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Digital Leadership

A key characteristic of a digital organization is its ability to use digital technologies to create competitive advantage.  This ability to create competitive advantage however is a function of many factors, such as strategy, culture, technology and human resources.  These factors require intentional blending to be able to deliver the desired competitive advantage and innovation. It is the role of leadership to enable this blending to achieve a desired goal. This brings up a key question: Whether there are new, or at the very least different, leadership imperatives that characterise the digital age?  Is digital leadership a new lens to leadership, or a modification to the existing leadership theories?  What would happen if a firm with digital aspirations continues to function with “traditional /non-digital” leadership?  And, what is digital leadership, assuming it is different or a different version of normal leadership.

Digital leadership can be analysed in different ways including the often (and rightly) understood need to manage employees virtually, a trend accelerated by the pandemic.  While this is a very important part of digital leadership, this section considers a good part of this virtual “managing” a managerial role, as opposed to a “leadership” role, though they are related, influence each other, and could vary from one role/one employee to another role/another employee.

This paper takes a macro-view and attempts to understand the ways in which a combined compact between digital technologies and strategy influences the nature of leadership (and referred to as digital leadership).  The section looks at digital leadership at two levels. It first makes the case that digital tailwinds adds a new dimension to leadership, irrespective of digital status of the firm. In the second section, it discusses new imperatives for leadership in the context of digital firms.

1)         Leadership in a digital world

At a fundamental level, leadership is same in terms of its purpose and values, irrespective of time-period, business context, nature of organization, and digital status of the firm. It could be defined in myriad of ways, but its’ essence is same: To inspire and engage individuals to follow a vision, purpose or given plan in ethical and responsible ways.  To the extent, such activities are influenced by digital technologies, it can be argued that leadership in a digital context brings new dimensions. It entails awareness of technologically-enabled (new) tools to engage with stakeholders (including employees and consumers).  Such tools provide efficiency, speed, and instant sharing, but also come with their own risks requiring leadership choices in terms of what, when and how to use digital technologies in ways that enhance employee engagement and trust. One such example was use of a three-minute video-message by P&O Ferries in March 2021 to cut the jobs of 800 staff[i].  The message led to wide-spread media spotlight, condemnation, and reputation loss.  Digital adds a level of nuance and transparency that legacy leaders need to increasingly consider and reflect in their choices whilst engaging with stakeholders. The availability of digital means to engage, communicate and lead also increases the number of audiences to manage. As one CEO (Carlos Brito, Anheuser-Busch InBev (AB InBev)) was quoted in one research report[ii], “I’ve been CEO for 15 years, and the initial part of my time as CEO was much easier because it was purely about the business … You had to deal with your consumers, with your retailers. But now it’s broader — it’s about sustainability, it’s about race, it’s about inequality, it’s about politics. It’s everything.” (pp. 1-2)

Given that stakeholders also have digital tools to engage with leadership and reach out to bigger audiences opens up (rightly or wrongly) decisions to a broader scrutiny, diverse viewpoints and higher standards of scrutiny, and in the process gives rise to a new opportunities and risks. In some ways, it raises the bar on transparency and fair practices, which always had a moral value, but now with potential for mass-sharing and amplification also has a significant business and reputational value.

The broad availability of digital tools, including broadcast tools from social-media, changes the context of leadership in another important way.  Researchers danah boyd and Alice E. Marwick pointed to the concept of “context collapse”, which refers to the idea that “social media flattens multiple audiences into one” (pp. 5)[iii]  This is further explained by Prof. Omar Wasow, as quoted in a research report:

“what used to be private realms of being able to have one conversation with your friends, another conversation with your family, and a third conversation at work are all increasingly one conversation.” This new reality can find leaders, who often thrive on personal connection, attempting to use the same tools and techniques to both address vast online audiences and conduct face to-face conversations with individuals.” (pp. 5)[iv]

Digital technologies by powering communication, particularly social media, play a big role in context collapse.  It raises new leadership challenges, such as expectations of a single identity across multiple domains (as the recent example of internet posts on Swedish Prime Minister’s private function /party shows[v]), single identity and message to serve various stakeholders, risks of alienating stakeholder(s) when that messages require difficult and sensitive trade-offs, “reacting” in real-time often with limited information, and risks of messages resulting in unintended consequences,. The need to engage in near real-time to an ever-increasing number of audiences is a new leadership challenge.  It raises the base-line level of a single identity, openness and transparency as a “new-normal” for leaders.

Whilst digital technologies provide more means to manage and do work (remotely, at home, flexibly at different hours), the raise the leadership challenge to ensure that cultural values are aligned. Challenges include maintaining a coherent culture, enabling ways to make surreptitious insights happen (coffee-machine discussions), managing an open-door policy, and ensuring that managers understand that digital off-time is not always same as work off-time (therefore not to automatically substitute one for another).

The increased usage and sophistication in digital technologies, however, is taking place with changing societal and individual values, particularly after a slow economic growth since 2008 (post Great Financial Crises) and its’ likely continuation in post Covid-19 context.  This raises the ask for leadership, as it needs to consider not digital technologies per-se, but how digital technologies interact with changing societal and employee values and influence mutual expectations.

The above discussion suggests that the digital technologies generate their headwinds and tailwinds, which have implications for leadership, irrespective of the digital-status of the firm, in terms of stakeholder engagement, maintaining single identity, managing boundaries and navigating possible unintended consequences.

2)         Leadership in a digital firm (Digital Leadership)

The premise of this paper is that digital firms are different (from non-digital or low digital firms) to the extent they rely on digital resources to compete. This is because digital resources differ from traditional resources in various ways, and this has implications in terms of nature of competition, business models and strategies, and organizational cultures.  As discussed previously, in digital contexts, markets are more network based, business models are more platform and eco-system centric, and organizational cultures are fast paced, risk-taking and experimentation oriented.

Firms competing in digital markets do not have to adapt their strategy, culture or leadership approach to digital contexts, but it helps in achieving better performance, if they do, particularly in n very competitive markets that have a high-performance bar to survive. This is because, management research highlights the role of “fit” or “alignment” among various organizational elements to generate superior performance.  Perhaps the most widely known is 7S framework from Peter and Waterman in their book “In Search of Excellence.”  Three hard “S” (namely, Strategy, Structure and Systems) need to be aligned with each other and with other 4 “soft” S (namely, Shared Values, Staff, Skills and Style).   One research report noted, “To navigate the complexity of digital business, companies should consider embracing what we call digital congruence — culture, people, structure, and tasks aligned with each other, company strategy, and the challenges of a constantly changing digital landscape.”[vi] (pp. 4).

The need for a digital version of leadership is on the rise for another important reason. There is also reported gap between firms that are digitally advanced (i.e., able to use digital technologies to build competitive advantage) and early-stage firms. Further, in a survey[vii], it was found that only 48% of respondents agree that their organizations are prepared for the digital economy, 40% agree that their firms have leadership pipelines to meet challenges of digital economy, and less than 10% strongly agreed that their firms have leaders with the right skill-sets to thrive in the digital context.    In another survey[viii], 80% of the respondents from the firms in early stage of digital journey reported needing new leaders for the digital age.  For digitally maturing firms, more than 50% respondents reported needing new leaders.  However, the survey noted a key difference between the early-stage and digitally maturing firms:  64% of the respondents from the digitally maturing firms report developing leaders, whilst only 14% of the respondents from the early digital firms report the same.

The need for leaders ready for digital economy is also influenced by the talent factor. The expectations (with regards to digital savviness in leaders) and values of new generation employees are evolving, and meeting them require that traditional leadership also evolve accordingly.  A survey[ix] found that nearly 80% of respondents wanting to work for a digitally enabled firm or a digital leader, and this is applicable to all age-groups from 22 to 60 years. For example, it was noted in a report[x]  that  “Leading digitally savvy workers is as much about prioritizing the effectiveness of enterprise values as the value of enterprise efficiency. Digital workers want their values, not just their value, explicitly acknowledged — if not publicly embraced — by top management.” (pp. 1).  The same research suggests that many workers perceive that their expectations are not being met. Leaders are not developing requisite digital skills (i.e., they are not prioritizing their own digital self-improvement) and also not engaging affectively (in addition to effectively) witin the organization.

