12 Mar 2020
Getting the C-suite across the digital divide
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Are you cultivating a digitally relevant leadership model? If not, writes Natasha D’Souza, the result could be catastrophic.
Digital transformation remains an unstoppable evolutionary force in business. The key to successfully navigating these choppy seas is to upgrade the digital expertise of a company’s leadership.
Business leaders must respond without delay. As our video explains.
Beware of the digital divide
Digitally-aware corporate leaders must cultivate a digitally-relevant leadership model. If they don’t, companies run the risk of fading into oblivion, like Kodak did.
A 2015 McKinsey study revealed that most companies have yet to realize the full value of digital, primarily because of deficits in leadership and talent. To close the gap, simply adding more digital roles, infusing existing roles with a digital orientation, launching function-specific digital initiatives and up-skilling existing senior leadership is not enough.
But how much confidence is there in today’s leadership to meet these challenges?
Well, according to the first-ever Odgers Berndtson Leadership Confidence Index, not much at all. The Index reveals that, across the world, only 15% of executives are actually confident in their leaders to deliver through the disruption brought on by, amongst other things, the impact of digital technologies.
Challenging new era for C-suite leadership
Karen Greenbaum, President, and CEO of the Association of Executive Search and Leadership Consultants (AESC) says the mandate for digital transformation no longer rests solely with a Chief Digital Officer or Chief Innovation Officer.
“Digital transformation can no longer be a siloed activity in the C-suite. It requires a collaborative, intersectional approach that cuts across the enterprise and it doesn’t need a technologist leading the charge.”
Digital leadership by the CEO is key.
In fact, extensive management research emphasizes that setting the tone for digital transformation must be a top-down exercise.
“Most organizations recognize that change is imminent and that the strength of the enterprise depends on senior leaders being agile. Not just managing digital change, but learning to drive it as well,” adds Paul Vella, Partner and Head of the Leadership Practice at Odgers Berndtson in the Middle East.
Sadly, at the moment, the CEO is not inspiring much confidence in this regard, as the Odgers Berndtson Leadership Confidence Index confirms.
Fresh outside input
As companies attempt to rapidly digitize and adapt to competitive pressures, some are bringing in CEOs from different industries, with fresh thinking. Top CEOs at digitally-advanced enterprises are also getting younger, especially in growth markets such as India and China.
“Asian companies are fundamentally more agile in the way they operate, in large part because their founders run them very entrepreneurially,” says Mark Braithwaite, Managing Director for Asia-Pacific at Odgers Berndtson. The average Asia-Pacific CEO is around 15 years younger than the average CEO in the US.
Digital deficit in the boardroom
Even with a digitally-savvy CEO, a ‘digital deficit’ in the boardroom can be a major roadblock to digitization. The board – not just the CEO – must guide an organization through its digital transformation.
The challenge at the board level is often generational. The average age of independent directors in S&P 500 companies in 2017 was 62.4 years. Unsurprisingly, information technology firms boast the most age-diverse boards, with a spread of eight years.
A common ‘quick fix’ is to bring in a director with deep digital expertise. But all board members must constantly ramp up their knowledge about digitization and new business realities. High-performing boards must ensure that their composition evolves to serve new strategic imperatives.
To that end, boards need to recalibrate their views of the ideal directorial candidate, particularly when it comes to credentials and age. If your board expects members to have the corporate C-suite experience, this might exclude many start-up veterans with a wealth of experience in an environment that demands agility, risk-taking, and collaboration.
“It’s time for younger individuals to have a seat on the board, particularly when they bring with them visionary thinking and proven deep expertise in value creation.”
The talent question
“The quest for talent proves even more competitive as companies seek to rapidly identify and secure a competitive advantage,” adds AESC’s Karen Greenbaum.
“The most intrepid performers are courted by some of the world’s most formidable companies. The presence of a well-enmeshed digital culture is one of the first things they look for.”
Certainly, in the Odgers Berndtson Leadership Confidence Index, one of the key areas where confidence really bottoms out is in the ability to find and keep the right talent to cope with disruption. In fact, it was on questions of talent that we saw the lowest overall confidence for all organizations.
So where will digitally ambitious organizations unearth the talent they need to take them forward?
“In Silicon Valley or [another] constantly innovating environment,” answers Greenbaum, adding: “Former start-up and tech executives possess a coveted blend of agility, inventiveness, curiosity, and fearlessness which makes them a very desirable hire.”
For this kind of hire to succeed at a legacy corporate, there is one important condition: “Entrepreneurial talent recognizes that failure is inevitable. They seek an environment that accepts failure as part of the innovation process.”
Creating a digital culture
An enterprise that continuously evolves in the digital landscape depends on an entrepreneurial and innovation-driven culture set by the CEO.
Greenbaum explains, “A culture of continuous learning and embracing failure is important. Employees should feel empowered to ask questions and encouraged to try, even if they fail. Diversity and inclusion are also vital as multiple perspectives ensure a better final product.”
As this internal culture develops and matures, it acts as a magnet for fresh digital talent. Integrative, intersectional and collaborative teamwork is also crucial.
When it comes to enterprise leadership in the digital era, we’re at the tipping point with exponential gains to be achieved from digitizing. It is a challenge no ambitious leadership team can ignore.
The Odgers Berndtson Leadership Confidence Index findings also deal with the following issues:
- Why a leader’s track record is no guarantee of future success
- How leadership is being redefined
- The keys to securing the right talent
- The three clear lessons for today’s boards and C-Suite teams
Odgers Berndtson Leadership Confidence Index
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