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Deep Dive: Must-have leadership skills for the digital age
Can B2B leaders intentionally avoid digital age ‘blind spots’ to better achieve innovation and transformation?
Are great leaders great because they have the timeless characteristics that are essential for leadership under all circumstances? Or are they great because they are the right leaders for a specific time and place, for the challenges at hand and the available opportunities? And what does all this mean for every leader driving transformation in the digital age? Douglas Ready, founder, CEO, and senior lecturer in organizational effectiveness at MIT Sloan, is digging into these questions and has essential insights for B2B innovators. In this edition, I share Ready’s insights, along with a summary of them in an article by Dylan Walsh, both of which are part of ongoing MIT Sloan reports on the Future of Leadership. This work is essential reading for B2B leaders—those that believe they are on the right course, as well as those that are just getting started and stepping up to the challenges and opportunities of the digital age.
Leading on purpose
Leadership is a skill that can be trained and honed, but the skills must be right for the times, and for how a company will overcome challenges and pursue opportunities. Ready offers invaluable research and insights for the specific leadership skills that are required right now, as every company finds its place in the digital age. He first establishes that there are timeless qualities and skills associated with leaders and leadership, but then identifies that there are contextual requirements as well. Ready points to four specific “blind spots” leaders should be aware of—an approach I find particularly useful because it allows leaders to fill in the blanks, paying attention to what they may not consider or even see.
All of this is important for B2B leaders of both digital startups and established businesses. B2B startup leaders are often driven by the promise of technology to deliver exponential benefits or perhaps make a difference not only in their organization, but in the economy at large. Established B2B leaders may be driven by the same principles, but their circumstances are different: They are experienced B2B professionals that must guide their company to a new path as digital technologies create existential threats and unimagined consequences. In either case, the execution of excellent leadership is very much about avoiding certain mistakes—the very blind spots Ready explains. Below, I share Ready’s blind spots, as described in Walsh’s article, followed by my suggested questions, analyses, and actions that B2B leaders and innovators may pursue to understand and avoid the blind spot. By doing so, I hope to improve B2B leadership, which will, in turn, help the B2B community take charge of its destiny and define its future in the digital age.
Platforms are for enabling user communities
In what has become a standard language in the digital-age B2B lexicon, the term “platform” refers to technology-driven marketplaces and market networks, often conceived by digital founders and executed as a disruptive attempt to displace or co-opt traditional B2B players. Existing companies may also attempt technology-driven platform marketplaces, requiring a new mindset for applying disruptive approaches as an insider. In both situations, success requires leadership skills that work in the context of driving market changes in the digital age.
Ready’s first blind spot is a call for leaders not to miss a fundamental shift for creating strategic advantage through platforms that are designed to help users create value for other users. This is revolutionary for B2B innovation because it diminishes the role of the traditional value chain as the primary mechanism for creating value for customers, which is accomplished by manufacturing products and delivering them with support added by distributors as channel partners. In Ready’s formulation, leaders must not miss the emergence of user-enabling platforms:
Strategic: Emphasis today needs to be on platforms, the space in which users create value for other users. This is fundamentally distinct from traditional views of creating strategic advantage. Without a mentality focused on platforms, a company’s leaders risk investing in increasingly obsolete ideas.
Applying these insights, three priority analyses emerge for imagining (or refounding) a B2B business as a platform, untethered from constraints imposed by a mindset that presupposes that you must operate in the traditional value chain:
Who are the users that are most important to your business? Do these users identify as members of a particular trade, profession, or community? What are their aspirations for what they achieve at work and in their personal lives? Do you have first-hand knowledge of them, or is your knowledge based on research? Or, is your customer knowledge dominated by experiences gained before the digital age?
How can your business help users “create value for other users,” enabled by your company’s knowledge, experience, network, and other capabilities that are wholly yours, not dependent on your upstream or downstream value chain partners? (Depending on your place in the value chain, upstream and downstream partners may include manufacturers, distributors, dealers, contractors, and so on.)
Does your most incredible opportunity for helping users “create value for other users” lie in the real world via human-to-human interactions, or in the virtual world, enabled by digital technologies, artificial intelligence, and automated processes? Why do you believe this? Why isn’t the opposite true? Interestingly, Walsh uses the technology-neutral term “space” as the place where users create value for each other.
Digital-age leadership is doing, not planning
Ready’s second blind spot recognizes that leaders are not doers. In every real-world B2B business model I have encountered, with the possible exception of owner-operators, a company’s leaders are planners or managers, divorced from direct, intense, and sustained customer contact. They lead from what they learned “on the way up” to their leadership position, from memory rather than current life experiences. The solution to this blind spot is cultural, and Ready’s advice asks leaders to go beyond expressing values to acting on them with behaviors that keep them in touch with cultural shifts:
Cultural: Far more than talking about digital leadership, leaders need to live it; they need to lead by example. Absent this, companies will grow out of touch with the cultural currencies of the time.
Cultural currencies are not the normal stuff of B2B strategy, which focuses on user needs and the benefits, features, and services that can meet them. Cultural currencies are more about how we live our lives. This means B2B innovators must carefully explore cultural shifts and incorporate this knowledge into new ways of doing business. I suggest three thought exercises to kick-start your efforts for building leadership as a capability, backed up by a leadership culture for leading in the digital age:
How do you define digital leadership? What are the values and, especially, essential behaviors for executing your version of digital leadership? How do you measure digital leadership’s inputs (required talent and capabilities) and outcomes (results achieved in your business and at customers)?
