We need a new type of leader for the digital age says Michael Wade, Professor of Innovation and Strategy & Cisco Chair in Digital Business Transformation. However, they should not discard their traditional leadership skills, as these are a vital part of the mix.
Technology-driven business tools such as big data, analytics and artificial intelligence (AI) were supposed to eliminate guesswork in decision-making. Armed with data-driven insight, leaders would no longer require gut instinct or domain expertise. Traditional leadership, involving the ability to collate and process information in order to come to an informed and considered decision, would become obsolete. Signaling the rise of emerging technologies as a dominant force, not only in automation but in business strategy, one Asian venture-capital firm even appointed its in-house AI to the board.
Tech falls short
As it turned out, AI has struggled to live up to its billing. Data-driven decision making has much to offer – but it requires someone to decide what good data looks like and what it means. In the most serious crisis to hit the world in generations, available data was sorely lacking: AI couldn’t deal with the COVID-19 pandemic because, the last such pandemic having occurred 100 years earlier, it didn’t have any meaningful data with which to drive useful outputs. AI needs to be hand-fed in a way that only human intelligence can currently overcome.
From a leadership perspective, AI’s failure to step up when the pandemic hit proved to be a rude awakening. Skills that were supposedly becoming outdated – instinct, decisiveness, authority and operational dexterity, for example – suddenly looked not only hugely desirable but vital to our survival. And many of the qualities that leaders had been told they needed to develop instead – such as long-term vision and willingness to delegate decision-making – no longer looked so valuable.
Out with the new, in with the old?
Does this mean that the new business leadership template is invalid, and we should stick with tradition? Not necessarily; but it turns out that context matters. IMD research surveying more than 1,000 leaders worldwide suggests that it’s not so much a specific definition of leadership that is out-of-date but the idea that there is a one-size-fits-all approach. The most successful leaders will be those who can modulate particular skills and qualities according to the environment they find themselves in.
In part, this is a technology question. Digital transformation provides organizations with a raft of new tools that can revolutionize the way businesses are run. AI effectively makes data the organizational leader, with those who were formerly responsible for making tactical responses to market shifts and taking knife-edge decisions that could affect a whole financial year’s results, relegated to trying to interpret the messages that data is bringing them.
Rather than priding themselves on decisiveness, leaders in the digital age need to be a little humbler, putting their egos aside and being prepared to watch, listen and learn. A big part of leadership today is accepting that others, both humans and technology-based intelligence, may be able to provide insight that ultimately leads to smarter choices. Similarly, in a world where data regularly provides new and unconventional perspectives, consistency and a knowledge of past events seem less valuable than adaptability and agility. Leaders would do well to adopt John Maynard Keynes’ maxim: “When the facts change, I change my mind.” A self-questioning attitude now a sign of strength, rather than weakness.
All of this seems self-evident, until leaders are confronted with a situation such as the pandemic, for which there is insufficient data and no algorithms that can indicate the best option. It was not AI that delivered, with unprecedented speed, the vaccines that controlled COVID-19, but pharmaceutical companies and research teams directed by leaders who made tough decisions quickly, stuck by those decisions, and overcome the short-term obstacles that threatened to delay progress. While new technologies undoubtedly played a significant part in the development of these groundbreaking medicines, it was the human hand on the tiller that steered a course to relative relief.
New technologies, in other words, have much to offer us. However, they will always require traditional leaders, exhibiting traditional leadership qualities, to direct them.
Moreover, what organizations really crave as digital technologies disrupt and transform their operating environments is a clear vision towards which they can work. Technology can help to deliver day-to-day business requirements with greater efficiency but only the best leaders can set their organizations on a steady course.
Volatility and stability require different responses
In any case, there is another lens through which it is important to view this debate. The pandemic is just one (albeit a devastating one) example of the volatility that organizations have had to deal with in recent years. Conflict in Ukraine, soaring inflation and the growing numbers of extreme weather events driven by climate change, all contribute to the current sense of uncertainty and insecurity.
In which case, is it reasonable to rely on traditional styles of leadership? When the environment is changing at such pace, an inflexible leader who relies on instinct risks being overtaken by events and, ultimately, swamped by them. Much better, surely, to have receptive leaders who listen, are ready to adapt as the outlook changes, and who can steer their organizations through short-term trials and tribulations, trimming as the headwinds dictate.
When the facts change, I change my mind
- John Maynard Keynes
A parallel could even be drawn with the need for different types of leader in war and peacetime settings. Winning battles requires leaders to absorb and respond to intelligence and enemy tactics. Developing and securing a vision for peacetime prosperity, by contrast, may require a greater doggedness in pursuit of an unwavering vision.
This dichotomy highlights a significant challenge for organizations. While it is appealing to throw our lot in completely with the new leadership style, there are some elements of more traditional approaches that we still prefer, and even require, in some circumstances. Technology dictates that leaders adapt their approaches, but they should also consider the fact that technology cannot always deliver. Leaders must be able to manage both volatile and stable conditions and to switch between traditional and modern business mindsets at speed.
That feels like a very big demand to make of any individual. Most leaders will have a “sweet spot” between these two styles, leaning more towards one set of attributes or the other. Indeed, given that the attributes required to fulfil either style are often contradictory, expecting any one leader to show them all feels unrealistic and perhaps unfair.
The best of both worlds
How, then, to find the right balance? IMD’s research suggests that leaders should work on developing their range of skills so that their sweet spots cover more of the spectrum between leadership types The broader the range of skills they can develop, the less risk they will be at of finding themselves in a situation with which they can’t cope.
This will not be straightforward. Above all, it will require significant self-awareness: a willingness from leaders to assess where their natural strengths and weaknesses lie and to focus their efforts accordingly. Think of right-footed soccer players practicing skills with their left feet.
In addition, even leaders able to flex towards traditional or modern styles of leadership to order will need to decide which to use at any given time. The ability to understand their environment and circumstances in order to formulate an appropriate leadership response will become paramount.
Moreover, there will inevitably be situations that require leaders to give a response beyond the range of skills they have developed. They will need to be humble enough to recognize this and to seek the help they require, be that internal or external to the business.
All of which is a long way from where this leadership discussion started. Those who hoped AI would usher in a new era of visionary, collaborative leadership based on data-driven decision making and power sharing, still have much to look forward to. However, they will need to recognize the enduring importance of the pillars on which traditional business leadership rests. Those who can combine the two approaches most effectively, adjusting to circumstances as they change, will enjoy the greatest success.
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