The very things that have delivered success in the past often become the instruments of the organisation’s demise in the digital economy. This even extends to business leaders who have steered their organisation through years of growth, but find the challenge of leading a digital business a step too far. It’s understandable that a business founder has a personal relationship with the organisation they have created. So how do they avoid becoming their organisations’ biggest liability?
There’s a big discussion taking place right now about the meaning of digital transformation. A business that’s not genuinely digital isn’t going to survive in the digital economy. However, relatively few businesses and businesses leaders really understand the subject. That may be why we’re told only 21% of businesses have a plan.
Transformation is nothing new, it’s been taking place constantly since the beginning of time. However this time around the digital element makes all the difference.
Transformation is radical
There’s no place for “make-do-and-mend” in the digital economy. Tinkering around the edges just doesn’t cut it. Digital transformation is the process of re-building a business from scratch using what you can of legacy resources. This is often less than you might imagine, but combined with new assets and enabled by digital technology you can deliver solutions you have probably never even considered before.
Most businesses that go through digital transformation emerge with new purpose, enabled by new structures and practices and often, new products. Many even find themselves operating in a completely different sector to the one they had previously inhabited.
Changing management styles
Business leaders come in a choice of two styles – “command and control” and ‘facilitatory”. There’s no doubt the first of these has worked to a point in the past. However, we’ve long-recognised facilitation is the way to go and, when you are leading a digital business, it’s the only one that works.
However successful command and control business leaders may have been to date it’s likely their success would have been even greater had they adopted a more facilitatory approach. Unfortunately, any success they have achieved will tend to reinforce their commitment to this management style and add to the reasons why business leaders resist change.
The new business models that result from transformation require a style of management alien to traditionally trained business leaders. Many of us find leading a digital business hard to come to terms with. Perhaps the most distinguishing feature of the digital economy is its pace. Not just the speed at which things are changing, but the fact that the pace itself is increasing and looks set to continue doing so. Innovations are emerging daily and to be successful every business has to keep abreast of these and respond to their influence on the market.
To do this requires agility you can’t achieve when you are restricted by the rigid-planning culture traditional businesses are built on. Transformation marks a change from a state of order to one of constant change and that requires, what Professor Ronald Heifetz at Harvard describes as “Adaptive Management”, which assumes the “plan” changes every day.
Leading a digital business means becoming a facilitator
These two requirements for leading a digital business – adaptive management and facilitation – are seen by many senior managers as a threat to their relevance. Supporting changes of this nature makes them feel like turkeys voting for Christmas. Hence their resistance to transformation, but they are mistaken. While any business that doesn’t transform is going to fail very quickly, this doesn’t have to spell the death of traditional managers. Their experience is valuable in a business world dominated by millennials. All they have to do to make it count is behave as a facilitator rather than a dictator.
Of course, this is often easier said than done. There’s no doubt transformation probably means a change of culture, especially if the incumbent culture is founded on a command and control leadership mentality, and that’s often the crux of the matter.
I’ve been told by a resistant business leader half-way through his organisation’s transformation that he was pulling the plug on the programme because it was “changing the culture of the organisation”. What he meant was that he could see it was leading to the empowerment of others within the organisation, which he regarded as a threat to his authority (or relevance). This was not the culture he had created for his business and definitely not one he was comfortable with. Nevertheless, it’s absolutely essential to the success of a business in the digital economy. In addition, the often-personal nature of the relationship between a founder and his business means any criticism of the culture of the business is likely to be taken personality.
Command and control isn’t leading a digital business
Command and control based organisations never really worked. Once the founder is out of the frame – and none of us last forever – these businesses cease to function. They evolve a workforce who have learned to do as they are told. They are unable to make decisions, don’t question the status quo and, most significant in the digital age, don’t innovate.
I hear concerns raised by business leaders that their workforce wouldn’t understand transformation or the need for it. However, my experience is it’s often easier to get employees behind change than it is to get the consensus of senior managers.
Empowering stakeholders
So, there are two issues that need to be addressed. The first is the style of the business leader. The second is the empowerment of the stakeholder community. As always this has to start by defining the brand in a formal brand model. This provides the focus you’ll need to do anything.
The compelling nature of the brand modelling process will usually help considerably in addressing the management issue. Nevertheless, mentoring is something to be considered too.
Of course, ego may stand in the way of this. Someone who has built a successful business. If their character is such that they have adopted a command and control approach, they may well resist the idea of mentoring, but there isn’t really a choice. Investors should do all they can to encourage the founder to take on a mentor. However, when this has failed, I’ve also witnessed founders being persuaded to disengage from the day-to-day management of the business and even sell their interest. Make no mistake, the need for facilitatory management isn’t optional if the business is to survive the digital economy.
However, that’s only half the problem. If the management style is an issue it’s probable internal stakeholders will need help too. It’s often hard to embrace and adjust to opportunities the new situation will afford them to contribute more fully to the future of the organisation. Often they will occupy the roles they do because the command and control culture has suited their own personalities. I’ve seen executive teams that are unable to make decisions, think for themselves, or even function outside of a prescriptive environment. However, everyone in a digital business has responsibility, firstly for re-inventing their roles and then the on-going innovation.
Transformation isn’t a DIY job
The internal marketing and training component of any well-designed transformation programme should address this. However, if this is the scale of your change, you will definitely need an external consultant to drive your transformation. Don’t be lured into the belief that you can manage transformation internally.
If you don’t get this right your established culture will stifle change. At best, this will slow your progress and, as we have identified, slow is something no business can afford. These days any business yet to transform is playing catch-up. You have to move as fast as you can to have any chance of competing with disrupters. I realise I’m in danger of making this subject seem simple. It’s not, but I hope I have provided some perspective and maybe a rough idea of what you have to do to tackle it.
However, I urge all those command and control business leaders out there to take a more optimistic view of their role in the digital economy and demonstrate to us all that an old dog can learn new tricks!
Phil Darby
March 6, 2019