Transformational Leadership in the Digital Age*

Posted on 22. Apr, 2015 by in Gary's Blog

Companies in all industries are wrestling with how to crack the code to win in the digital space. Typically, they focus their efforts on shifts in business strategy.  They concentrate on enhancing marketing capability, creating new digital products and service, improving their social media efforts, and upgrading their IT expertise.

From our experience working with clients across various market segments, it is clear that far less attention is paid to the important shift in leadership behavior necessary to foster a culture of innovation and experimentation.

We believe there are four key issues that senior executives need to address in order to retool their organizations for success in the digital space.  They must implement practical strategies that proactively engage:

  • The leadership team in building a digital-savvy culture
  • The organization’s employee population in the change process
  • Key customer segments in all aspects of the brand
  • Individuals in the process of experimenting with new ways of doing their work

Achieving these important results requires a culture that encourages and rewards innovation and experimentation at all levels of the workforce.  Leaders who ignore or simply pay lip service to the idea of building a culture that supports these critical engagement issues seriously diminish the likelihood of digital success.

Organizations such as Southwest Airlines, Apple, Zappos, and Nordstrom have figured this out.  They have built cultures that deliver on these four dimensions. This distinguishes them from their competitors, increases customer loyalty, and drives revenue.

Research over the past several years from Gallup’s Employee Engagement Studies, consistently shows that only 30% of employees are actively engaged in their work.  Simply creating a brilliant digital business strategy is insufficient to engage the 70% of employees who are resisting the   “new way”.

A famous Peter Drucker quote insightfully sums it up:

“Culture eats strategy for breakfast”.

The Katzenbach Center of Strategy& (formerly Booz & Company) conducted a study of 2,200 employees that clearly demonstrates the connection between culture and business success. 84% of respondents believed culture is critical for business success, while only 35% believed their organization manages their culture effectively.*

Leaders intent on transforming their organization’s culture must deal directly with resistance to change.  They themselves must be willing to experiment with new leadership behaviors. Given the new dynamics of the digital space, doing the same things that worked in more traditional times won’t work.

While the concepts of WHAT leaders need to do to create a digital-ready culture seem rather straightforward, typically the breakdown is in HOW to do it.  Below are 10 practical steps leaders can take to create a culture that builds the level of trust, commitment and customer-centricity so that employees are motivated to innovate and experiment with new ways of working:

  1. PLAY IN THE GRAY: Be willing to operate outside their comfort zone.  Most leaders seem better at the technical/business aspect of their jobs than they are at creating spectacular work cultures.
  2. BE TRANSPARENT: Admit to themselves and employees that they don’t have all the answers necessary to make the change effort successful.
  3. COMMUNICATE EARLY & OFTEN: Over-communicate about vision, roles, process and expectations especially in the beginning of a change effort.
  4. SOLICIT INPUT & PROVIDE FEEDBACK: Bring multiple levels of employees into the solution creation process.  Give people feedback about what’s working and what’s not working.
  5. FOCUS ON CULTURE: Give at least as much time and attention to leadership strategy as they do to business strategy.
  6. BE VISIBLE/TAKE RESPONSIBILITY: Be readily accessible to employees at all levels, particularly when things get bumpy.  When there are missteps take responsibility for them.  Don’t look to shift the blame as that reinforces skepticism and resistance.
  7. MATCH WORDS WITH ACTIONS: Avoid disconnects between words and actions like the plague.  Being consistent and authentic will raise the level of trust.  This will help employees embrace the  change effort.
  8. CREATE SMALL WINS: Skeptics and resistors need proof that this change effort will actually work.  Small meaningful wins are much more important than grand promises.
  9. ROLL UP YOUR SLEEVES: Leaders must be willing to jump in and model the “new way”, particularly when things get messy or go off the rails.
  10. CELEBRATE SUCCESS: Call out small meaningful wins in an authentic way.

There is no magic formula for building a digital culture.  It is always a one-step-at-a-time process. The good news is leaders don’t have to be perfect in their efforts. They must be willing to try new behaviors themselves, be ready to admit they don’t have all the answers and actively support innovation.  The big payoff is that leaders who take the time to build positive cultures and lead by example have a big competitive advantage in the race to succeed in the digital space.

*Written with Joe Collins

** Katzenback Center of Strategy&: Why Culture Matters, 2013

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