Developing digital leadership

Technology and talent are the biggest worries for chief executives today, however those challenges are part of a much greater shift in business, according to Gartner’s senior vice president for global research Peter Sondergaard.

At the Australian Gartner Symposium on the Gold Coast this week, I discussed with Sondergaard how businesses owners and managers have limited time to adjust to a rapidly evolving marketplace. While his views focus on the problems of big business – those are Gartner’s main clients – his message his valid for companies of all sizes.

Sondergaard believes companies have at most 24 months to face the changes which academic and futurist Andrew McAfee forecasts is going to overwhelm businesses and society in the near future.

“The transformation that a lot of people are grappling with is ‘how do I translate this into action in leaders?'” Sondergaard suggests. “Organisations have leaders in financial backgrounds and people who understand people management, leadership and customer facing activities.”

“Businesses expect this in every senior leader hired in the organisation, but somehow it’s okay to accept those people have their son or daughter do everything technology wise. In the future you can’t have that.”

“Digital leadership is at par with all other assumed skills in what is a fully rounded business leader.”

A generation change

Sondergaard sees a generational change happening in senior management as the new guard are more comfortable with technology, having had to deal with the 1990s PC boom as well as the internet during their working lives.

“The change generally happens when you switch chief executives, it’s very funny to watch right now how new chief executives that come in change the strategy completely and focus on digitalisation,” he says.

For many companies, this is a dramatic change in business practices and one that doesn’t come without resistance within the organisation, although the marketplace may force these reforms as margins fall.

Changing focus as margins fall

A problem facing managers that Sondergaard sees is the falling margins faced by businesses as new competitors unencumbered by legacy systems enter the marketplace.

Most of these competitors bring the ‘startup ethos’ into their industries. With no fixed overheads, the new entrants are far more flexible than the incumbent businesses.

Stock markets are also making the problem worse with older businesses being held to different benchmarks than the new players.

To illustrate this, Sondergaard cites Amazon and IBM where are both staking their futures on cloud services that are barely profitable; IBM is punished for this by investors while Amazon continues to get stock market support.

Owning the ethical risks

Another challenge facing businesses in going digital are the ethical considerations. This is a complex and multifaceted area that is going to test managers throughout organisations as new technologies give rise to unforseen risks.

“What does your brand want to stand for in a digital world?” Sondergaard asks. “I think we will need people who articulate the brand, and what we do from a technology perspective.”

“Ethics in this is a very part of the user experience which becomes very complex very fast. If you don’t have someone who owns this from a co-ordination perspective I would say you get an element of risk that you don’t want.”

For managers across all industries, the challenge is to deal with the disruption that is happening now and the greater changes that are looming. Sondergaard believes this requires a ‘bimodal’ way of doing business that balances the needs of existing markets with the demands of a much more complex fast moving developing digital marketplace.

This is a big task for managers and one that many will struggle with. Those who don’t succeed are going to struggle in a very turbulent business world.

For those of us who have some understanding of technology helping our businesses and industries deal with these changes is both an opportunity and responsibility that we’re going to have to take seriously.

Paul Wallbank is the publisher of Networked Globe, his personal blog Decoding The New Economy charts how our society is changing in the connected century.

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