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Closing the Digital Leadership Gap

Part 2 of a 2-part post

In The Digital Leadership Gap we explored the digital leadership gap and why it matters. In this post we go deeper to look at what sets digital leaders apart and what needs to change to become a digital leader, based on new research from Harvard Business Review Analytic Services, sponsored by Microsoft.

Digital leaders share three common attributes.

Digital firms take risks

  1. Leadership: In addition to having a formal digital strategy, digital leaders are much more likely to have the CEO leading their digital transformation. But CEOs don’t work in a vacuum; two-thirds of respondents view their CIO as critical to the success of their digital transformation as well.
  2. Data & analytics: Digital leaders use data and analytics to a much greater degree – both to understand what customers want and to improve operations and forecasting. They are also significantly more likely to use cognitive computing/AI. They are three times as likely as non-digitals to have specialized skills like data science and data engineering on staff and more than twice as likely to say all professionals have the ability to work with and make sense of data and analytics. This latter point is extremely important. Companies can access specialized skills through partners, but if employees can’t make use of the results, it will be hard to reap the benefits.
  3. Open to taking risk: Innovation, invention and change all involve risk, and digital leaders are significantly more open to taking risks in pursuit of new digital business opportunities than are hybrids and non-digitals. And they build this into their culture.

Impact on Employees and Skills

More than half of all respondents predict a significant impact on employees’ job roles as a result of adopting new technologies – saying that 25% or more of jobs will change or that parts will become redundant. In particular this means:

  • Reskilling to digital work, including the ability to work with data/analytics. This was identified as one of the top two skills necessary for success in 2020.
  • More collaboration across silos – the ability to collaborate was named as the other top critical skill.
  • Integration of human and machine intelligence. Three-quarters believe their organization’s future success will depend on this. Even non-digital firms believe this to be the case.

A third worry that the use of artificial intelligence and automation will cause a loss of jobs in their industry - especially true in the financial services and professional/business services industries, where 45% and 43%, respectively, anticipate job loss from AI and automation.

Organizational Silos: The No. 1 Barrier to Success

Digital hates silos. The need to reorganize for digital business was named the top barrier, and digital leaders are almost twice as likely as non-digitals to be actively working to reorganize away from traditional silos, functions and hierarchies to encourage more collaboration and coordination. That said, given the urgency to get digital efforts under way, large-scale restructuring is often superseded by more expedient means. These include:

  • More regular engagement between C level peers and conversations across functions at multiple levels.
  • Cross-functional project teams. Silos still exist, but they’ve become much more porous. Roles, responsibilities and reporting lines are more fluid than they used to be.
  • Digital leaders also use financial levers to drive this change. For instance, until recently, a global fashion retailer ran online operations as a separate entity from headquarters. Today online revenue is recognized as part of country managers’ P&Ls. This move has accelerated store managers’ buy-in to using consumer devices to incorporate online inventory as their “virtual stockroom.”

Digital disruption is imminent. Eighty percent of the nearly 800 business leaders surveyed say that is the case in their industry today. Expect to see winners and losers emerge as we approach 2020. To avoid having your organization be one of the latter, create a digital strategy, develop your analytics capabilities, be willing to take on more risk, and do whatever you can to penetrate the silos in your organization for greater collaboration and coordination.

Download a copy of the full report, "Competing in 2020: Winners and Losers in the Digital Economy"

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