This suggests that the need for digital leaders is nearly universal.  These factors also point out that there may be “digital leadership premium” at work in getting digital firms to their position of competitive advantage. Jacqui Canney, Walmart’s executive vice president of global people, was quoted in a research report[xi] that digital leadership is being called out as a new competency needed for leaders to get promoted.

2.1)        Imperatives of Digital Leadership

Digital leadership is not separate, or distinct, from leadership in general, though it may be subject to a set of different expectations and behaviours.  They are analysed in two different categories, namely, digital mind-set and digital leadership behaviours.   Two additional responsibilities (namely, building a digital narrative and managing change to leverage digital technologies) are also discussed in the last two sub-sections.

  • Digital mind-set essentially means a mental-model that is relevant for digital leaders to consider and employ, whilst leading their firms.
  • Digital leadership behaviours refer to the ways of relating to the stakeholders (including employees and customers) in a way that is aligned to features of a digital environment (such as low marginal costs, power law, long-tailed market opportunities, interconnectedness, unintended consequences, innovation, value-creation, ethics and right governance, and innovative business models).

Two caveats apply to this analysis:

  • Firstly, the above schema applies to employees and leaders in traditional firms though the extent varies with the context. They are included in the section on digital leadership, because the opportunity cost of being unaware of them is more for digital leaders (and firms).
  • Secondly, the principles suggested below are not self-contained or collectively exhaustive. They interact with other elements of culture, strategy and talent management. The interactions between leadership and culture are highly involved, and, to that extent, ideas contained in this section apply to the organizational (digital) culture, and ideas contained in the digital culture section will be effective (digital) leaders acts on them.

3)         Digital Mind-set

This section looks at mind-set in terms in terms of a mental model to navigate the digital challenges.  Digital mind-set has many elements, and this sub-section covers the elements relevant from strategy standpoint.  Other behavioural elements, such as data-centric management approach (a hallmark of digital firms and essential component of digital mind-set), risk-taking and experimentation, and ethics and governance are covered separately under the digital culture section.

3.1)        Every business is a software or technology business

In their book, Daugherty and Wilson[xii] stated three truths about current digital context with the first one being “all companies are now technology companies”.   The recognition, though hard to get internalise, is an important first mind-set requirement.

A common example is provided by Fintech firms, which, by definition, operate at the intersection of finance and technology.  It is not uncommon for such firms to claim that they are in technology firms, but happen to be in the finance business. Lemonade, a New York based insurance firm uses AI extensively and its’ co-founder Shai Wininger says that “Lemonade is a tech company doing insurance, not an insurer doing an app.”[xiii]  This applies to bigger and established firms as well. In 2017, Lloyd Blankfein, Chairman and CEO of Goldman Sachs proclaimed, “We are a technology firm. We are a platform.”[xiv]

That every business is a software or technology business is becoming real for all firms including traditional firms (in industrial products) with the rise of new technologies, such as Internet of Things.  Firms, which are traditionally in the products businesses (such as GE and Siemens) have undertaken their own digital transformation.  However, the role of digital technologies in product firms is not limited to using data and information for new business models (mostly platforms and eco-systems), but also for other value-add activities (such as predictive maintenance, understanding product usage practices, and getting ideas for additional product features and new products).

At a more fundamental level, the nature of product itself is changing.  Software, for example, allows new functionalities to be added (or changed) to the product often remotely. As an example, “whereas, John Deere used to manufacture multiple engines with different levels of horsepower to serve different customer segments, it now can modify the horsepower rating on the same engine using software alone. “[xv]  As a result of digital technologies (in this context Internet of Things), products are increasingly becoming smart products, which is followed by next stage of becoming smart-connected products linked to other related products[xvi].

Similarly, products are now increasingly benefiting from what Daugherty and Wilson called “Forever Beta Strategies”. In this model, seen in products such as Tesla, the product is digitally updated from the cloud, and as a consequence the utility and value of the product grows (instead of diminishing) over time post purchase[xvii].   The products are, in a way, ever green, or probably become even more useful as better AI is incorporated in them. This connection through software means that products “continue to evolve long after entering into service …and for the first time, the traditional sources of data are being supplemented by another source – the product itself.”[xviii]   This potential is being capitalized by existing incumbents. Research indicates, “Incumbents moving boldly command a 20 percent share, on average, of digitalizing markets … it’s often incumbents’ moves that push an industry to the tipping point.”[xix]

As these examples show, digital strategies will play an increasingly important role in product companies. One implication is that though the blurred boundaries between offline and online will become more complex, there will be a digital leadership premium in navigating them

a)          Building Digital-Technology Mind-set

Recalibrating the existing (product-business specific) mental model to technology-based mental model requires deliberate efforts, even – or more so – at the level of senior leaders.  Best practices suggest an initial perspective building through digital benchmarking, building digital fluency at all levels, and also visits to the digital firms to understand the digital context.

DBS’s digital transformation provides the level of (extraordinary) efforts made to change the mental-model to technology-first mind-set.  Their leaders asked questions, such as “What did being world-class in digital look like? How could the bank innovate with technology? …To answer these questions, they visited several technology companies. To think like a technology company, and not always like a bank, Dave created a new question, “What would Amazon CEO Jeff Bezos do?” …DBS started to explore the best practices they could adopt from the technology world, so that it would be perceived as not only a bank, but also a platform company and technology integrator….”. DBS also created acronym GANAFE (Google, Amazon, Netflix, Apple, LinkedIn and Facebook to adopt and reflect their respective strengths (such as open-source like Google, design like Apple, and use data and automation like Netflix).”[xx]

That’s every business is a software or digital technology business has three important corollaries.

  • The software or technology is not to be understood as a “business as usual” or routine technology. In a certain sense, routine or “business as usual” technology is similar to “hygiene” or “maintenance” factors of Hertzberg’s famous two-factor motivation theory. Their presence will not lead to competitive advantage (or motivation, as in the original theory), but their absence could lead to loss of competitiveness (or demotivation, as in the original theory).
  • The software or technology may become a dominant part of the value, and may change the definition of “business” itself. Application of emerging software capabilities including advances in autonomous cars, for example, are prompting Ford to look at its’ business as away from personal car ownership to matrices, such as vehicle miles travelled, whether through personal car sales, or car rentals, or car-sharing arrangements[xxi].

3.2)        Business Performance not based on efficiency alone.

(Value-creation, innovation and superior customer experience needed to build competitive advantage)

Business performance in the traditional context is generally guided by efficiency considerations, as the business environment did not relatively change much, and, once strategy is set, the key to performance was producing goods and services as efficiently as possible. For these reasons, efficiency is an important part of the traditional mind-set.  For a digital strategy and transformation to deliver full value, a shift away from efficiency as the only consideration is important for at least in two important ways:

Firstly, as John Hagel, Co-chairman at Deloitte LLP’s Center for the Edge, noted, “If you are truly going to accelerate performance improvement, you have to stop focusing efficiency. If it’s just efficiency, that’s a diminishing returns game. The more cost-effective and faster you are, the harder it’s going to be to get to that next level of efficiency. But if you focus on effectiveness, on impact, on value delivered to whatever the arena is— the sky is the limit. That requires a mindset shift, getting out of efficiency mind-set.”[xxii] (pp. 9).

This is also being reflected in surveys, where firms that are digitally ahead are more likely to use digital technology for revenue generation, innovation, new business lines as compared to generated cost-efficiencies. In addition, it can be argued that activities, such as innovation and new businesses, when powered with digital technologies, could also give cost benefits. The research shows that advanced AI users focus on revenue generation opportunities to a significantly more extent (in fact twice as likely) than less advanced users.

