To survive and flourish, leaders will need an agile mindset to systematically innovate, so that their organizations can harness the full potential of the digital infrastructures evolving around them.
Rather than relying on a rigid hierarchical chain of command, we must embrace an intrapreneurial decision-making process that relies on advice from those who possess expertise relevant to the problem being solved – such as a centralized sustainability team – coupled with input from those who must live with the consequences of any decision made.
Today, we face the task of understanding and governing 21st-century technologies with a 20th-century mindset and 19th-century institutions. - Klaus Schwab
Four important principles to keep in mind when thinking about how to define a leadership mindset are Values, not disengagement; Empowering, not determining; Systems, not technologies; and by design, not by default.
Economists today have popularized the notion of disengagement of the workforce due to technology and the gig economy. Technology is linked to increasing disparity, and despite the advocacy of work-life balance throughout the pandemic, workers typically perceive company policies as prioritizing shareholder wealth over human well-being and social cohesion. Rather than asking ourselves what outcomes we might want from technological change, we keep finding that we have to react to undesirable outcomes.
All technologies implicitly have values baked into them, from the initial idea to how they are developed and deployed. We must recognize this and debate values at all stages of technological innovation. Today, we can argue that sources of employee disengagement attributed to technology today might include perceived threats to job security, obsolescence, invasions of privacy, data integrity, and misinterpretation of data collected.
Data privacy varies greatly from country to country. In the US, data privacy decisions typically reside with the individual. In Europe, the government has taken greater steps to regulate data. Although technology can offer a great many potential contributions in the workplace, for people to feel comfortable with privacy, the integrity of the data and the data collection process itself must be safeguarded beyond reproach. Misuse, or the perception of misuse, of the data continually collected from employees, could quickly erode trust in leadership and the organization. Also, misinterpretation of data leads to less than helpful recommendations for employees and consequently lower user adoption. At worst, it could create greater levels of disengagement and eroded trust.
In contrast, a leadership mindset focuses on value creation as a motivating activity that results in change and transformation within the workplace and gives employees new avenues for career advancement. The World Economic Forum ranks analytical thinking as the most important source of value creation, followed by creative thinking, ahead of three self-efficacy skills – resilience, flexibility, and agility; motivation and self-awareness; and curiosity and lifelong learning. Dependability and attention to detail, rank seventh, behind technological literacy. The core skills are completed by two attitudes relating to working with others – empathy and active listening and leadership and social influence – as well as quality control. All these skills have one thing in common – the crucial ability to create new value in the digital age.
The organizational components of profit-making, such as revenues, cash, gross margin, cost structure, and funding, are the same as ever. However, the emphasis, the patterns, the timing, and the relationships among them are different. Using these differences to create value for the employee, consumer, and shareholder at the same time is a new kind of business savvy and a source of competitive advantage.
The second aspect of the leadership mindset implies that we must design systems that harness new technologies to give our workers more autonomy and control over their everyday tasks. Shaping the Fourth Industrial Revolution to ensure that it is empowering and human-centered, rather than divisive and dehumanizing, is not a facile task. By empowering subordinates, leaders are also more likely to be trusted and be more effective at influencing performance.
New forms of institutional innovation will pave the way for a new leadership mindset that heralds unprecedented change and guides the workforce towards opportunities to flourish even as technological advances drive seismic shifts across all organizations. At its heart, this movement is about empowering people, rather than the rise of machines.
This involves giving workers more autonomy and control over their everyday tasks to ensure that work is empowering and human-centered, rather than divisive and dehumanizing. By empowering subordinates, leaders are also more likely to be trusted and be more effective at influencing performance. Rather than focus on determining outcomes in an era of unprecedented technological evolution, business leaders must seek to implement systems that give workers more choice, opportunities, freedom, and control over their lives. This is key when we consider how emerging technologies increasingly harness machines that can decide and act without human input.
Organizational silos are one of the most disempowering challenges that every purpose-driven organization faces today, leading to conflicting or misaligned priorities, lack of clarity, and fragmented approaches to execution.
Siloed approaches affect the connected enterprise in multiple ways. First, they lead to increased technology complexity due to fragmentation, resulting in diverse architectures, systems, and processes across teams. This complexity hinders the seamless integration of new technologies, innovation, and responsiveness to customer needs. Additionally, siloed decisions and development can lead to incompatible technological solutions, interoperability issues, and increased technical debt. These challenges increase the pressure for short-term workarounds, further escalating technical debt and complexity impacts.
Business leaders must rethink and integrate traditional organizational silos that separate administration from the front lines, that is, create multiple knowledge pathways that lead to bidirectional work practices and innovation. This is merely the initial foray into empowering the entire workforce to transition from traditional, hierarchical models to decentralized, multi-dimensional knowledge networks.
In stark contrast, today’s employees and workers are empowered in ways never before seen in traditional organizations, and managerial determination is diminishing. Today, we are experiencing a paradigm shift that is changing the way we work and relate to one another, as the digital age rewards change and punishes inertia. We are moving away from the concept of the organization as a machine that is designed to predict and control the world, and into the sphere of collective intelligence and knowledge informed by a living organism that has its sense of destiny in an increasingly short-lived and chaotic business environment.
