Digital transformation: what leadership qualities are needed?

Over the past two weeks, I have often been asked what characteristics I think leaders should have in the digital transformation phase. Reason enough to summarize a few thoughts on this here

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Where do our current leaders come from?

Basically, you first need to understand the overall economic context of the digital transformation. I have already written a lot about why we underestimate the massive change that digital has brought in recent years and that other technologies will bring in the coming years.

Before we turn to leadership qualities, it is important to recognize that the last 70 years have been an exceptionally prosperous economic period in a historical context. The high demand caused by the post-war period, combined with the much faster pace of technological progress, has created an economic illusory reality.

In this reality, security, calculability & plannability, guarantees and manageability are the order of the day. This did not exist to this extent before the world wars and we are now experiencing that precisely these supposed foundations are no longer valid. And I have no doubt that they will disappear. We are already seeing this in the area of investment, for example, where it is no longer possible to make a major investment in proven technology without achieving a return on investment in an extremely short period of time.

The risk of a new technology replacing the existing investment at much more favorable conditions is far too great. This is just one example of many that show that these golden years are over.

Education in economics: ?

This is a huge problem for today’s managers because they were trained and socialized precisely in this exceptional time. This means that their view of the world and their options for action are based on concepts that are rooted in this exceptional time. And during this time, it was important to minimize risk, to do a lot of controlling, to generate added value through work, capital and land. Over the last 50 years, we have trained and raised the perfect administrators and corporate politicians. And now? Yes, the environment is now changing in a direction where precisely this skillset is needed much less.

You don’t believe me? Don’t you find it strange that we have been talking about “delicate economic conditions” and “crises” for almost 20 years? At a time when incomes and general welfare, including average working hours, have risen once again. What we are currently experiencing is not a 20-year crisis, but a time of upheaval and change. Economic theory, however, has no concepts ready for this; it is unable to interpret the signals, so to speak, and therefore sticks to the tried and tested language.

And these economic sciences continue to be taught almost unchanged, the value of such an education is continuously decreasing and I think we are already seeing some of the effects of this in the labor market.

Traditional entrepreneurial virtues are in demand: entrepreneurs instead of managers

I believe that to be successful in a new, fast-changing economy characterized by uncertainty, we need leaders with traditional entrepreneurial qualities. These are:

Willingness to take risks

True entrepreneurs take real risks. A real risk is always a risk that cannot be calculated precisely. Taking a risk must be understood as a bet on an entrepreneurial vision.

Look around at the hugely successful entrepreneurs, what they all have in common is that at one or more points in their business they have bet their entire company on a vision. This is something an administrator would never do and it separates the entrepreneurial wheat from the chaff. If you want to be really successful in digital transformation, you have to be prepared to make massive bets. Just a little adapt and me too will result in them being overrun by their competitors.

Think in terms of opportunities

How many times do we read about digital transformation as a threat (“…somebody is stealing your business…”), as a challenge in the negative sense. Honestly, if you see it that way, you’ve already lost 80% of your business.

Because a business model is not an asset that belongs to them, it is more like a wave that they have to recognize early enough and position themselves to ride it. Then jump on at the right moment and try to ride it for as long as it is lucrative for them.

Business opportunities are like waves. Surf them!

The difficulty is that while you are riding one wave, you already have to be on the lookout for the next one. If you stay on the existing wave and invest all your time and energy exclusively in preparing the wave as well as possible, you will end up lying in the surf.

It is true that the waves of the last 60 years – and this is the misleading thing – were big and lasted (and continue to last) for a very long time. But they all, without exception, come to an end. If we take another look at the traditional entrepreneurs, we can see that, especially in the pre-war years, they often tried their hand at many different possible lines of business. They were opportunists in the best possible sense and I think this is exactly the spirit that today’s managers should have. They should be able to recognize opportunities, even very unconventional ones, and pursue them. Just like surfing…

Team builder

Another important skill is team building. It is a glorified legend that alpha males lead companies to fame and success as lone warriors. It is and always has been much more the teams that have achieved extraordinary results. What is new is that the team is also being portrayed more centrally in external communication. Good entrepreneurs are able to create teams that work independently and autonomously from the entrepreneur in a certain direction. And good entrepreneurs hire people who are better than themselves, let them do it and learn from them along the way.

Passion & frittered away motivation

To be successful in the digital transformation, you have to be passionate about what you do. Actually, they always have to be if they want to fulfill their profession. But as a manager, you should be especially so. If you’re not, then do something else that you like. What’s more, and I think this is also important, your motivation should be focussed.

By this I mean that it should consist of many different components. These can be reasons of self-realization, a world view (making the world a better place), the joy of doing things (e.g. enthusiasm for technology) or even material motivation (even if it is a little discredited at the moment). It is best to have a mix, because motivation and success promote motivation. If you are only motivated in one way, you run the risk that if this one motivation suffers a setback (e.g. through a failure), your entire drive will be lost. If the motivation is dispersed, this cannot happen so quickly.

Be a Tiger

Develop a self-confidence that is bigger than yourself. Think big, motivate and encourage your doubters.

Confidence is everything!

By this I don’t mean blindly sticking to an idea or vision when the facts speak against it. But if the facts are in favor of your vision, invest in it mentally. Just because something feels surreal doesn’t make it unrealistic. Something is always impossible until someone does it. I think this point is one of the most important in terms of culture and the new technological possibilities of the future. There will always be a side-caller who wants to make them believe that their vision is utopia. This is a good thing, because it shows you that your vision has a disruptive character. The boundaries between vision and utopia are increasingly disappearing in the age of fast-paced new technological innovations. Your ambition is crucial.

Back to the roots

So I think we would be well advised to return to entrepreneurship as it was at the beginning of the industrial revolution. One of the achievements of our time is that the barriers to entry (at least in the western world) are much lower than they were back then. Essentially, now that we are in the process of closing the post-war period economically, not much has changed for leaders. What is new and positive is that leaders can live out these qualities as intrapreneurs or entrepreneurs. I hope that we will see as much of this as possible in the future.