In a survey[xxiii], it was found that digitally maturing firms are more than twice as likely than early-stage digital firms (87% vs 38%) to invest in innovation, and more than 80% plan to develop new core business lines in the next 3 to 5 years.  Another report[xxiv] noted that whilst early-stage digital firms have an operational focus with single applications in mind (80% of respondents from such firms saying that improving efficiency and customer experience are digital objectives), 90% of respondents from digitally maturing firms suggest that business transformation is the aim of digital strategies. Digitally advanced firms are also significantly more likely to use technology to conduct business in fundamentally different ways and twice as likely (compared to early-stage firms) to develop strategies with time horizon of five years or more[xxv].

In one research that looked at AI initiatives, it was found that the firms that capture value from AI (very low, fewer than 2 out of 5) are more likely to generate value from AI-driven revenue as opposed to cost savings alone, and it is mostly believed that the highest future value of the AI will be on the revenue and growth, as opposed to the cost-side.  Such firms “exhibit a distinct set of organization behaviours.”[xxvi]  (pp. 1-2).  They take large, often risky projects that prioritise revenue growth over cost reduction, align production of AI with its’ consumption (note: this needs cultural and organizational design changes, covered in the section on digital culture), “invest in data, talent and process changes … and recognize that AI is not all about technology…To a large extent, difficulties with generating value from AI show up in the data as organizational rather than technological.” (pp.2).  The research suggests that of the three possible applications of AI (namely, cost reduction, revenue generation and new product development), most pioneers (i.e., the firms that both understand and have adopted AI) apply AI in at least two possible applications.  The report cautions that “Most AI success stories focus on improving existing business processes, whether in sales, marketing, pricing, … But these improvements are comparable to improving the gas mileage of combustion engine vehicles in an era of new transportation possibilities. Business executives need to consider how they can reinvent and reimagine many of those processes in the context of what AI enables. This is where AI’s true potential will emerge: not in doing the same thing better, faster, and cheaper but by doing new things altogether. This is where AI will disrupt industries the most.” (pp. 17).   Further, respondents that report only cost reductions are less hopeful of seeing additional savings than those with revenue gains.

3.3)        External orientation

An important difference between traditional and digital firms, particularly those having platforms and eco-systems as their dominant strategies, relates to the extent they work on “outside in” as opposed to “inside out” strategic basis.

Traditional organizations have relatively rigid organizational boundaries, because, in a near stable environment, it is easy to make decisions on which activities are to be internalized, and which activities can be sourced from the market. Management literature suggests that organizations internalize activities that are either a source of competitive advantage (and therefore easier to control and access internally) or which could be a source of significant risk and/or uncertainty (e.g., a supplier may raise prices suddenly, or acquired by a competitor).  An important consideration in the setting of organizational boundaries is economics of information for various activities, which are subject to inside/outside decisions.  Digital technologies change the economics of information as well as economics of exchange of information, and in the process change the risks/uncertainties involved in engaging with external partners.

The change in information economics make it possible to reduce external risks and uncertainties, transaction costs, information-impactedness, and reach and scope of information access and sharing.  These factors make business models, such as platforms and ecosystems, feasible. Even if a digital firm does not have a platform or eco-system, the changes in information economics have the effect of making organizational boundaries more flexible with greater external networking, engagement, and various forms of loose partnerships. In short, changes in information economics leads to greater external orientation in an organization. The focus shifts from outside in (and managing efficiencies) to inside out (to adapt and innovate through external partners and resources for diverse customer needs in a constantly changing competitive landscape).  An additional reason for the external orientation is the change and VUCA nature of environment. Organizations that are internally focussed may get blind-sided by new and sudden threats, and may also lose opportunities. In a VUCA environments, the windows for responding effectively to opportunities and threats are very narrow requiring digital firms to be proactive to survive.

The external engagement, particularly through platform and eco-system models, opens the possibilities of value-creation through “inversion”. In practice, inversion[xxvii] is an extension of outsourcing, where the platform and eco-system partners provide value (services, ideas, complementors, information) that a traditional firm would have done in-house. Examples include customers providing reviews (and “free” advertising) and recommendations, crowd-sourcing, apps development, and other similar activities.  An inverted firm is a very distinctive entity with blurred lines between “old” and “new” firm, and has significant implications for trust and ecosystem governance[xxviii].

A survey[xxix] found that digitally maturing firms are more likely to participate in digital eco-systems, and also far more likely to collaborate with external partners. Same survey found that digitally maturing firm are twice as likely to partner with external firms to innovate compared to early-stage digital firms.  This is not surprising, as eco-systems offer various advantages[xxx], such as network partners, complementary assets and resources, flexibility, and access to large and diverse set of consumer needs, behaviour and data.  However, these advantages are to be managed along with the risks that they entail. Digital mind-set, in this context, would mean employees are trained in openness (and empowerment) to engage more with external environment, assess external cues, flexibly decide and act, and also maintain external-internal balance in terms of mutual interests.  It may also involve organizational capability development itself.  In its’ digital transformation process, Mastercard adopted an “adaptive eco-system strategy” to join forces with multiple and uncommon partners to “collectively create a solution”, and later started “to codify the process involved in leading multi-party innovation.” (pp. 9-10)[xxxi].

The change towards greater external orientation has important implications for strategy and culture.

In their article, Van Alstyne, Parker and Choudary[xxxii] argued that the move from pipeline (traditional) to platform (or eco-systems) involves three main shifts, which are:

  • from resource control to resource orchestration,
  • from internal optimization to external interactions, and
  • from customer value to eco-system value.

Each of the above three shifts holds keys to a digital mind-set, particularly when organizational boundaries change either because of a business model (platform) or more external engagement through greater number of bilateral alliances.

Engaging more with external environments through alliances, networks and partnership, particularly in a platform context, needs a psychological leap in terms of getting comfortable with “loss of full control”.  When a firm has most key activities inside a firm, it is easier to control and manage them. However, when a firm engages more with external partners, whether or not through platforms, on a more active and hands-on basis, it requires a different mind-set, a digital one, that is more comfortable with loss of full control, ambiguity, greater number of partnerships, and the performance and governance risks that new participants in the eco-system may pose. Digitally maturing firms form alliances that rely less on controlled relationships, and detailed and formal nature of agreements, and more on relational governance[xxxiii].  Platforms are generally partly open with default contracts, as opposed to individual bi-lateral, detailed and long-term agreements between individual partners as in traditional firms. Digital mind-set requires being comfortable to such shifts in the nature of external engagements.

Digital mind-set not only means overcoming psychological fear of loss of total control and ambiguity it brings, but also overcoming the mental block on some loss of confidentiality and sending cues on strategic thinking and projects.  Instead of maintaining secrecy, some businesses encourage their staff to be active on platforms like GitHub, so that they can collaborate with external experts in developing cutting-edge technologies[xxxiv].

External orientation means accessing and leveraging on external resources and opportunities, whenever it is strategically and economically feasible to do so.  One such example includes openness to engage with external resources to solve strategic problems, and being comfortable with some loss of confidentiality (and sharing of strategic thinking). It is in evidence when firms decide to tap the “wisdom of crowd” to solve their problems that are inefficient in terms of cost, time or both to solve internally.  For example, Netflix launched its’ “Netflix Prize” public contest in October 2006 with a prize money of $1 million to improve its’ Cinematch algorithm by 10%[xxxv].  Firms such as Merck and Colgate-Palmolive also used crowd-contests to solve their specific problems.  The solution to Merck’s problem is especially noteworthy, because the solution came from computer scientists (instead of life-science professionals) using machine learning approaches that Merck previously did not know of[xxxvi]. Crowd contests are not the only way to tap the “wisdom of the crowds” to solve technical, design or other problems.  Other forms of crowd-engagement, such as crowd collaborative communities, crowd complementors and crowd labour markets provide different options to organizations adept in external orientation to solve their problems.  Design consultancy, IDEO, for example, uses an online community to work with its consultants to solve problems[xxxvii].