The vitality of an organization will be measured by its capacity to dynamically adapt its business, empower its workers, and grow sustainably through holistic operating systems, value stream management platforms, centralized hubs, collaboration tools, advanced communication platforms, and intelligent data management. The idea that a leader’s job is to extract value from processes and people is morphing into a strategic focus on adaptability and learning that exemplifies the connected organization through networks of teams, flexible resources, and standardized processes. This is where progressive and alternative points of view bring cognitive diversity to the organization and increase its ability to rapidly respond to new opportunities.
As the philosopher John Armstrong points out:
"When we look at the past, we can see many, many world-changing things were possible at the time, which people did not realize. We know this. What we forget to tell ourselves is that this must be true for us in the present as well.”
Our third consideration of the leadership mindset asks whether we will be able to truly understand how technologies are transforming the systems we need to run our business without attempting to gain a deep understanding of the different technologies themselves. At the very least, we need a minimum viable understanding of emerging technologies. We also need to explore trends and linkages across these technologies to understand how they relate to one another and will cumulatively impact our organizational systems.
The conundrum here is whether we will be able to truly understand how technologies are transforming the systems we need to run our business without attempting to gain a deep understanding of the different technologies themselves. At the very least, we need a minimum viable understanding of emerging technologies. We also need to explore trends and linkages across these technologies to understand how they relate to one another and will cumulatively impact our organizational systems.
If we as business leaders zoom out – as John Hagel, the former leader of the Deloitte Center for the Edge, suggests – we find ourselves asking questions like, ‘What will my relevant market look like in a decade from now? What kind of systems will I need to have to thrive in that market or arena?’ Only then can we consider the technologies that may support those systems.
At the same time, we must zoom in to identify two or three short-term projects that will have the greatest impact in accelerating the organization’s movement toward the longer-term opportunities already identified. These would be accompanied by considerations of technological implementation, resource allocation, and relative measures of success in attaining the desired end state.
At the same time, we must zoom in to identify two or three short-term projects that will have the greatest impact in accelerating the organization’s movement toward the longer-term opportunities already identified. These would be accompanied by considerations of technological implementation, resource allocation, and relative measures of success in attaining the desired end state.
When we connect the dots between these two approaches, we see that emerging technologies must rely upon and extend digital systems, scale readily due to a foundation of digital interoperability, inhabit physical objects, combine in surprising and disruptive ways, and create similar benefits and challenges.
Fourth Industrial Revolution technologies promise to disrupt even today’s systems and create entirely new sources of value, turning the breakthroughs in digital technologies that organizations are struggling to make sense of today into the core infrastructure that business models will take for granted tomorrow. New technologies can enable better-performing systems to be put in place; without them, new technologies could even be detrimental to existing systems.
There are three key areas of focus when we talk about systems, not technologies. These are activating ecosystems via platforms, directing technological influx, and evolving human-machine interactions.
Finally, to succeed in the new world order, we must never resign ourselves to the inevitability of default options. In practical terms, design thinking - particularly employing the techniques and philosophy of human-centered design - as well as systems thinking approaches, can help us to understand the structures that guide the world and appreciate how new technologies may shift systems into new configurations. Design thinking has a human-centered core. It encourages business leaders to focus on the people they're creating for, which in turn leads to better products, services, and processes.
This fourth premise of our leadership mindset suggests that culture exists in an organization either by design or by default, so why not design it intentionally based on how we want our organization to work? The challenge here is for leaders to create a culture that encourages workers to focus on what is essential. Thinking like a startup, putting purpose first, creating a mutual understanding of the company's mission and vision, living your company values, and even thinking critically about an employee’s first day in the company are all part of the leadership mindset.
The Futurist Gerd Leonhardt declares that 'science fiction is becoming science fact' and since humans are biological and don’t progress exponentially, we often have a very hard time understanding where our new technologies are going. What may be amazing, magical, and “good” for us today, may soon become “too much of a good thing”, and go from being a tool to being the purpose, from being a god-send to being a doomsday machine!
Today we have a profound opportunity to reimagine ways of working, as well as the norms of human interest and interaction that help create a cohesive culture, generate social solidarity, strengthen purpose, boost resilience, and build shared trust and cooperation.
The World Economic Forum has attempted to put it all into perspective, stating that:
“A company is more than an economic unit generating wealth. It fulfills human and societal aspirations as part of the broader social system. Performance must be measured not only on the return to shareholders, but also on how it achieves its environmental, social, and good governance objectives.”
As business leaders we must create a culture that encourages workers to focus on what is essential, putting purpose first, creating a mutual understanding of the company's mission and vision for both mutual prosperity and the common good of all, and living your company values of equity and inclusion. Purpose, prosperity, people, and planet are the four enabling ‘horsemen’ of operating by design, not by default.