In my work, I have found that as B2B companies work with customers more and more in the virtual world, they can lose touch with the benefit of everyday contact with customers. Ready’s admonishment for leaders to stay in touch applies to the rest of the organization as well. If culture is about values and behaviors, one way to ensure all employees stay in touch is to adjust their job descriptions to include active work with customers—work that requires them to participate in the customer’s digital transformation or to get involved in activities that work toward the betterment of communities. Going further, a company might define a metric to gauge “participation” measured as involvement in teams that include customers, time spent on community initiatives, and so forth.
Having defined digital leadership and a new employee “participation” metric, can you tell stories about how your company is a force for change, enabling your customers to thrive in the digital age and guiding the transformation of your markets and communities?
You are who you hire
Ready’s third blind spot goes to bringing in a well-defined and cultivated “new wave” of workers. Like the previous blind spots, this one is contextual, meaning that it is a requirement of the moment, responding to changes in how we all live our lives and do our work in the digital age:
Human Capital: Digital leaders need to proactively design talent policies and practices that will attract, motivate, and retain a new wave of workers who seek investment in their professional growth and a sense that their contribution has a purpose.
For this blind spot, adapted for B2B innovators, I suggest three steps built precisely around the need to “attract, motivate, and retain” a new wave of workers. But before that work, I suggest that B2B innovators lead a project to define the new wave. Who are these workers? Are they individual contributors, managers, or leaders? What mindsets do they bring to your company? What work (and life) experiences are most essential? Who would your customers suggest that you hire? And so on.
Once the work of defining your “new wave” of workers is accomplished, you must then follow through on three dimensions:
How will you attract new workers? Your approach may include proactive recruiting or leveraging social media so that new workers self-select, seeking to gain employment with your company. Can you create temporary exchanges of new-wave workers that are currently employed by your customers, as a way of learning and leading together?
How will you motivate new workers? It’s important that new workers are allowed to reshape your company’s culture, so look at your reward system and make sure that it does not lock new employees into legacy behaviors. Another approach is to explore the intrinsic rewards for new workers. Intrinsic rewards are the satisfaction, joy, and sometimes, monetary gains, that a person receives for acting on their personal values. For example, if your new wave of workers wants to grow a business, find a way to align their work with your best growth opportunities. If they want to make a social impact, put them on teams working to serve your customers as a community. Make sure they work side-by-side with your employees, and their motivations may sneak into your current employees’ approach to work.
How will you retain new workers? To some extent, the answer to this requirement is achieved by successfully attracting and motivating workers. But you must also measure and monitor retention–not just when employees choose to leave your company, but by identifying the factors and predictors that lead to their exit. Exit interviews are useless. Pre-exit insights are powerful.
Live your stories; don’t tell them
Ready’s fourth blind spot is a call for leaders to be aware of how they are perceived, and to avoid believing their own hype, and their company’s stories, as told through press releases and other methods. Storytelling is a powerful and essential tool for letting the world know about a company’s innovations and digital leadership. But it can also create groupthink that confirms expected outcomes instead of continuously creating the stress, motivation, and uncertainty needed to move forward. Thus, all B2B leaders should avoid being misled by their intrinsic confidence:
Personal: … 12% of respondents feel their leaders are prepared to lead in the digital economy. However, when asked about their preparedness, 26% of respondents believed themselves up to the task. Generally, 80% of people believe themselves above average. As Ready writes, “We must be mindful of not believing our press releases.”
I propose just one action to follow up on Ready’s advice: Ask your constituents if you pass the “red face test”:
As your company follows Ready’s advice by adding the contextual leadership requirements essential for leading in the digital age, are you “full of it?” That is, if standing in front of a group of your customers, business partners, financers, peers, family, and friends, should you be embarrassed at your claims of success as a leader? That’s the “red face” test. Ask the ones that will give you the unvarnished truth, coming from a place of respect for your intentions and a knowledge of your business. It’s a pass/fail test. There is no middle ground. If you fail, try again. If you pass … well, don’t rest on your laurels. I have found that many leaders believe that they will be successful in the future because they have been successful in the past. Be bold and drive change, but don’t make that mistake.
Ideas for innovating B2B
I have three straightforward suggestions for acting on the ideas in this newsletter. I suggest that these ideas may be incorporated into every leader’s personal assessment to strengthen the leader’s individual contributions and improve the leader’s B2B company as a leader in its markets. This is an important distinction. B2B operates not just on the vision of founders and executives but through the execution of a company in an ecosystem, or more specifically, in an impact system. Collaboration is essential to bring forth the best that digital technologies and real-world execution can offer. In this sense, every leader is a steward of B2B’s collective future. It is incumbent on us all to set expectations, nurture, develop, and achieve outstanding leadership.
My three suggestions are:
Tell leadership stories and ask for feedback. Great (and bad) leadership is the stuff of great literature. It makes for a good story. By investing in storytelling capabilities as an individual and organizational skill, the impact of leadership can be shared, helping to light the way forward for all B2B companies.
Apply my suggested actions (above) as a checklist. By doing so personally, leaders can build their self-awareness of blind spots. By doing so as leaders, a digital culture of leadership will emerge, multiplying and sustaining individual efforts.
Apply artificial intelligence and data analytics tools. Okay. I don’t really know how to do this. I have had a few conversations about applying AI in a human resources context, but none have wowed me. But this is the digital age, and I wonder if digital-age tools can be applied to measure the impact of effective leadership. More importantly, do those tools improve the impact of well-designed digital leadership over time? I will look for advice and examples. If you know of work in this area or discover it, please let me know.
Join the journey
I would very much like to hear from B2B leaders at startups and established companies about Ready’s blind spots and my suggested actions. Let me know what works and doesn’t, whether I am on target or off the mark. I’ll share what I learn in future editions and tell stories about specific applications of these principles. Together, we can put the B2B revolution forward! Share your thoughts in the comments section below. If you prefer, reach out directly at firstname.lastname@example.org.