3.4)        Growth mind-set

Digital technologies enable firms to explore the unknown, whether through a large-scale low-cost data, or computational ability, or through new technologies, such as drones and robotics.  Product firms rely more on traditional resources, which are fixed and finite, whilst digital firm create their competitive advantage through digital resources, which are infinite and unknown, as new technologies and possibilities through them are hard to predict.

Noted scholar Carol Dweck identified two distinct types of mind-sets, namely, fixed mind-set and growth mind-set.  Fixed mind-set refers to looking at one’s talent and capabilities as fixed, finite, and pre-determined.  Growth mind-set refers to looking at one’s talent and capabilities as flexible and amenable to growth through training and other intentional efforts.

The distinction at the individual – but also organizational – level becomes important in the digital context, because, by their very nature, digital environments and technologies are constantly evolving, changing (sometimes in disruptive ways), and exploring the unknown. These features align themselves more with the growth-set, which is premised on flexibility and learning of the new and unknown, as opposed to fixed mind-set, which is premised for optimization in fixed and constant contexts.

As one research report[xxxviii] puts it, “A growth mind-set is key to digital transformation. Many people don’t innately possess the skills necessary to succeed in a digital world, but they must develop them as that adapt to the new challenges wrought by digital disruptions.” (pp. 7). Another report[xxxix] based on its survey findings noted that respondents blame market forces, if they believe that their firm is in danger whilst crediting their own actions and capabilities if their firm is not in danger. It further noted that “digital maturity is rooted, at least partly, in mindset, and whether people believe they can adaptor whether they think digital disruption is eroding whatever finite advantage they have.” (pp. 12).

To summarise the discussion on digital mind-set:

Digital mind-set consists of various elements, and the section above covered four elements that emanate from strategic (as opposed to organizational design and behavioural perspectives – though they are interconnected in practice). These four elements are: Considering every business as a software or technology business, moving away from efficiency as the only driver of organizational success, developing an external orientation to engage more broadly and flexibly with external partners, and developing a growth-mindset. Other elements of digital mind-set (such as empowerment, ethical and governance imperatives, and digital fluency) are covered separately in the digital culture section.

4)         Digital leadership behaviours

While the essence of leadership – to set vision and purpose, engage and motivate individuals, and enable practice of ethical and responsible behaviours – remains same irrespective of level of digitalization, the context, expectations, and mix of behaviours to achieve same level of success could vary.

One line of research identified[xl] three sets of behaviours: Eroding (value of these behaviours is in decline), enduring (these behaviours remain as relevant as before) and emerging (these behaviours have gained new emphasis and value).

  • Eroding behaviours include asking for permission, managing top-down, micro-management, one size fits all approach, and rigid long-term plans).
  • Enduring behaviours include (clear vision, customer-centric, leading by example, performance centric, ethics and integrity).
  • Emerging behaviour includes purpose-driven, passionate about work, data-driven decision making, authenticity and empathy, inclusive approach and ability to work across boundaries.

An implication of the above is, “emerging behaviours” that were “nice to have” or “best practices” could be on ways to becoming a new leadership imperative, and overcoming “eroding behaviours” that was in a way optional may become an effective or even detrimental in the digital context

Same research[xli] identified four specific mindsets that play a key role in leadership success in the digital contexts.  These mind-sets are:  Producers (customer orientation/obsession, disciplined decisions, excellent execution), Investors (pursuit of higher purpose, commitment to sustainability, community orientation), connectors (build partnerships, networks, and relationships) and explorers (curious, exploring, experimenting and learning, and broad view).

While the above are digitally-aligned leadership behaviours, there are many (“enduring” as categorised above) legacy leadership behaviours continue to play an important role. These include providing vision and purpose, building leadership pipelines, honesty, integrity, inspiration, and trust.

5)         Building digital narratives

Digital technologies increase the strategic load on leadership by increasing the number and complexity of decisions to deal with, particularly for firms, which are in products businesses.  These decisions include: Whether or not to build digital offerings? Should there be a different business model or a set of business models? Where are main threats coming from – new start-ups, existing competitors, industry disruption, or existing and expanding platforms and eco-systems?  What, if any, be the scale and scope of digital transformation to undertake? These – and other such decisions – lead to second order decisions, as to how the change process is to be managed, and include structural, cultural, talent, technological decisions.

Given that digital technologies are “new” and still evolving, there is not enough time for the critical mass of organizational experience (though anecdotes, case-studies and papers are available) to accumulate that could inform leaders of both the map and territory of digital change management.  As Govindarajan and Immelt[xlii] note in the context of manufacturing (industrial) companies:

“… starting and sustaining a digital transformation in a manufacturing company? That’s tougher than managing any other change initiative — from total quality management to Six Sigma to lean manufacturing —… there are no playbooks and few best practices for manufacturers’ digital transformation. CEOs still have to figure out its art — and science — forcing them to draw up their game plans on the fly, which inevitably leads to tension and trauma. Some business leaders have been criticized for kicking off digital transformations prematurely; others for delaying them; and still others have been sacked for not sustaining them.” (pp. 24).

One implication of this “new” and evolving nature of digital change (or transformation) is that there is a range of (often inconsistent) advise available in terms of the “right” way to implement digital technologies.  An important (digital) leadership imperative is to cut though this “noise”, and provide some degree of certainty as to firm’s approach to leverage on digital technologies. Leaders in the traditional or manufacturing contexts are more subject to this noise, because they also have to consider additional choices, such as off-line and on-line integration, industry and eco-system integration, disruptive vs non-disruptive transformation, relationship with legacy assets including channels and customers, etc?

Managing the uncertainty with regards to digital choice and cutting through the “noise” is a key digital imperative, when the digital context is dynamic and unpredictable in nature.  The following non-exhaustive list provides examples of considerations that give rise to (business and strategic) uncertainty due to digital context.

  • What are initial and long-term goals, is it digitalization or digital transformation? Is firm doing digital or becoming digital?
  • Should the start point be “tactical” digitalization with single application or use case, or fully scoped digital transformation including change in the business model?
  • Does digital transformation need to be disruptive, or a steady, smooth implementation possible? Is Head of Technology going to lead the digitalization or digital transformation, or is it C-suite driven? Which function, team, or committee, if any, is responsible for design and execution of strategy-led digital transformation?
  • How is the integration between strategy and digital technologies is being achieved? What is the nature of relationship between these two?
  • Does the firm need to deploy cutting-edge technology, or stick to mainstream technologies until digital savviness and fluency build up?
  • What is the nature of relationship between physical and digital, and between existing businesses and new offerings? Is it “either/or” or “both/and”?Is culture ready for the level of digital change being considered? What are the key cultural changes needed?

Digital leadership involves building a digital narrative that accomplishes reduction of uncertainty posed by above (and similar) questions, and also achieves cutting through the “noise” arising from management fads and “best” practices. This digital narrative, a kind of digital purpose statement, is different from a digital strategy or a plan (which are often expressed in technical milestones and deliverables) in terms of its’ purpose. The digital narrative (or a set of them), which would also evolve over time to reflect changes in the digital space, sets out the role and purpose of digital technologies in terms of strategy, customers, employees and future growth. It encapsulates various principles, which guides decisions making on many (digital or non-digital) strategic choices with regards to digital approach and choices.

Andriole[xliii] identified five digital transformation myths, such as:

  • Every firm should digitally transform.
  • Digital transformation leverages emerging or disruptive technologies.
  • Profitable companies are most likely to launch successful digital transformation projects.
  • Firms need to disrupt their own industry before someone else does
  • Executives are hungry for digital transformation.

The growing lists of myths – and these lists do not overlap substantially – suggest that digital transformation is a complex area, and often the optimal approach needs to be firm-specific. A key leadership role in a digital context is to develop a firm-specific digital narrative, which is driven by the strategy, enterprise-based and integrated in nature, and takes into consideration firms’ own culture. Leadership makes an assessment, from strategic as opposed to technological and in the “fashion” digital trends, and sets out the strategic and organizational principles on which digital choices, implementation, and outcomes/returns will be assessed.

