Digital transformation requires agile leadership

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Robert Trnovec

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General Manager at Microsoft Adriatic

Across all industries, digital transformation is bringing about more and more changes that leaders can no longer predict as they are happening too quickly and too randomly. Technologies, such as virtual reality, business analytics, artificial intelligence and mobile devices mean that it is increasingly difficult to create and maintain a competitive advantage. Of course, this is no special secret to leaders as they are mostly aware of the significant impact of the digital revolution on their business – according to IMD, 28% of leaders believe that digital revolution is quite important and 33% believe that it is very important for their business.

Of course, company operations and their readiness to face the challenges of digital transformation is to a large extent a reflection of the leadership and their willingness to change. This is why agile companies require agile leaders and recently, the prestigious IMD school published the report “Redefining Leadership for a Digital Age” on the characteristics of an agile leader that directly correlates to the business success of the companies they manage.

The first characteristic is humility as leaders need to accept the fact that others may know more. The flood of information makes it impossible to keep up to date with everything that is happening in their company, industry or the world. Therefore, it’s important for them to surround themselves with an effective team and accept that they do not know everything. Knowledge flows freely and quickly in an effective company, making it possible to flexibly respond to change. The role of managers is to create an environment that encourages the knowledge and opinions of all team members.

The second competence is being adaptable, which represents the ability to change the opinion based on new information. Planning is still just as important as ever but uncompromising insistence on sticking rigidly to the plans regardless of what new facts come to light creates no value for the company. To achieve this, it is crucial to communicate new positions to all other company stakeholders to ensure the entire company responds correctly to the changed circumstances. An example of this type of thinking is the Spanish bank BBVA, which has transformed from a traditional bank into a global provider of digital bank services. They could accomplish that through internal innovation and acquiring start-ups.

It will not be possible to succeed in the digital world without a vision that has always been an important part of business. Leaders must know exactly where they want to take their companies, even though they might not know how to do it. During the times of rapid change, a clear vision is particularly important as it guides the operation of all parts of business and employees. GE is an excellent example of this. By focusing on industrial internet, they clearly defined their vision and even sold off parts of the group that did not support this vision. And this is a company that was historically famous for working on everything from nuclear plants to TV networks.

The final important competence is the readiness of the leader to listen, connect and communicate with internal and external stakeholders. This is the only way to adapt the vision based on the signals other team members receive from customers , the market and industry. In the survey, agile leaders achieved excellent results in factors such as “ensuring a constant interchange of information within my team” (85% often/frequently) and “encouraging teams to challenge views and opinions” (86% often/frequently). Leaders need to listen constantly as all changes in technology and business models are happening so quickly that it is simply not possible to keep up with everything.

The world of digital transformation requires a new generation of leaders who are prepared to work in an environment in which the pace of change makes it impossible to rely on traditional leadership models. Instead of control and command, modern business environment require the readiness to learn and listen to the opinions of others. At the same time, companies must become more conducive, enabling information to flow faster between the leadership and employees as well as upstream. This is only possible if company leaders implement and encourage this approach to work. The most agile leaders will be able to create companies that can successfully overcome the largest change and the most difficult competitive challenges.

General Manager at Microsoft Adriatic

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