FEATURE 

Digital transformation – the leadership challenge

A successful digital transformation requires a different kind of leadership, writes Professor Lucy Kueng. CEOs need to demonstrate new skills and their top team needs to encompass new roles.

By Lucy Kueng

Digital transformation – the leadership challenge

Digital transformation stands or falls by the calibre of the leadership guiding it. But while serious attention and investments are made in the ‘hard’ classic business aspects of transformation – rethinking business models, revenue streams and workflow – the vital accompanying changes to the soft connective tissue of the organisation, particularly culture and leadership, get less attention than they need. But unless these are prioritised also, a digital strategy won’t deliver what it should, a culture will continually revert to old assumptions, and critical new talent will be unable to deliver what they were hired to do.

Leadership is first among equals of all the factors involved in pulling off true transformation. Mediocre leadership will muddy the focus and dilute results. Progress will happen, but it will be slower and deliver less than the resources invested might have done, and the risk of burnout for those pushing the change is high.

Getting the leadership of digital transformation right is not complex, but it is difficult. The sinews of leadership are embedded in invisible cultural norms and embodied in individuals who cannot be swapped in and out at will.

For my book ‘Hearts and Minds: Harnessing Leadership, Culture and Talent to Really Go Digital’, I carried out over 100 interviews. Here are the key insights from that work on what leadership traits are needed at the top, and on who needs to be in that top team.

This translates to a dual leadership requirement at the top of organisations – leaders need a high IQ and a high EQ.

Basic leadership formula: ‘high thinking, low ego’

There has seldom been a tougher time to lead. Covid-19 and remote working have left people stressed, anxious, and on the edge of burnout. No one has the bandwidth for renovation and regeneration, yet Covid-19 has not only highlighted the urgency of tackling structural transformation challenges, but also created huge opportunities to accelerate digital transformation. This translates to a dual leadership requirement at the top of organisations – leaders need a high IQ and a high EQ.

On the IQ side, simply put, leaders’ ‘big brains’: the person at the top needs the conceptual smarts to chart a strategic course in a fast-evolving sector that is structurally challenged. Digital products need to be compelling enough to compete with the platforms for attention and advertising. New revenue streams need to be found to compensate for the shift from high to low margins that comes in train with a shift to reader revenues. Leaders as strategists need to play what strategic cards they have really cleverly.

Some of the most valuable, strategically-critical knowledge is now located in newer areas of the business, and in younger heads.

Human first, leader second

On the EQ side, while smarts are essential, these are fast becoming table stakes. The game-changing leadership skills are now the soft ones, and these all stem from a self-reflection, self-awareness, humility even, that has never previously been the essential starting point for excellent leadership.

The great management theorist Henry Mintzberg observed that only 10% of strategies are ever fully implemented – and that’s because implementation rests on soft skills, on the ability to shape an organisation’s social architecture. Leaders need to know how to shift a culture, set new norms, priorities and boundaries, and to get individuals to buy into a plan that may be to the greater good of the organisation, but perhaps not in their own best interests. And this work, exhausting as it is, can’t be subcontracted. If top leaders are not driving the change, visibly and authentically, it won’t really happen.

So, what are the critical soft elements of leadership?

  • Be accessible. Expertise is no longer automatically correlated with length of experience. Indeed, in some respects, the reverse applies. Some of the most valuable, strategically-critical knowledge is now located in newer areas of the business, and in younger heads. Those at the top need to ensure that important messages can flow up to them from all parts of the business, in particular from the lower and peripheral areas, where people have a visceral sense of how digital markets are evolving. This mandates a less hierarchical and more conversational approach – leaders need to ask, rather than tell. Members of the organisation need to know they can deliver key messages to those at the top, and that they will be listened to.
  • Show vulnerability. This has two dimensions. First is the ability to admit you don’t have all the answers. The environment is turbulent, and that turbulence is multi-factoral, so strategy will inevitably be emergent. Prediction and planning have to yield to an iterative approach, based on trial and learning. Leaders can’t have all the answers. And they need to be comfortable being open about this – it will, ironically, build their credibility. The second dimension of vulnerability is personal. If leaders are asking people to make profound changes in how they work, they need to show they are having to do this too, and that this can, at times, be hard. Vulnerability is especially important for millennials, who cite vulnerability as the single most important trait they are looking for in their leaders.
  • Create a credible and compelling strategic narrative: Leaders need to pull off a communications balancing act. On the one hand, they must confer absolute clarity on what the core goals are and why. On the other, they must make it clear that these concrete goals may change. This links back to the need for leaders to be open about what they know as well as what they don’t, be comfortable with ambiguity and build organisations that are comfortable with ambiguity too. Another communications priority is to simplify, to cut the strategic to-do list. Most companies have too many strategies (corporate strategy, digital strategy, diversity strategy, data strategy, and so on). They effectively create a strategic ‘pick and mix’ situation – people simply select the goals that appeal or feel doable. And finally, leaders need to double down on leadership messaging. Overdo it. Leaders are never not signalling – passive messaging often carries further than active.