Developing a digital narrative is a leadership imperative, because it is a complex undertaking to integrate strategy, digital technology and culture, and may require more clarity on strategy and knowledge of culture than is generally acknowledged.  In addition, digital transformation itself undergoes changes, requires trade-offs, changes power relationships, and contains unintended consequences.  Leaders are more equipped, in theory at least, to consider and incorporate them into a digital narrative.

6)         Managing change to leverage digital technologies

Given the ubiquitous nature and continuous evolution of digital technologies, firms, irrespective of their digital status, are almost obligated to embrace them either proactively or reactively. For firms that are not digitally inclined may over time realize that choice is not entirely theirs, as competitors, start-ups, customer’s digital preferences, and eco-systems competing on a digital basis could increase the performance (and even survival) bar for a low-digital firm and nudge, even “force” it, to become more digital. It is relatively safe to suggest that digital change and process is an active and on-going agenda, and the choice for firms is how to go about achieving it in an effective – and possibly, efficient – way.  This is not easy for variety of reasons, such as lack of established best practices and “noise” in the outside world, and also, because digital technologies keep evolving and cultural factors, generally unrecognized in implementation blueprint, play a key role

Digital leadership entails a recognition and undertaking of two main responsibilities:

  • Change management (or digital transformation) under a digital context is different from a normal -even transformational – change management.
  • Building organizational capabilities is key to effective digital change.

6.1)         Digital Change is Different

Digital leadership entails a recognition that in the digital context, change management (or digital transformation) differs from the normal change management. As authors Leonardi and Neeley[xliv] note that, in a normal change process, once the change happens, it is over.  However, in the digital context, “…once change bleeds seamlessly into the next. This means that not only our vocabulary but our conceptualization of what change is and how it happens needs to – change” (pp. 232). They express “leading as transitioning”, which is to prepare the firm that employees do not need to adapt, but be adaptive, as change is continuous.  Few additional differences form the normal change management are:

  • Main driver is to leverage technology to create value, preferably in innovative and new ways.
  • The objectives and the range of change involved could include total transformation including new business model, platform development, or building an eco-system.
  • There is lot of exploration and learning involved during the implementation itself.
  • Digital change (and transformation) is mostly evolving. It may have a start or end for particular phases and even for the project, but largely it is a series of ongoing sprints.
  • Pace, complexity and potential upside is significantly more.
  • Digital Transformation requires uncertainty management
  • Conventional transformation deals more with risk management.

In a general way, it can be summarised as saying that whilst normal change (normally) could be implemented with a “fixed mind-set” with “growth mind-set” as a useful add-on, digital change and transformation (normally) requires a “growth mind-set” as a necessary condition.

6.2)         Building organizational capabilities for digital economy

It can be argued that digital technologies, particularly disruptive in nature, accelerate the VUCA features in digital environments. The term VUCA (volatility, uncertainty, complexity and ambiguity) environment “presents a shift in kind rather than just in degree”[xlv].  In such environments,  a threat can come from anywhere, making the horizons of strategy making very wide.  The right unit of analysis for strategy  could be digital economy itself, as threats could come from new start-ups, eco-systems, established competitors, new business models, and “hub firms”.

The broadening of horizons of strategic planning in a digital economy gives rise to a new set of strategic plays.  In their book on intangible economy, Capitalism without Capital, Jonathan Haskel and Stian Westlake[xlvi] identified four features of intangible economy that they referred to as 4S. These 4S are: Scalability, Sunkenness, Spillover and Synergies (Note: These terms are explained in end-note[xlvii]. Also, though intangible and digital economy are not the same thing, they are aligned and have more similarities than differences between them.)

Managing the 4S features and digital imperatives arising out of intangible (digital) economy requires building organizational culture (covered in the separate section) and organizational capabilities (as distinct from individual capabilities and skills) aligned to (digital) context.

Organizational capabilities are understood in different ways, and also have a history in strategy.  It is related to similar terms (though they differ from each other), such as distinctive competencies, core competencies, customised and hard to replicate business processes, and functional expertise (logistics, technology, new product development).

Following the definition provided by Ulrich and Smallwood[xlviii], organizational capabilities are defined as “collective skills, abilities, and expertise of an organization … they represent the ways that people and resources are brought together to accomplish work.”  Ulrich and Smallwood also provided an initial list of organizational capabilities that include talent, speed, shared mind-set and coherent brand identity, accountability, collaboration, learning, leadership, customer-centricity, strategic unity, innovation, and efficiency.

Additional work in this area makes a distinction between “ordinary organizational capabilities” and “dynamic organizational capabilities”.  Ordinary organizational capabilities allow a firm to efficiently produce current product and services for the current environment (i.e., a given technology, customer base, geographic area, etc).  Dynamic capabilities are defined as “ability to continuously create, extend, upgrade, protect, and keep relevant an enterprise’s unique asset base.”(pp. 36) [xlix]. Further, they are” higher-level activities … (that) enable the firm to integrate, build, and reconfigure internal and external resources to address and shape rapidly changing business environments.” (pp. 7)[l].

Both capabilities are important (and successful digital firms, such as Apple and Amazon are good both in innovation and execution of routine processes, a capability captured by the term “ambidexterity”), but dynamic capabilities are considered particularly useful in a hyper-competitive, VUCA and discontinuous environments, which are “normal” for digital firms.  Dynamic capabilities can be further broken down into sensing (exploring or scanning the environment for opportunities and threats), seizing (mobilizing resources to address the needs), and reconfiguring (of intangible and tangible assets) though transformation.

A key challenge faced by digital leaders is to select a combination of digital technologies, business models and products/services/industries to compete in, and since these are dynamic elements, they are hard to predict and plan for. As Adner and Kapoor in their article “Right Tech, Wrong Time” noted, “…the timings of technological change remain a mystery …Although we have become quite savvy about determining whether a new innovation poses a threat, we have very poor tools for knowing when such a transition will happen.”[li]

An interesting finding with regards to digital firms is that while digital strategies differ by industry and context, the elements of digital culture are consistent within groups of firms that are similar in digital advancement. At an intuitive level, this can be generalised (though yet to be researched) that organization capabilities provide means to innovate or to adapt to external change, since, like culture, organization capabilities are flexible and adaptable. Organizational capabilities differ from firm to firm, and the extent to which they contribute to strategy and its’ execution. Common examples include: innovation, customer-centricity, data-culture, ability to integrate technological advances into a new product, and digital culture itself.

a)          Features of organizational capabilities

To be effective, organizational capabilities should reflect the following features:

  • Organizational capability is a property of the organizational system as opposed to individual skill-set or excellence;
  • There is collectiveness and synergy element to it. Having a team of experts is not an organizational capability, if there is no synergy among their work;
  • Organizational capability is not only about teams or combined human skill-sets. It is a synergistic combination of talent, infrastructure, processes and policies.
  • Organizational capabilities go the distance. Their usefulness is not only limited to getting the job done, but instead enabling innovation, providing new product ideas, supporting strategic alliances, minimization of disruption risks, dealing with uncertainty, etc.
  • They create competitive advantage, because they:
    • are an outcome of a combination of processes, talent, culture, and other elements that short-term focussed organizations do not find it easy to execute.
    • are difficult to imitate or copy
    • create unique value
    • create an entry barrier for new entrants
  • Organizational capabilities have a strong execution focus.
  • Organizational capabilities usually are (or should be) at the cutting edge of the industry (or a given domain), so that gap between next development and existing state is minimal and manageable.
  • Though dynamic, they are stable over time, and also not easy to measure[lii].

The review of the literature on digital firms suggests that integrating strategy with digital technologies, and building a digital culture and organizational capabilities are perhaps the most important imperatives for digital leaders. These tasks are complex, long-term, require deep commitment, but they also provide a cushion to digital turbulence and potential for upside.

7)         Digital Leadership at Board and C-Suite Level

Given that digital technologies led strategies, business models, and products are increasingly considered strategic to the firm, it is not surprising that digital transformation is considered a board level priority. The 2020 pandemic accelerated the use of digital technologies across all industries. Following an accelerated adoption of digital technologies by the pandemic, their high cost, and strategic importance, it is expected that Boards will now have more oversight into assessment and approval of strategic digital initiatives.

