What Are Digital Leaders and Why Are They Succeeding?

There is a new generation of executives who view business differently. Digital leaders shaped by the internet era, who have a radically different mindset to more traditional leadership styles.

In many ways, the idea of digital leaders is just another buzzword. I mean, what the hell is a digital leader anyway? Is it even a thing? Probably not.

That said, there is a new generation of executives who have been heavily influenced by the digital age and it is impacting their style of leadership, leading them in many cases to significant success. So what is this group doing differently? How is there thinking different?

Admittedly, many of the things they are doing are just modern best practice in business leadership. But some of their approaches are more directly influenced by digital itself. It is these aspects that I want to explore.

Tony Hsieh, the founder of Zappos, is just one example of a new generation of leader who takes a very different approach to management.

So what aspects of digital are influencing modern business leadership? Well, I believe there are three elements:

  • Digital has unique qualities.
  • Digital has changed consumer behaviour.
  • Digital is changing employees and their work.

Let’s delve into these and see what we can learn.

Digital Leaders Leverage the Unique Qualities of Digital

It is lazy thinking to dismiss digital as another marketing channel, or something that we can bolt onto existing business models. Digital has some unique characteristics that set it aside from many of the other tools of business. Sets it aside in ways that make us reconsider how we do business.

The raw materials of digital are free

For a start, the raw materials of digital projects are free. Pixels do not cost money. Of course, we all know this, but a true digital leader allows that fact to influence their approach.

Imagine for a moment a traditional project, something like building a new factory. The high cost of materials makes it important that these projects are completed the first time correctly and without mistakes. You cannot get halfway through building the factory only to conclude you haven’t taken the right approach and start again. The costs would just be prohibitively expensive.

As a result, traditional business thinking is focused on reducing risk, because the cost of failure is high. Traditional organisations form committees to ensure they consider every eventuality. They write specifications, so they know the exact nature of what they are creating. Once a project starts, scope creep is the enemy because change brings substantial costs in new materials.

But that kind of thinking makes little sense when the raw material is free. It makes even less sense in the context of digital when things evolve at such a speed. That slow moving, risk adverse business thinking is harmful in this kind of environment.

Digital provides constant feedback

Another aspect of digital is that it provides us with unparalleled amounts of data on its usage. We can see exactly how people are using our digital services and get near-instant feedback on whether changes we make to the service improve it or not.

Imagine if you could apply these qualities to a factory. Suppose you could rearrange rooms and production lines at limited cost, or that you could see what worked and what didn’t before further adjusting it based on what you observe. Would you still insist on the committees, specifications and waterfall project plan? Would you leave your factory as you originally built it for years at a time, or would you keep tweaking and improving it?

We can see this different worldview among digital leaders. They know that they can create digital services through experimentation and iteration. They operate more like scientists than traditional business leaders. They research, hypothesise, test and iterate, inching their way towards a progressively better solution. To them, projects don’t have a finite beginning, middle and end. Instead, they evolve and grow over time-based on the feedback data can provide. It is a world of prototypes, split testing and constant evaluation.

But although digital has brought many benefits, it has also come at a cost.

Digital Leaders Obsess Over the Connected Consumer

When you talk to digital leaders as often as I do, it quickly becomes apparent that they share a common obsession with the customer experience. Not just the lip service you hear from any business executives, but an almost pathological fear of disappointing their customers.

One disgruntled customer has the power to destroy a brand overnight.

That is because they know how fickle today’s connected consumers are. How brand loyalty is a thing of the past. The problem is most business leaders, don’t share this realisation.

Most business leaders learned their skills in the mass market, mass media age. Back then, if a consumer wanted to buy a new product they had two ways to source a supplier; word of mouth or turning to company advertising. The company with the biggest advertising spend would win out because word of mouth would have very limited reach. But those days are gone.

Today’s consumers have unparalleled choice

Today, a simple Google search will return every single company which offers similar products or services to you on the planet. What is more, there are thousands of sites dedicated to reviewing and comparing those suppliers. Not to mention millions of social media updates providing feedback on the experience.

The web has provided consumers with unparalleled choice and transformed the power balance between business and customer.

Digital leaders fear the customer because they know the consumer has a near unlimited choice and could go elsewhere with the click of a mouse. But that isn’t the only reason they fear them.

Power has shifted from the business to the customer

They also fear them because they know one unhappy customer could destroy their reputation. For example, a middle aged disgruntled housewife in Utah has just as much ability to influence a potential customer as your entire marketing team. One bad review can go viral. Your brand is no longer what you say; it is what your customers say about you.

