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Digital disruption – the big bang for leaders


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Mohit Pande, Country Head of Google India, delivering the keynote at the CIMA Business Leaders’ Summit last Monday pointed out that Airbnb (an online marketplace and hospitality service, enabling people to lease or rent short-term lodging including vacation rentals, apartment rentals, homestays, hostel beds, or hotel rooms) founded in 2006 is worth more than hotel giant Marriott founded in 1927 and also how startups are disrupting traditional business models. 

Today the rise of emerging markets, the accelerating impact of technology, new talent demands, an ageing population, and the easy flow of capital and knowledge are having a transformative impact on business, leaders and economies. By 2025, a single regional city in China will have a GDP equal of Sweden (22nd largest economy in the world). 

We have never had more data and advice at our fingertips – literally. The iPhone 7 and the Samsung Galaxy S7 contain far more information and processing power than the original supercomputer. Yet, we work in a world where top MBAs are routinely caught unaware. Therefore today the biggest worry for leaders is how disruptive accelerating workplace automation will be for organisations in the future and how they must change their old models and processes to deliver exceptional customer experiences that can set themselves apart from their competitors.

For decades, businesses have deployed technology to save management time to reduce costs and complexity, offer better service, make better products, and develop new business models. Today customer experiences with Apple or Amazon or Uber are the new standard. Users have grown to expect best in class experiences from all their online and mobile interactions and demand the same on most offline services. 

Moreover, the new potential of artificial intelligence, drone technology and advanced robotics poses major new challenges for leaders as they seek to reset their strategies for the digital age. Recent research on workplace automation from the McKinsey Global Institute suggests that advances in artificial intelligence and robotics mean that we’ve only taken the first few steps of a long journey that mainly lies ahead of us. 

Therefore the questions that need to be asked; a) are we at a turning point in how we do business, b) or is none of this disruptive technology necessarily that new, c) or have companies been living with this for a long time not knowing it was there to be used. Today, deploying technology is an absolute necessity, and leaders would therefore have to reinvent themselves all the time to remain current. What’s new is that the speed of change in automation is dramatically faster than it once was five years ago. However, automation isn’t new. What is different is that in the last few years the introduction of new technology has become far more significant and more frequent, causing havoc to the traditional companies.

Automation 

We are today at the intersection between automation and changing business models. As Mark Zuckerberg, founder of Facebook said many years ago, “When companies adopt technology, they do old things in new ways, when companies internalise technology, they find disruptive new things to do.” 

Therefore, automation itself may or may not lead to the change in the business-model. It depends on how you think about this. Automation can mean taking a process and doing it much faster, better, and cheaper or automation can fundamentally change what a business offers, requiring a new business model. 

There is now a requirement to enrich organisational ranks with tech talent to ensure the firm has the capability to understand the technology that is profoundly disrupting the organisation and industry. Many companies tend to see these two things as the same, but they aren’t. 

In banking, for example, you could think of discount brokerages either as the automation of tasks or as the potential disintermediation of a bank’s offering to customers. The implications are profoundly different on customers, costs, leadership, customer experience and talent. 

Furthermore, growing competition from FinTech startups will represent a challenge for banks. According to McKinsey calculations, banks could lose around 29-35% of their revenue to new disruptors. If banks undertake digital transformation for their entire value chain they will only benefit from an increase in revenue. Banks will require a fundamental change in thinking. Innovation should become a part of their DNA. 

Unlike FinTechs, banks do not always take targeted action to pursue specific ideas, instead trying to tackle everything at once. Banks also should think outside in rather than inside-out. Overall, digital transformation should become a key strategic priority. Proactive market surveillance is essential in order to observe key pioneering developments and which of them could radically alter the current environment. In a competitive environment, banks and startups would need to work in partnership. 

Leadership challenge

From a leadership perspective, the challenge is not an intellectual one of knowing which disruption is coming. The challenge is how you get the organisation to embrace the looming change. Many companies know what is going to happen, even their own customers tell them they are moving to do more business in the internet, because it is cost-effective. 

However, company executives don’t see the disruption coming. Their challenge is organisational − how do we set up the capabilities to embrace change before the disruption happens? Therefore the leadership challenge is even deeper than most people think. 

When we talk about leaders, we too often think about an individual with specific abilities. But no one can do everything. Leadership is a team sport. What’s really at stake here is finding the right combination of complementary talents. The leader playing Rambo is a distortion, particularly in America, compared with Europe. Leaders should be asking themselves, how do we build a diverse and creative team that can read the disruption correctly to take better-improved decisions? 

One way to think about the leadership implications of a major technology-driven change – whether for an individual or a team – is to start by asking more broadly what the role of leadership is. Leaders refer to individuals who have unique skills to guide and influence the behaviour of others and achieve outstanding results. Leadership refers to an organisation’s capacity to build future leaders. An individual leader matters, but an organisation’s leadership matters more over time. 

Individual leaders can become more effective through coaching, mentoring, 720 feedback and individual development plans, but to build leadership depth companies need to invest in leadership development and establish a process to build a leadership pipeline. The question is whether the quality of leadership within an organisation can manage the disruption and anticipate what’s to come. There is ample evidence to show that a firm’s quality of leadership drives performance both inside and outside the organisation. Organisations with strong leadership depth will have the capacity to respond to changing business conditions, execute strategy, increase investor confidence, and anticipate and deliver customer requirements. If that is so, we need to make leadership success more sustainable to manage the ever-changing business landscape.

(The writer is a HR Thought Leader.)


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