In a survey[liii], 80% of the global directors said “that digital transformation should be led at the board level rather than relegated to the IT department”.  Noted management scholar, Ram Charan, expressed similar expectation and observed, “Boards Can’t Wait for CEOs to Prioritize Digital Change”[liv].  These high-level observations are supported in separate research, which concluded “that companies whose boards of directors have digital savvy outperform companies whose board lack it …among companies with over $ 1 billion in revenues, 24% had digitally savvy boards, and those businesses significantly outperformed others on key metrices – such as revenue growth, return on assets, and market cap growth.”[lv] (pp. 41-42).

How common are digitally savvy Boards? In the research above, digital savvy was defined “as an understanding, developed through experience and education, of the impact that emerging technologies will have on businesses’ success over the next decade”[lvi] (pp.41).  Their research revealed that Information, Professional Services, and Manufacturing have 57%, 39% and 29% of Digital savvy boards, whilst Financial services (13%), Mining (9%), Transportation (8%) and Construction (4%) are the lower end of having digitally savvy boards.

In a survey[lvii], the role specifications for Board of Directors and Chief Executive Officers, among other roles, were analysed for terms, such as “Tech or Digital”, “Tech and Digital”, “Tech” and “Digital”.  These role specifications were taken from the search conducted for various roles at Fortune 1000 companies. It was found that the terms “Tech or Digital” and “Tech and Digital” were used 40% and 10% respectively in the role specifications for Board of Directors, and 60% and 30% of times for the role specifications of Chief Executive Officers.

That there is a catching-up needed is revealed in a survey that indicated that “more than half of global boards were still using general tools such as Google Meet, Zoom, or WeChat for virtual meetings, rather than systems specifically designed for digital board governance”[lviii] and also whilst 83% of the board directors identified cybersecurity as a top priority, less than half respondents said that their boards took any dedicated action.

Whilst having anecdotal rationale for digitally savvy board is well-placed, it is also useful to look conditions under which such a board makes any difference to business performance. An interesting finding was that it takes three or more digitally savvy board members to have statistically significant impact. In the research previously cited, boards with three or more digitally savvy members have 17% higher profit margins (than those with two or fewer digital savvy members), 38% higher revenue growth, 34% higher return on assets and 34% higher market cap growth.  Having less than three digitally savvy board members do not comprise the critical mass needed to make a desired impact.

The above raises the questions, such as:

  • What are Board’s responsibilities with regards to business initiatives that are based on digital technologies and its’ resources?
  • What is the baseline, if any, requirement with regards to digital fluency needed from Board members, and how that should be developed and updated?
  • How do senior executives manage the constant changes happening in the technology space with new (sometimes disruptive) technologies and new business models.

It is being suggested that just as “Financial literacy is a baseline qualification for any top executive; we need to think about technological and digital literacy in the same way”.[lix]    It is argued[lx] that board members need to be technologically sophisticated to assess future opportunities presented for approval, and additionally to assess and govern on the new sources of risks that digital technologies could give rise to.

While the need to assess at Board’s level the suitability and progress of digital transformation is apparent, the skills and expertise needed is not.  An article referred to an anecdotal account, where, a $500 million digital transformation plan was presented to the board, but even after asking questions, “they were not able to evaluate it. Was it too costly? Was it aiming too low? Was it focussed on the right priorities?”[lxi]

An overlooked, but increasingly important area relates to ethical, privacy and “duty of care” obligations, whenever digital technology is used in a material way to deal with customers and other stakeholders.  Given the higher level of scrutiny – both public and governmental – that digital firms now attract, it is increasingly becoming important to develop ethics, privacy and duty of “general care and good” as separate board items, whilst assessing and approving digital initiatives.

8)         Key ideas

The main ideas in this paper can be summarised as follows:

  • The essence of leadership – to provide a vision and purpose and to influence, engage and motivate individuals to act in an ethical and responsible way – remains the same irrespective of the digital status of the firm. Digital technologies through various tools, however, do influence the ways and means to engage with and provide leadership.
  • Leadership in a digital context can be analysed at two levels, namely, at the general level and at the level of individual firms.
  • At the general level (which applies to all firms regardless of their digital status), leadership in a digital context is characterised by context collapse (multiple audiences merged into one audience – a concept highlighted by researchers danah boyd and Alice E. Marwick[lxii]) and blurring of various boundaries[lxiii]. Implications include need for a single identity and message across multiple audiences.  Digital tools also provide easy and effective means to reach out to large audiences, and amplify the message. This is both an opportunity and a risk, and leaders need to consider carefully the how and why of the digital tools available for a given audience for a particular purpose.  Digital technologies – and the tools that they enable – raise the bar on transparency and openness.
  • Leadership in digital firms (Caveat: All firms are to some extent digital firms) is subject to different mind-set, expectations, behaviours and influences. These imperatives are not always new, but their combination and role in a digital firm varies from a non-digital, legacy leadership context. Four such imperatives are:
    • Adoption of digital mind-set
    • Adopting leadership behaviours aligned to digital context
    • Building digital narrative for the firm
    • Managing digital change
  • Adoption of digital mind-set includes four key elements (note: digital savviness, an important area, is covered separately in the digital culture section).
    • Recognition that every business is a software or technology business
    • Business performance is no longer based on efficiency alone
    • External focus
    • Growth Mind-Set.
  • Research[lxiv] suggests that effective leadership behaviours in a digital context combine differently, and leading is transitioning[lxv]. One research identified three sets of leadership behaviours.
    • Eroding (value of these behaviours is in decline). Examples: micro-management, rigidity in plans, and managing top-down.
    • Enduring (these behaviours remain as relevant as before). Examples include clear vision, customer-centric, leading by example, performance centric, ethics and integrity
    • Emerging (these behaviours have gained new emphasis and value). Examples include purpose-driven, passionate about work, data-driven decision making, authenticity and empathy, inclusive approach and ability to work across boundaries.
  • Digital leaders face high expectations to make their firms digital as opposed to their doing digital. The path to this is, however, not always clear, and additional factors, such as timing, scope and manner of change make digital transformation more complex and different from a normal business transformation.
  • The path to digital transformation requires leaders to work through lots of unknows, explorations and learning including self-transformation. During its’ planning and implementation, digital leaders are also inundated with inconsistent “best practices” given the complexity, newness and changing nature of change itself. A key digital leadership imperative is to chart out a digital narrative (in addition to digital plan), which sets out the principles to leverage digital technologies to create value, innovation, customer experiences and competitive advantage in an ethical and responsible manner. Resolving uncertainty in the minds of stakeholders on the expected digital trajectory is an important part of leadership role. This will additionally involve cultural-change and building organizational capabilities.
  • A specialist area in digital leadership relates to the role of board and C-suite members with regards to digital technologies. Digitally savvy boards are found to make an impact on the firm’s performance. An interesting finding is that it takes three or more digitally savvy board members to make a statistical impact. In future, boards will have a larger role in assessing digital initiatives. In addition to assessing the business case for digital transformation and specific digital initiatives, boards will also have an important role in the risk-management (such as Cyber-security) and ethical and privacy standards that are being followed.  An important area in this regard is to have processes, so that Board members are digitally savvy themselves, and current with the general digital landscape and trends.

References

[i] P&O Ferries’ job cuts a ‘PR disaster’, say experts, https://www.bbc.co.uk/news/business-60799825  (Accessed September 22, 2022).

[ii] Schrage, Michael., Pring, Benjamin., Kiron, David., and Dickerson, Desmond (2021) “Leadership’s Digital Transformation: Findings from the 2021 Future of Leadership Global Executive Study and Research Project”. MIT Sloan Management Review. January 2021, Research Report in collaboration with Cognizant.

[iii] As cited in the above.

[iv] As above.

