Digital Leadership: The Challenges, Skills and Technology

Great leadership is one of the most important driving factors of continued success in any business. But what does leadership mean in the digital age?

Digitalisation continues to be the number one topic of conversation across industries — particularly as companies accelerate their initiatives in response to the COVID-19 emergency that continues to disrupt the business world. However, digital transformation is as much about people as it is technology. Employees must buy into the strategy for change and be willing to adapt to new technology and new ways of working if it is to be successful.

As such, digital transformation must also be viewed as a cultural transformation — and both will only be achieved if organisations can put effective digital leadership in place.

As observed in the 2020 Deloitte Global Human Capital Trends survey: “Technology creates a sense that anything that can change, will; yet humans desire a sense of certainty to support bold steps forward. Here, our survey illustrates the uncertainty many organizations feel about their ability to navigate rapid change: 90% of respondents said that the accelerating need for organisations to change at scale and speed was important to their success over the next 10 years, yet only 55% felt that their organizations were ready to change at the scale and speed required.”

A separate report from Aon concurs with these findings. As noted in the report, the digital future will require a new set of skills, behaviours and ways of working — yet most organisations (59%) do not have the defined set of skills and critical competencies needed to compete in the age of disruption.

As such, only half (51%) of Aon’s respondents reported that their organisations had made significant progress toward executing an effective digital strategy. Nonetheless, a significant majority of organisations recognise the importance of addressing digitalisation at the leadership level. In fact, nearly two-thirds (64%) of organisations have already placed digital leaders in critical roles to drive digital change.

But what does effective digital leadership look like? No CEO or managing director worth their salt could possibly deny the criticality of digitalisation. But, as both a company-wide technological and cultural transformation, change must start at the top.

What, then, does it take to be an effective digital leader and drive these changes towards a positive outcome?

What is digital leadership? Consulting Heads provides a useful and succinct definition: “Digital Leadership, also known as Leadership 4.0, is a new management style that accompanies and drives the digital change in your own company with the aim of making business processes more agile and flexible. As a Digital Leader you have to set a good example and are a mixture of digital expert and change leader.”

Digital leaders, in other words, are decisive for the success or failure of a company’s digital (and, by extension, cultural) transformation — which, in itself, will be decisive for the success or failure of the company in the coming years.

As such, soft skills are just as important as traditional leadership qualities, as is an innovative spirit, openness and agility. Successful digital leadership means constantly expanding one’s own digital competencies and passing them onto employees — winning the trust and appreciation of those employees in process, while orchestrating the whole team to drive digital change initiatives forward.

Why do companies need this new form of digital leadership? Consulting Heads provides at least six reasons:

• Pressure to innovate: Technologies, business models and products are all evolving rapidly. Every organisation must keep pace.
• Competition: In the digital age, companies compete in a global market — and it’s difficult to catch up with early pioneers once an industry has been successfully disrupted by a new market entrant. Your biggest and smallest competitors are only a click away.
• Decentralisation: Value creation is being decentralised — using digital tools, processes can increasingly be carried out by customers themselves.
• Knowledge revolution: The amount of data available to companies is growing exponentially, providing a source of competitive advantage for those that can leverage it successfully. Meanwhile, digital marketplaces and platforms are creating greater transparency, more choice and better experiences for customers — and all companies must compete on these terms.
• Internal communication: With the rapid move to remote work, organisations need to facilitate streamlined communication pathways between geographically disparate teams, often in different time zones.
• Changing employees: With digital skills in high demand, it’s a job seeker’s market. Attracting and retaining good employees is a high priority.

What skills, qualities and competencies, then, must digital leaders possess to overcome these challenges and make digital transformation a success for their organisation?

Digital leaders must live and breathe technology. They must always be up to date with the latest innovations and changes in the digital business world. They should use digital tools at all levels — in both their personal and professional lives — and invest in both their own and their employees’ further digital education.

In particular, the digital technologies that digital leaders must take an especial interest in are:

• Big data and analytics
• Cloud computing
• Artificial intelligence
• Ecommerce
• Online and social media marketing
• Mobile

It is a digital leader’s role to not only define the vision that underpins the organisation’s digital transformation, but to communicate that vision to the rest of the team. More, the digital leader should involve the organisation’s employees in decision-making and developing change initiatives. Leaders should encourage employees to actively challenge old ways of working and discover new digital tools and technologies that would offer solutions.

Along with establishing a clear change story for the transformation, these factors were found to be behind the most successful digital transformations in a recent study by McKinsey.

Communicating a clear change story, McKinsey says, helps employees understand where the organisation is headed, why it is changing, and why the changes are important. It finds that at organisations with strong digital leaders who follow this practice, a successful digital transformation is more than three times more likely. The elements with the greatest influence on success are clear targets for the organisation’s key performance indicators (KPIs) and clear communication of the transformation’s timeline.

At the heart of any digital transformation are of course the digital tools and solutions that improve processes, productivity, efficiency and competitiveness. However, building the right technology stack requires in-depth scrutiny of all operations to understand precisely what solutions should be deployed, where, and in what order of priority. Indeed, understanding how, when and where technology can be deployed to increase productivity or improve internal processes is a key digital leadership skill.

As such, one of the best investments a digital leader can make is in a modern, powerful enterprise resource planning (ERP) system. Long deemed the cornerstone of robust and sustainable digital transformations, ERP solutions are designed to give digital leaders the complete helicopter view of the entire organisation. They comprise of a powerful suite of business process management, communication and collaboration tools that combine all aspects of an organisation — including product development and planning, HR, finance, accounting, and sales and marketing — into a single database, application and user interface. In this way, the ERP is the central instance for the planning, control and execution of all business processes — and provides the flexible foundation upon which digital leaders can integrate the additional technologies they will need to advance their organisation’s digital maturity.

However, digital leaders must select their enterprise tools carefully. Some ERP systems are overwhelmingly large and complex, take many months to implement and even longer to onboard employees — all of which throws up barriers to ensuring change processes are streamlined and the transformation is a lasting success.

This is the precise opposite of what we have aimed to achieve with metasfresh ERP. At metasfresh, we know that an ERP is one the most important tools for digital leaders. We also know that successful digital transformation relies on people and that any new piece of software should not only be powerful, but enjoyable and easy to use. That’s why we have designed metasfresh to adapt to the user and not the other way around.

Ultimately, the task of digital leadership is to ensure digital and cultural transformations are managed successfully. With metasfresh, not only can digital leaders identify precisely where new digital solutions can be implemented to enhance operations, instant communication between employees, customers, suppliers, business partners and other stakeholders is facilitated via a centralised platform that is so intuitive anyone can use it — the ultimate tool to lead your workforce through digital transformation.

Talk to us here at metasfresh. Since 2006, we have been developing our metasfresh ERP software non-stop with open source components and under the open source licenses GPLv2 and GPLv3. Our mission is to enable each and every company to access a powerful ERP system that supports digital transformation and fuels corporate growth. Get in touch today for more information and insights.