The next time you attend a leadership networking event, try this simple experiment. As you mingle with various social groups, ask how people are progressing with respect to digital.
You will likely notice there is no common unifying theme. Some will refer to their social media endeavors, others to their IT refresh programs. You will also likely hear references to process engineering and enhancing the customer experience. Many will refer to their digital transformation programs.
It is not for me to suggest that these definitions are incorrect. However, they imply that “digital” is simply another executive-led initiative, or even a role to which digital matters can be delegated. My belief is that digital is not a program. It is an operating model, and it has a significant bearing on the nature of leadership.
It should be no surprise that the clock speed of business is accelerating. Technology is a catalyst in this respect. Similarly, the world is becoming more uncertain and volatile. Technology has a role to play in this, too. You might say that the industrial era cultivated a form of synthetic certainty that enabled organizations to exert some control over their destinies. The philosophy was: If I build a factory, the market will be sufficiently stable for there to be a demand for the goods produced to the extent that building the factory would be a wise investment. This synthetic certainty enabled leaders to enjoy a high degree of predictability and thus devote more of their time to efficiency. The game was to find a profitable niche and optimize the operating model to maximize profit.
But the days of synthetic certainty are over. A faster, smarter, cheaper Titanic is still a Titanic. Even if it can detect icebergs, it is still no match for the arrival of air transportation. So, this new so-called Digital Age is not simply the industrial era amped up on “tech steroids.” This Digital Age represents a profound change in the business landscape. In many respects, we are back on the preindustrial savanna, where survival is the top agenda item and strategic visions are giving way to situational awareness.
Digitalization of your business is not digital transformation or, should I say, transformation for the Digital Age. At this point in time, all the major business schools, advisory firms and publications are conflating digitalization and digital transformation. Many leaders are under the impression that if they sprinkle their business models with artificial intelligence (AI), internet of things (IoT) and blockchain while moving more stuff to the cloud, they are all set for a bright future. Thus, many leaders are presiding over what can be described as “car crashes in waiting.”
The questions I encourage my clients to ask themselves as they assess their own Digital Age readiness include:
- Are all of our major decisions made by just a handful of people, with the majority simply adhering to some form of operations manual?
- Are our strategic initiatives largely focused on process engineering (polishing)?
- Is there a general belief among our leadership that past successes are a strong indicator of future successes?
If the answer to one or more of these is “yes,” then your organization is not ready for the Digital Age. As you will learn in subsequent posts, rigid, sclerotic factory business models need to become living, sensing organisms that move toward opportunity and away from threats in real time.
This requires a radically different approach to leadership. You have been warned!