[v] https://www.theguardian.com/world/2022/aug/18/supporters-defend-finnish-pm-sanna-marins-right-to-party,

[vi] Kane, Gerald C., Palmer, Doug., Phillips, Anh Nguyen., Kiron, David., and Buckley, Natasha. (2016) “Aligning the Organization for Its Digital Future: Findings from the 2018 Digital Business Global Executive Study and Research Project”. MIT Sloan Management Review. Summer 2016. Research Report in collaboration with Deloitte University Press.

[vii] Ready, Douglas A., Cohen, Carol, Kiron, David., and Pring, Benjamin (2020) “The New Leadership Playbook for the Digital Age: Findings from the 2020 Future of Leadership Global Executive Study and Research Project”. MIT Sloan Management Review. January 2020, Research Report in collaboration with Cognizant.

[viii] Kane, Gerald C., Palmer, Doug., Phillips, Anh Nguyen., Kiron, David., and Buckley, Natasha. (2018) “Coming of Age Digitally: Findings from the 2018 Digital Business Global Executive Study and Research Project”. MIT Sloan Management Review. Summer 2018. Research Report in collaboration with Deloitte University Press.

[ix] Kane, Gerald C., Palmer, Doug., Phillips, Anh Nguyen., Kiron, David., and Buckley, Natasha. (2015) “Strategy, not Technology, Drives Digital Transformation: Becoming a digitally mature enterprise”, Findings from the 2015 Digital Business Global Executive Study and Research Project”. MIT Sloan Management Review Research Report in collaboration with Deloitte University Press. . Summer 2015.

[x] Schrage, Michael., Pring, Benjamin., Kiron, David., and Dickerson, Desmond (2021) “Leadership’s Digital Transformation: Findings from the 2021 Future of Leadership Global Executive Study and Research Project”. MIT Sloan Management Review. January 2021, Research Report in collaboration with Cognizant.

[xi] Kane, Gerald C., Palmer, Doug., Phillips, Anh Nguyen., Kiron, David., and Buckley, Natasha. (2017) “Achieving Digital Maturity: Findings from the 2017 Digital Business Global Executive Study and Research Project”. MIT Sloan Management Review. Summer 2017. Research Report in collaboration with Deloitte University Press.

[xii] Ibid.

[xiii] Wininger, Shai (2016), “Lemonade Launch Metrics Exposed,” Lemonade, November 22,

2016, https://www.lemonade.com/blog/lemonade-launch-metrics-exposed/.

[xiv] Gupta, Sunil and Simonds, Sara (2019). “Goldman Sachs’ Digital Journey” Case: 9-518-039 (Boston: Harvard Business School, May 2019).

[xv] Porter, Michael E. and Heppelmann, James E (2014). How Smart, Connected Products Are Transforming Competition. Harvard Business Review. November 2014.

[xvi] Ibid.

[xvii] Daugherty, Paul R. and Wilson, James, H. (2021). Radically Human. How New Technology is Transforming Business and Shaping Our Future. Harvard Business Review Press. Massachusetts: Boston.

[xviii] Porter, Michael E. and Heppelmann, James E (2015). How Smart, Connected Products Are Transforming Companies. Harvard Business Review. October.

[xix] Bughin, Jacques., Catlin, Tanguy., Hirt, Martin., and Willmot, Paul., (2018). Why digital strategies fail. McKinsey Quarterly. January 2018.

[xx] Koh, Annie., Speculand, Robin., and Wong, Adina., (2020). “DBS: Digital Transformation to Best Bank in the World”. Case: SMU 816. Singapore Management University. Version: 2020-06-15

[xxi] Gundling, Ernest. (2018). “Disruption in Detroit: Ford, Silicon Valley, and Beyond (A).  Case: B5875. (Berkeley: BerkeleyHaas Case Series, Haas School of Business. University of Californica, January 2018).

[xxii] As cited in, Kane, Gerald C., Palmer, Doug., Phillips, Anh Nguyen., Kiron, David., and Buckley, Natasha. (2018) “Coming of Age Digitally: Findings from the 2018 Digital Business Global Executive Study and Research Project”. MIT Sloan Management Review. Summer 2018. Research Report in collaboration with Deloitte University Press.

[xxiii] Kane, Gerald C., Palmer, Doug., Phillips, Anh Nguyen., Kiron, David., and Buckley, Natasha. (2016) “Aligning the Organization for Its Digital Future: Findings from the 2018 Digital Business Global Executive Study and Research Project”. MIT Sloan Management Review. Summer 2016. Research Report in collaboration with Deloitte University Press.

[xxiv] Kane, Gerald C., Palmer, Doug., Phillips, Anh Nguyen., Kiron, David., and Buckley, Natasha. (2015) “Strategy, not Technology, Drives Digital Transformation: Becoming a digitally mature enterprise”, Findings from the 2015 Digital Business Global Executive Study and Research Project”. MIT Sloan Management Review Research Report in collaboration with Deloitte University Press. . Summer 2015.

[xxv] Kane, Gerald C., Palmer, Doug., Phillips, Anh Nguyen., Kiron, David., and Buckley, Natasha. (2017) “Achieving Digital Maturity: Findings from the 2017 Digital Business Global Executive Study and Research Project”. MIT Sloan Management Review. Summer 2017. Research Report in collaboration with Deloitte University Press.

[xxvi] Ransbotham, Sam., Khodabandeh, Shervin., Fehling, Ronny, LaFountain, Burt., and Kiron, David.(2019) “Winning with AI: Pioneers Combine Strategy, Organizational Behaviour, and Technology”. MIT Sloan Management Review. October 2019. Research Report in collaboration with BCG.

[xxvii] Van Alstynes, Marshall W., Parker,  Geoffrey G., and Chouday, Sangeet Paul.  Pipelines, Platforms and the New Rules of Strategy. Harvard Business Review.

[xxviii] Van Alstynes, Marshall (2019) “The opportunity and challenge of platforms” in “Platforms and Ecosystems: Enabling the Digital Economy”, Briefing Paper, World Economic Forum. February 2019.

[xxix] Kane, Gerald C., Palmer, Doug., Phillips, Anh Nguyen., Kiron, David., and Buckley, Natasha. (2019) “Accelerating Digital Innovation Inside and Out: Agile Teams, Ecosystems, and Ethics”, Findings from the 2019 Digital Business Global Executive Study and Research Project”. MIT Sloan Management Review Research Report in collaboration with Deloitte Insights. June 2019.

[xxx] Williamson, Peter James and De Meyer, Arnoud. (2012). Eco-system Advantage: How to Successfully Harness The Power of Partners. California Management Review. Vol 55. No 1. Fall 2012.

[xxxi] Furr, Nathan and Shipilov, Andrew. (2018). How Does Digital Transformation Happen?  The Mastercard Case” (A). Case No 1463. INSEAD.

[xxxii] Van Alstynes, Marshall W., Parker,  Geoffrey G., and Chouday, Sangeet Paul.  Pipelines, Platforms and the New Rules of Strategy. Harvard Business Review.

[xxxiii] Kane, Gerald C., Palmer, Doug., Phillips, Anh Nguyen., Kiron, David., and Buckley, Natasha. (2019) “Accelerating Digital Innovation Inside and Out: Agile Teams, Ecosystems, and Ethics”, Findings from the 2019 Digital Business Global Executive Study and Research Project”. MIT Sloan Management Review Research Report in collaboration with Deloitte Insights. June 2019.

[xxxiv] Kane, Gerald C., Palmer, Doug., Phillips, Anh Nguyen., Kiron, David., and Buckley, Natasha. (2017) “Achieving Digital Maturity: Findings from the 2017 Digital Business Global Executive Study and Research Project”. MIT Sloan Management Review. Summer 2017. Research Report in collaboration with Deloitte University Press.

[xxxv] Karim R. Lakhani, Wesley M. Cohen, Kynon Ingram, Tushar Kothalkar, Maxim Kuzemchenko, Santosh Malik, Cynthia Meyn, Greta Friar, Stephanie Healy Pokrywa (2014). Netflix: Designing the Netflix Prize (A) and (B). Case No 9-615-015 and 9-615-025. Harvard Business School.

