It’s understandable that the relationship a business founder has with the organisation they have created is personal. The same principle extends to business leaders who have steered their organisation through years of growth. However, when the very things that delivered success become the instruments of the organisation’s demise, which is often the case in the digital economy, traditional leadership often becomes a problem.
The need for digital transformation
In the era of digital transformation any business that isn’t genuinely digital isn’t going to survive. There’s a big discussion going on right now about the meaning of digital transformation. Relatively few businesses and businesses leaders really understand the subject, which 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 the digital element is the ingredient that makes all the difference this time around.
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 – which is often less than you might imagine – combined with new assets and enabled by digital technology to deliver solutions you have probably never before even considered.
Most businesses that go through digital transformation emerge with new purpose, enabled by new structures and practices and often, new products. Some even find themselves operating in a completely different sector to the one they had previously inhabited.
The need for a new leadership approach
Business leadership comes in two styles – “command and control” and ‘facilitatory”. There’s no doubt the first of these has worked to a point in the past, but we’ve long-recognised facilitation is the way to go and, in the digital economy, it’s the only one that works.
However successful command and control leadership may have been to date it’s likely such leaders 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. One many find it hard to come to terms with. Perhaps the most distinguishing feature of the digital economy is its pace. Not just the speed with which things are changing, but the fact that it’s increasing and looks set to continue doing so. Innovations 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.
The value of traditional leadership
These two requirements of digital management – 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 spell the death of traditional managers. Their experience is valuable in a business world dominated by millennials and all they have to do to make it count is behave as a facilitator rather than a dictator.
Tackling the “C-word”
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) – not the culture he had created for his business and definitely not one he was comfortable with, but one that is 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 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, but my experience is it’s often easier to get employees behind change than it is to get the consensus of senior managers.
Two fundamental issues
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, but mentoring is something to be considered too. However, ego may stand in the way of this. Someone who has built a successful business, especially if their character is such that they have adopted a command and control approach, 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, but 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 leadership 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 to adjust and embrace the opportunity this affords 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, but everyone in a digital business has responsibility, firstly for re-inventing their roles and then the on-going innovation.
The internal marketing and training component of any well-designed transformation programme should address this. However, if this is the scale of your change, 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, slowing 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 and 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!
August 16, 2019