Worst of all consumers know this. They know the power has shifted to them, and their voice matters. They know companies don’t like it when they say negative things about them on Twitter or Facebook. That has made them demanding.

Customers have become fickle

But the choice has also overwhelmed them. With so many suppliers they are forced to narrow the field. They become fickle dismissing any provider that they consider lets them down. Their expectations have gone through the roof.

Digital leaders understand that they aren’t even just competing with their competitors in the digital space. In fact, we are competing with every other experience a consumer has ever had online. They don’t understand why they get amazing tools from Google, Facebook, Skype and Dropbox, yet have to tolerate your rubbish website. Their last best experience online becomes their expectation for every experience they have moving forward.

The old mindset of taking existing customers for granted, while offering new customers exclusive benefits doesn’t work in this new reality. In fact, a lot of the best practices of the past no longer remain valid after such a shift in consumer power.

While traditional marketing departments are replacing TV advertising with banner ads, or press releases with blog posts, digital leaders are taking a different approach. They are obsessively nurturing their customer base and turning them into advocates. They know that thanks to social media, happy customers can spread their products further and faster than any advertising spend ever could.

However, digital presents one last change for today’s business leaders to embrace.

Digital Leaders Adapt to a Different Generation of Employee

Digital has introduced some obvious changes to the workplace. The rise of remote working is probably the most apparent, but that is just the tip of the iceberg.

A frustration with the tools of business

For a start, digital technology has permeated every part of our companies from customer relationship management to cloud computing and stock management systems. However, many employees are increasingly frustrated with these tools.

After all, in their personal lives, they use sophisticated, easy to use, applications. Then they are confronted with enterprise tools that are technology, rather than experience driven. Just like consumers, the last best experience they had online has become their baseline expectation of the tools they use at work.

But there are more subtle changes at work too. These are changes that begin to challenge the traditional command and control management style.

Out of date management styles

Digital, along with many other factors has led to a workplace that doesn’t require traditional management. In fact, I would argue that in some cases the level of control many managers exert is damaging to digital innovation because as I suggested above, it slows decision making.

Most workers, especially in the digital field, are highly paid and highly motivated. They don’t need to be ‘managed’, they need to be protected, motivated and lead. That requires a very different skill set to that found in many of the managers I have had the misfortune to work alongside.

Many managers treat employees as inherently untrustworthy and lazy. They have the attitude they need constant monitoring and micro-managing. Employees, on the other hand, increasingly expect autonomy and the right to choose how, where and when they will work.

The hierarchical structure within many organisations further heightens this discrepancy. Many companies still see managers as superior to their employees, despite often knowing less than them about what are becoming increasingly specialised fields.

Many managers seem to take their leadership lessons from Dilbert.

Strong digital leaders take a very different attitude. They understand that not everybody is suited to leadership positions. They know that just because employees haven’t chosen to move into management doesn’t mean they are less skilled or experienced.

Their leadership style has been influenced by the flat structure of the web and open source projects. A structure where respect is earned, rather than granted by job title or position.

These problems in the workplace are only going to become more apparent over the coming years as more digital natives take up employment. They are not a generation who blindly accept authority and do what they are told because “that is how things are done”.

But these changes are a good thing. Companies need independent, self-motivated employees capable of taking the initiative. That is because the hierarchical structure is not flexible or fast enough to keep pace with the rate of change digital imposes.

Adapt or die?

Where does the digital age leave the older generation of leaders? If you listen to some people you would think they are a hopeless case, and that you cannot teach old dogs new tricks. They seem to suggest that these leaders can never offer a digital vision or provide digital strategies.

If that is true, then one of two things will happen, either the companies they run will slowly disappear into obscurity, or those same companies will kick these managers to the curb. Personally, neither option sounds particularly appealing in my opinion, and I am not willing to give up on my peers quite so quickly.

We need to be careful not to dismiss the tremendous knowledge and experience ‘old school’ leaders have. The vast majority of that is still as relevant today as it has ever been. These are people who are worth investing in, who are worth taking on the digital journey.

Instead of dismissing them as obsolete we should be helping them fill the gaps in their knowledge and adapt their considerable leadership skills to the new digital reality. That is not an impossible task. In fact, it is relatively straightforward. The question is not whether we can help our leaders, but rather whether they are willing to accept it.

Pride is the biggest barrier to transforming the current generation of leaders. Are they ready to acknowledge that the world has changed and they need to update their skill set? Unfortunately, the odds are stacked against them as they come from a management style where they are expected to have all of the answers. In their minds at least, admitting gaps in their knowledge would be to let their staff and their company down. That in itself is going to be a hard transition to make.

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