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Knowledge at Wharton

Innovation

Being a Digital Leader Has Never Been More Important

While Covid-19 may be a health crisis and shock to the system, it’s driving the rapid adoption of digital technologies

Published: Monday, April 27, 2020 - 12:03

When the Mosaic browser, with its consumer-friendly interface, was released to the world in 1993, most had no idea how radically this first foray into the internet era would transform our lives, both personally and professionally. As humans, we are generally poor at detecting and acting on early signals of change. And as business leaders, we don’t fare much better.

Most companies were late to the party on PCs, e-commerce, smartphones, digital payments, the sharing economy, gig work, AI, and now virtual ways of working. And it’s not for lack of trying. Last year, companies spent nearly $1.2 trillion on digital transformation, according to research by International Data Corporation. Yet only 13 percent of leaders believe their organizations are truly ready to compete in the digital age.

Enter the Covid-19 crisis. Although it may not be a welcomed shock to the system, it’s driving the rapid adoption of digital technologies and ways of working needed for companies just to stay relevant and continue to operate. Not only has the stock market experienced a historic drop in value, but companies also have had to dramatically change the way they operate amidst a social lockdown.

This also includes servicing customers in new ways. If you are a bank, you now have a surge in digital banking users. If you are a healthcare provider, telehealth visits are way up. If you are a retailer or restaurant, online ordering and delivery are keeping your business afloat. Companies are also having employees work remotely wherever possible.

For some segments of the workforce, especially tech and sales, this is natural and a relatively easy transition. For others, this is a painful leap from a traditional physical work environment, with regular face-to-face contact, into a new digital domain, requiring consistent, proactive efforts to maintain connection. This also puts enormous pressure on internal organizations like IT and HR to ensure the technology capabilities, workplace policies, and organizational processes are adapted to this new environment. As companies scramble to provide training on digital tools to their workforce to make this shift, all leaders are being put under the spotlight in terms of their own digital readiness.

Fortunately, the groundwork for virtual collaboration has been laid by our use as consumers of apps like Facetime, Google Hangouts, and Skype. The path for workplace messaging solutions like Slack, Teams, and Jabber were already cleared by our voracious appetite for texting, as well as platforms like Whatsapp, Facebook Messenger, and WeChat. And now social virtual reality platforms like Mozilla Hubs, AltspaceVR, and Rec Room—historically used by the gaming and entertainment community—are quickly moving from the living room to the virtual conference room, enabling highly immersive professional interactions for those willing to plunge in.

Yet, even with our head start with virtual interactions as consumers, many leaders are still finding wide gaps in their own capabilities, realizing they must rapidly raise their digital skills to be effective in this fast-changing environment. So how can leaders shift behaviors, mindsets, and ways of working in such a short period of time—both for themselves and their teams?

Headwinds to rapid transformation

To understand the pathways to rapid transformation, we first need to know what stands in the way.

1. Thinking “digital” is someone else’s job. The first barrier is thinking anything “digital” is owned by others—like IT, those with “digital” in their title, or even a new executive formally tasked with “digital transformation.” The reality is that every part of an enterprise is affected, and every leader can be an amplifier or blocker of digital adoption. If leaders don’t see how digital technology and ways of working translate to their role, there is little hope for sustained impact from transformation efforts, or for their ability to drive success in the future.

The table below shows how every functional leader has a role to play in shaping digital adoption for their organization.

2. Waiting for everything to be perfect to act. If this current health crisis has taught us anything, it is that inaction has a price. The same goes for organizations that fail to move ahead to deploy digital tools and operating models as minimal viable solutions and allow room for employees to dive in and evolve how they use these solutions over time.

3. Thinking digital is only about efficiency vs. enabling innovation. Organizations must foster the right culture and mindset to encourage experimentation, failure, and learning around new digital operating models and experiences along with the process, tools, and coaching on how to innovate. Otherwise, great ideas from your employees will get crushed under the weight of corporate machinery, especially a company in short-term crisis mode. As a result, you may only focus on using digital to reduce cost during the crisis and miss the opportunity to generate novel thinking and opportunities that could deliver advantages for your company as the market rebounds.

Critical skills of digital leaders

To overcome these headwinds and thrive in today’s extremely dynamic, uncertain environment, leaders must turbocharge their skills for the future. They must become digital “triathletes,” playing a unique three-part role of digital strategist, innovator, and driver to be able to navigate and thrive in a fast-changing digital world.

While all triathletes are better at some events than others, they must train and develop proficiency in all three to stay in the race. Similarly, digital triathletes will naturally have unique capability spikes, but also a solid level of capability in all three elements, as described below.

Digital strategist: Stays ahead of emerging trends and technologies, experiments with them personally where possible, and finds ways to apply them to drive transformative change for customers or business operations. The strategist role is critical for envisioning the future and developing a path to winning by creatively leveraging technology.

