Josh Bersin reports in Harvard Business Review:
90% of executives believe their businesses are being disrupted by digital business models, and 70% believe they do not have the right skills, leader, or operating structure to adapt. Digital leaders create small, highly empowered teams. They trust these teams to perform. They build real-time information systems to support decision making, and they expect these teams to iterate, experiment, and adapt. They look at their business as platforms, not just as products and services. And they design the platform around systems that can be extended and that can deliver real-time information to managers at all levels.
Being a CEO is harder than ever. The rapid pace of change in business and technology means that more and more companies will find themselves being disrupted. In fact, our latest research with MIT, in which we interviewed more than 1,000 CEOs (from 131 countries and 27 industries, in organizations of varying sizes), shows that 90% of executives believe their businesses are being disrupted or reinvented by digital business models, and 70% believe they do not have the right skills, leader, or operating structure to adapt. It’s not a good position to be in.
What’s a CEO to do? Should you hire a chief digital officer? Should you replace your executives with leaders from internet companies? Should you force everyone to learn about mobile computing and digital business models?
While these are all sound ideas, our research shows that something more fundamental is at play. Companies that rapidly adapt to digital business models don’t just “do digital”; they “act digital.” In other words, they practice an entirely new model of management. And their CEOs are leading the charge.
What does digital leadership look like in this sense? Our research, which we call the “digital DNA,” identified 23 new management practices CEOs should consider, focusing on empowerment, experimentation, collaboration, data, and speed.
Digital leaders create small, highly empowered teams. They trust these teams to perform, and they hold them accountable for customer impact. They build real-time information systems to support decision making, and they expect these teams to start small, iterate, experiment, and adapt. They look at their business as platforms, not just as products and services. And they design the platform around systems that can be extended, that can adapt, and that can deliver real-time information to managers at all levels.Here’s an example to put this into context. One large media organization faces large incumbent players and operates in a market that is growing quickly. Rather than using traditional top-down management practices, the company organized itself into small business units, each of which operates in a local geography.
Geographic business units are responsible for hiring the right people, selling their products, and provisioning new customers. They know the local market, promote their offerings in the community, and often serve as community leaders. They are given tremendous local responsibility, and many of their local leaders come from outside the industry.
To support this decentralized, empowered organization, the company built a real-time, mobile-enabled information platform. Everything this company does, from hiring to customer acquisitions to service to employee engagement, is done through mobile apps. District managers and leaders in headquarters can monitor hiring, customer growth, employee satisfaction, and customer satisfaction in real time. So while these small teams are highly empowered, they are also highly accountable.
To promote innovation and local service, the company hires people with entrepreneurial backgrounds and gives them freedom to design promotions, sales programs, and marketing events however they like. The teams share information widely through the company’s video communication network, and everyone in the company uses standard mobile apps to communicate.
What’s unique about this company’s leadership? Leaders are intimately involved in the architecture, culture, and metrics of the company, hiring people who can innovate and grow a business and holding them accountable with a minimum of midlevel management. The senior leadership team meets often to look at metrics and trends.
One of the keys to this kind of digital leadership is an ability to morph the company as the business changes. We call this operating structure the “network of teams.” Rather than operating through a traditional hierarchy, the company looks at each geographic unit as a small “reseller.” Corporate functions operate like shared services to provide scalable programs, but people do what they need to succeed. If a business needs help in recruiting, customer service, marketing, training, or other areas, the company restructures its local organization to provide support. Goals and metrics are local and shared, so people are incentivized to work together toward the company’s overall objectives.
As we’ve studied digital leadership over the last few years, we find something else important: Culture is key. Success is largely dependent on people sharing information with each other, partnering, and continuously educating themselves. This is able to happen when you build a collective, transparent, and deeply shared culture. CEOs who are digital leaders are continuously reinforcing the culture, communicating values, and aligning people around the culture whenever something goes wrong.
Being a CEO is a tough job. You have many stakeholders, continuous challenges, and a wide range of things to think about. And the idea of the CEO as “boss” no longer applies. Instead, the most effective CEOs will need to start thinking of themselves as digital leaders. It’s your job to push the organization to stay focused, to experiment, to innovate, and to scale through standard platforms. These principles are fundamental to success in the disruptive years ahead.
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