR, which is more likely to look to off-the-shelf solutions.

According to the IML, it costs on average $A24,000 to rehire a lost employee.

Stay relevant, be alert, seize opportunities

When it comes to planning their own careers managers need to be every bit as agile as the 21^st century organisation.

Rapidly advancing technology means business models and organisational structures are constantly being tightened and realigned. Managers, no matter how senior, have never been more expendable.

Research by management consultant CEB found over a recent 12-month survey period 13 per cent of leadership positions were eliminated and 31 per cent of current leaders were in newly created roles.

It also found companies were three times more willing to replace senior executives than they were 10 years ago as more executives are “misaligned” to organisational needs.

The onus is on managers to be alert, ensure skill levels are to-the-minute, stay abreast of market and industry trends, take on special projects to remain fresh and motivated and seize every opportunity to build an industry profile.

Managers would do well to have a mentor as they progress through their careers but they should also consider being a mentor to young up-and-comers: as well as helping to develop a future leader it provides a valuable link to alternative experiences and world views.

Leo D'Angelo Fisher is a freelance writer and veteran of management journalism