Digital innovator: The innovator role is central to disrupting the status quo and moving the organization toward the vision for winning in the future. This role helps teams overcome legacy mindsets and ways of working, as well as finds ways to harness the company’s legacy assets like data to build a long-term digital advantage.

Digital driver: Builds trust and collaborates across the organization with diverse stakeholders to enable rapid action. The driver role ensures that once the vision is set, and the status quo disrupted, that innovation initiatives are executed quickly. This role is also responsible for building talent to enable execution for the future and broadly across the organization.

At the core of the digital triathlete is agility—the ability to rapidly pivot as the market changes, shed old mindsets, and voraciously keep learning about new technology and ways of working for the future.

The demand for digital triathletes has always significantly outpaced supply. Even before the crisis, only 9 percent of executives strongly believed their leaders had the right skills to thrive in a digital economy. Now such leaders are even more sought after, as companies try to survive these unprecedented times.

Knowing what skills are needed and why it is so critical to rapidly hone them will help leaders set the pace and build a sustainable digital advantage, securing their own—and their company’s—long-term success.

A summary of this future competency model, digital dexterity, is shown in the table below:

Becoming a digital leader

Like typical heart patients who fall back to their old habits after going through bypass surgery, many leaders will revert to their old ways of working after the Covid-19 crisis subsides and businesses begin to ramp up again. But leaders who see this as an opportunity for lasting change will train harder and build their own digital dexterity.

Below are some key strategies to accelerate this set of skills amid today’s period of extreme stress and volatility. 

Use scenario planning to anticipate both short and long-term shift. Amidst the crisis, every business will be presented with unique challenges but also opportunities to leverage technology to unlock new opportunities around customer experiences, products, and operations. Using a scenario lens can help companies make more balanced bets vs. overweighting on the near term, as well as embed more options into their strategies to pivot quickly with market changes.

Leverage data and predictive analytics to help monitor and see early signals of change. The Canadian health monitoring platform BlueDot scours news reports and airline ticketing data to see early signs of possible outbreaks or unusual events. Through its natural language processing and machine learning algorithms, it was able to identify the Covid-19 outbreak early, alerting its government, business, and public health clients of danger zones like Wuhan several days before the WHO and CDC.

Launch organizational experiments with emerging technology. Capitalizing on the user-friendly Oculus Go virtual reality headset released in 2018, Walmart was one of the first organizations to use VR for large-scale employee training, ordering 17,000 headsets to use across its locations. This investment in trying new technology is now paying extra dividends, as the organization has much more comfort with VR, which is now gaining massive traction as a more immersive virtual collaboration tool.

Raise your own digital game. Randall Stephenson, CEO of AT&T, believes that the knowledge and skills life span is very short. “Mine is two years in duration, max,” he says. “I’m constantly retooling myself,” Now is the time to become well versed with all the advanced features of your current virtual collaboration platforms, for instance, as well as find new virtual tools to try with your teams to stay better engaged and connected.

Get creative with serving your customers virtually. The crisis has spurred incredible innovation with how organizations continue to stay connected to and serve their customers virtually. We have seen Skype-based courses, Zoom art classes, virtual team-building workshops, and Periscope jam sessions become increasingly popular. This physical-to-virtual translation often requires teaming those with expertise in digital ways of working with those who have the subject expertise and institutional knowledge. This allows the team to creatively translate traditional solutions into virtual ways to engage with and continue to deliver value to customers.

Empower your employees to innovate and co-create. Companies like Mastercard and Enel view innovation as a competency that all employees can develop, and the companies provide the pathways for these employees to quickly move concepts into experiments and learning across the enterprise. This includes having leaders make innovation a priority and giving employees and teams the time and space to collaborate, experiment, and learn with new digital tools like virtual reality, machine learning, and automation. It also means allowing them to find creative ways to innovate and provide support amid the crisis, as we have seen with several distilleries and cosmetic companies innovating and pivoting to produce hand sanitizer for their communities.

Focus on shifting the mindset and culture to clear the path. Without changing the hearts and minds of the organization and helping all employees see themselves in the new digital version of the company, it will be hard to drive lasting change, even on the back of such as monumental crisis like Covid-19.

This is an opportunity for leaders to set the example by embracing the current situation as an opportunity to reinvent themselves as digitally aware leaders and help their teams see the opportunity amidst the chaos. This will help all leaders, no matter where they sit, realize that being a triathlete and building digital dexterity is more than just physical training. It’s the mindset to win under any conditions. Even this one.

First published March 27, 2020, on the Knowledge@Wharton blog.

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Knowledge at Wharton

Knowledge@Wharton is the web-based research and business analysis journal of the Wharton School of the University of Pennsylvania. Launched in May 1999, its goal is to disseminate business knowledge and insights to readers around the world. The Knowledge@Wharton Network offers free access to analysis of current business trends; interviews with industry leaders and Wharton faculty; articles based on the most recent business research; conference overviews, book reviews, and links to relevant content; and a searchable database of more than 1,500 articles and research abstracts.