Prediction and planning have to yield to an iterative approach, based on trial and learning.

The top team is critical too

The composition and calibre of the top team is just as important as the calibre of the person at the top. Digital transformation needs the right roles, the right people in those roles, and those individuals need to pull together as a team.

We automatically think of leadership as being only about the person at the top, yet we know that a CEO never leads alone. However charismatic and prescient, she or he inevitably relies on a team that provides additional expertise, challenges their thinking, adds depth, contributes a different perspective, and acts as a check on overweening ego or ambition. For digital transformation to work, elaborate care needs to be given to getting that top team right.

Getting this constellation right is one of the few ‘gangster moves’ in digital transformation. The upside in terms of the speed of transformation is huge, and there’s a downward delta too. If the top team is poorly curated or aligned, the pace of transformation will be sluggish, fundamental decisions will be constantly revisited, and leaders pushing change will get disillusioned.

The composition and calibre of the top team is just as important as the calibre of the person at the top.

New roles in the top team

Striking changes are happening in the composition of that top team. New roles are being added, and others are being redefined. Here are key changes:

  • Chief Product Officer, maybe Chief Data officer too: The advent of these roles is inevitable once digital products become the core business. Shaping these roles is challenging – how do they sit with the Chief Technology Officer, do you need both, where are they sited – with the business, in the newsroom, in charge of the marketing team? There is no textbook solution. What these roles look like in your firm depends on who you have already, and what they know, what your ambitions are and what new expertise these demand.
  • Publisher role morphs into Chief Revenue Officer / Chief Customer Officer: This new role is usually the publisher role reincarnated. It connects and drives all revenue streams, not just advertising. The prime focus is the membership engine, and the allied data and tech activities around that, making it a complex and demanding position. This is a new expertise for the sector and recruits often come from adjacent industries – telecoms, energy, membership organisations. Their skill set includes understanding the inter-play between product, tech and data, customer acquisition, retention and churn management, pricing, and maybe e-commerce, branding, and behavioural economics also.
  • Enter the ‘super HR’: This role is concerned with shaping an internal organisation that is capable of delivering on the strategy, with ensuring organisation has the right culture, leadership, talent, and structure. It was noticeable during research how many of the stronger performing organisations had massively invested in what one head-hunter described to me as ‘the super HR’. These individuals work in lockstep with the CEO and are part of the core decision making group, they don’t simply deliver on strategy, they help design it.
  • Chief Diversity Officers now common: As with other new roles in the top team, they need to have a real seat at the table, a real budget, and to be closely integrated into the core team, as well as having strong links (and credibility) with content producers. Their mandate is to define the challenge around DIE, design the response, and then oversee and support how diversity, inclusion and equity processes are owned and run. They face backwards – correcting structural inequities and unearthing structural blockages – but also forward, putting policies in place to cover all DIE needs.

Just as digital necessitates a different business model and different products, so too does it need different leadership – different traits and different roles. This has been under-prioritised to date. Get digital leadership right, and you will move transformation into fifth gear. It truly is the hidden key to accelerating change, and to finding a sustainable future for the industry.

Get digital leadership right, and you will move transformation into fifth gear.

Lucy’s book, Hearts and Minds: Harnessing Leadership, Culture and Talent to Really Go Digital, can be downloaded free from Oxford University’s Reuters Institute.

This article was first published in InPublishing magazine. If you would like to be added to the free mailing list, please register here.