[xxxvi] Boudreau, Kevin and Lakhani, Karim R. (2013). Using the Crowd as an Innovation Partner. Harvard Business Review. April 2013.

[xxxvii] Susskind, Richard and Susskind, Daniel (2015). The Future of Professions: How technology Will Transform The Work of Human Experts. Oxford University Press. United Kingdom: Oxford.

[xxxviii] Kane, Gerald C., Palmer, Doug., Phillips, Anh Nguyen., Kiron, David., and Buckley, Natasha. (2018) “Coming of Age Digitally: Findings from the 2018 Digital Business Global Executive Study and Research Project”. MIT Sloan Management Review. Summer 2018. Research Report in collaboration with Deloitte University Press.

[xxxix] Kane, Gerald C., Palmer, Doug., Phillips, Anh Nguyen., Kiron, David., and Buckley, Natasha. (2019) “Accelerating Digital Innovation Inside and Out: Agile Teams, Ecosystems, and Ethics”, Findings from the 2019 Digital Business Global Executive Study and Research Project”. MIT Sloan Management Review Research Report in collaboration with Deloitte Insights. June 2019.

[xl] Ready, Douglas A., Cohen, Carol, Kiron, David., and Pring, Benjamin (2020) “The New Leadership Playbook for the Digital Age: Findings from the 2020 Future of Leadership Global Executive Study and Research Project”. MIT Sloan Management Review. January 2020, Research Report in collaboration with Cognizant.

[xli] Ready, Douglas A., Cohen, Carol, Kiron, David., and Pring, Benjamin (2020) “The New Leadership Playbook for the Digital Age: Findings from the 2020 Future of Leadership Global Executive Study and Research Project”. MIT Sloan Management Review. January 2020, Research Report in collaboration with Cognizant.

[xlii] Govindarajan, Vijay and Immelt, Jeffrey. R. (2019) “ The Only Way Manufacturers Can Survive”, MITSloan management Review, Vol. 60, No. 3, Spring 2019.

[xliii] Andriole, Steohen J. (2017) “Five Myths About Digital Transformation”.  MITSloan Management Review. Vol. 58, No. 3, Spring 2017, Pp. 20-22.

[xliv] Leonardi, Paul., and Neeley, Tsedal. (2022). The Digital Mindset: What It Really Takes to Thrive in the Age of Data, Algorithms, and AI.  Harvard Business Review Press. Massachusetts: Boston.

[xlv] Schoemaker, Paul J. H., Heaton, Sohvi and Teece, David (2018). Innovation, Dynamic Capabilities, and Leadership.  Special Section on VUCA, California Management Review, 2018, Vol. 61M) 15-42.

[xlvi] Haskel, Jonathan and Westlake, Stian. (2018) “Capitalism without Capital. The Rise of the Intangible Economy”. (Oxfordshire: Princeton University Press).

[xlvii] Scalability refers to the opportunity and ability to scale up to a much larger extent and in a shorter time than either possible or required in the tangible economy.  Ram Charan and Geri Willigan41 [ii]noted that opportunities “in the digital age can be vastly bigger than at any previous time in business history …Leaders of digital businesses recognize this potential. It’s part of their DNA to seek opportunities that they can scale up quickly. They think in terms of markets that can grow 10 times, 100 times, or even 1,000 times bigger than the current market space.” (pp. 31).  Sunkenness refers to the low salvage value of the assets, if the digital business fails.   Spillovers refer to the ease of imitation of business models, product and service features, and organization practices that enable value-creation. Haskel and Westlake[iii]give example of Apple, and note that “After Apple released the iPhone, almost all smartphones started looking just like it” (pp. 72)191.  A firm could be subject to spillovers both ways, its own innovations could be subject to replication by others, but it could also benefit from the innovations of other (in a legal and ethical manner) or when innovations create a public good (like a new product category or a service, such as tablet category).  Synergies refer to the sum being larger than the parts, where the parts could be complementary products, multiple uses of the product, ideas, partnerships that add value to the product, etc. Though synergy has a long history in strategy literature, but its application in the digital context is more far-reaching.

[xlviii] Ulrich, Dave and Smallwood, Norm (2004). “Capitalizing on Capabilities”, Harvard Business Review, June 2004.

[xlix] Teece, D.J., “Explicating Dynamic Capabilities: The Nature and Microfoundations of (Sustainable) Enterprise Performance,” Strategic Management Journal, 28/13 (December 2007):

1319-1350 as cited in Birkinshaw, Julian and Zimmermann, Alexander (2016)  How Do Firms Adapt to Discontinuous Change? BRIDGING THE DYNAMIC CAPABILITIES AND AMBIDEXTERITY PERSPECTIVES”, California Management Review, Vol 58, No 4. Summer 2016. Pp. 36 – 58.

[l] Teece, David. And Leih, Sohvi (2016) “Uncertainty, Innovation, and Dynamic Capabilities: An Introduction”, California management Review, Vol 58, No 4. Summer 2016. (pp. 5 – 12).

[li] Adner, Ron and Kapoor, Rahul  “Right Tech, Wrong Time”, Harvard Business Review. November 2016.

[lii] Ulrich, Dave and Smallwood, Norm (2004). “Capitalizing on Capabilities”, Harvard Business Review, June 2004.

[liii] David, Diana Wu. and Farzan, Sunshine. (2021). Boards Are Undergoing Their Own Digital Transformation. Digital Article. HBR.Org.

[liv] Charan, Ram. (2017). Boards Can’t Wait for CEOs to Priortize Digital Transformation”. Harvard Business Review.  September 2017.

[lv]  Weill, Peter., Apel, Thomas., Woerner, Stephanie L. and Banner, Jennifer S. (2019) It Pays to Have a Digitally Savvy Board. MITSloan Management Review. Spring 2019.

[lvi] Weill, Peter., Apel, Thomas., Woerner, Stephanie L. and Banner, Jennifer S. (2019) It Pays to Have a Digitally Savvy Board. MITSloan Management Review. Spring 2019.

[lvii] Digital Transformation of Industries (World Economic Forum White Paper: In collaboration with Accenture). World Economic Forum. January 2016.

[lviii] David, Diana Wu. and Farzan, Sunshine. (2021). Boards Are Undergoing Their Own Digital Transformation. Digital Article. HBR.Org.

[lix] Cheng, J. Yo-Jud., Frangos, Cassandra., and Groysberg, Boris,,(2021). Is Your C-Suite Equipped to Lead a Digital Transformation. Digital Article. HBR.Org,

https://hbr.org/2021/03/is-your-c-suite-equipped-to-lead-a-digital-transformation (Accessed 22 Sept 2022).

[lx] Huber, Celia., Sukharevsky, Alex. And Zemmel, Rodney. (2021) “5 Questions Boards Should Be Asking About Digital Transformation”. Digital Article.

[lxi] Huber, Celia., Sukharevsky, Alex. And Zemmel, Rodney. (2021) “5 Questions Boards Should Be Asking About Digital Transformation”. Digital Article.

[lxii] As cited in,

Schrage, Michael., Pring, Benjamin., Kiron, David., and Dickerson, Desmond (2021) “Leadership’s Digital Transformation: Findings from the 2021 Future of Leadership Global Executive Study and Research Project”. MIT Sloan Management Review. January 2021, Research Report in collaboration with Cognizant.

[lxiii] As above.

[lxiv] Ready, Douglas A., Cohen, Carol, Kiron, David., and Pring, Benjamin (2020) “The New Leadership Playbook for the Digital Age: Findings from the 2020 Future of Leadership Global Executive Study and Research Project”. MIT Sloan Management Review. January 2020, Research Report in collaboration with Cognizant.

[lxv] Leonardi, Paul., and Neeley, Tsedal. (2022). The Digital Mindset: What It Really Takes to Thrive in the Age of Data, Algorithms, and AI.  Harvard Business Review Press. Massachusetts: Boston.

Author Details
Dr Anujayesh Krishna
anujayesh@gmail.com

Author

Author: Dr Anujayesh Krishna

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