Leadership’s Digital Transformation: Leading Purposefully in an Era of Context Collapse – MIT Sloan

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Leadership’s Digital Transformation: Leading Purposefully in an Era of Context Collapse – MIT Sloan

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The affective challenges of digital transformation pose a clear and present danger to leadership effectiveness and success. Leadership’s failure to explicitly recognize and address digitally driven stakeholder concerns and rivalries — especially those of the digital workforce — creates counterproductive consequences. These recommendations offer a framework for serious leaders to revisit the affective fundamentals that produce more effective outcomes.

Champion Purpose as a (Re)Organizing Principle

Having a compelling mission statement isn’t enough. Serious leaders must appear as genuinely passionate about enterprise purpose as they are about strategy, agility, and customer centricity. The key is to authentically embed and enable purpose as part of the organization’s digital transformation trajectory. Purpose thus has an operational as well as an aspirational rationale that invites new leadership accountability. Taking purpose seriously pushes leaders to publicly take these steps:

Actively communicate a strategic purpose that explains what the enterprise is trying to achieve in terms of both productivity and humanity. Leaders should articulate and elicit purpose-driven narratives. Digital talent wants this. Brito’s pursuit of purpose as an organizing principle began at a global employee town hall with a question he couldn’t answer from a young associate, who asked, “What would the world miss if AB InBev did not exist?”

Intentionally and systematically measure pursuit of purpose. Rather than appointing a chief purpose officer, companies should consider adopting the equivalent of a Net Promoter Score — a Net Purpose Score — to assess engagement and guide experience design around purpose. These metrics — key purpose indicators — should be an intrinsic part of the digital platforms and processes that create value for the company. They should be part of both individual and team performance reviews.

Be transparent about trade-offs. When does purpose take precedence over profit? Under what circumstances, if any, does profit trump purpose? Similarly, when stakeholder interests inevitably conflict, does purpose or strategic intent tip the leadership balance? Context collapse complicates this dynamic: Rival stakeholders will surely use digital media to call out controversial leadership interpretations of purpose-driven decisions. Visibility gives stakeholders an idea of how leadership expects its positioning on purpose to be understood.

Lead by Example

Digital transformation requires digital leadership. At a time when the work/home distinction has blurred and when digitally mediated communication has all but replaced informal in-person interactions, employees’ experiences of leadership have changed. The impact of C-suite communication is magnified. Leaders must be more self-aware, realizing their strong impact on enterprise culture.

The executives interviewed for this report all emphasized that their actions speak louder than words. Digital technologies inherently make leaders more transparent, agile, and vulnerable. Are they effectively — and affectively — using digital media to better lead by example?

Leading from behind is an anachronism in a digitally transformed world. Humanyze’s Waber urges leaders to be proactive. He notes that in-person settings offered the possibility of interaction between senior and junior employees in a way that virtual settings make difficult. “It’s important to take proactive measures to encourage that sort of interaction in the virtual setting.” Now, Waber says, “a CEO might have open office hours, but is some new employee going to call up the CEO? You are relying on people with inherently less power to make that extra effort. Instead, you need to flip that. You need to tell folks in leadership that it’s their responsibility to make these things happen, to reach out and say, ‘Hey, we should do a virtual lunch.’”

The leaders we spoke with understand how they want their leadership to be experienced by their stakeholders. They recognize the importance not just of collaborating with a greater diversity of stakeholders but of being seen collaborating with a greater diversity of stakeholders. They participate in mutual mentoring not merely to become more effective but to demonstrate its acceptability and desirability to other managers and executives.

Intentionally Leverage Context Collapse

Today’s global leaders can’t escape the digital platforms that form connections across both their work lives and their personal lives. But context collapse increases the odds that errant tweets from either domain will ignite crisis-management situations that might lead to disruption and resignations. Leaders can avoid flare-ups by considering how to intentionally leverage context collapse.

Where legacy leaders once drew clear lines between their personal and professional lives, context collapse makes such aloofness difficult to sustain. Leaders instead ought to be deliberate about which sides of themselves to share: their politics, their passions — even their families. They need to decide which personal and professional boundaries to blur.

Will you be ready when the “Twitter mob” comes for you or your people? Much the way chief information security officers use simulated “red team” attacks on an enterprise’s digital infrastructure to identify weaknesses, leaders ought to simulate context-collapse scenarios that threaten brands and reputations — say, a racist or homophobic Instagram post by an executive’s adolescent son.

Leaders are particularly vulnerable to context collapse, but no one in the enterprise is immune. A single tasteless TikTok dance can have enormous workplace repercussions. Organizations have an opportunity to declare principles to govern online behaviors. Will leaders support people who digitally transgress? Where should the lines be drawn? For example, are associates accountable for family members’ posts? Clearly articulated principles build morale; they might even make workers more understanding of leadership transgressions. At a minimum, these guidelines should clarify how the enterprise distinguishes between private and professional digital activity.

Delta’s Bastian says that for a long time, the airline used social media defensively, “to get ahead of problems and deflect criticism.” More recently, however, Delta has used digital technology to talk about company values. “The main thing is to get our messages out as positive,” he says. “We use digital technologies to play as much offense as defense. That part is fun.”

Measure How Affective Your Leadership Is

Leaders should be as concerned by how they are digitally experienced by employees and other key stakeholders as they are by how customers and clients digitally experience enterprise offerings. Defining KPIs to lead affective digital transformation becomes as important as determining which KPIs drive effective digital transformation.

For Delta’s Bastian, Starbucks’ Johnson, and Purdue’s Daniels, affective KPIs around “perceived safety” became dominant during the COVID-19 pandemic. For Brito, the importance of having AB InBev be seen publicly as contributing to the health and prosperity of its local communities became paramount.

Leaders increasingly are expected to share their own emotions about why they choose to lead as they do. Ying Yuan Ng, chief learning officer at DBS Bank, notes that vulnerability “was one behavior that this year we needed to see data on — how to go about inspiring, how to go about galvanizing despite times when there is uncertainty.” Johnson is candid about the fact that a serious health scare led to his willingness to rethink stakeholder priorities. Joly says, “I became a better leader when I was able to overcome the disconnect between my head and my heart.” Effective leaders measure and monitor their own vulnerability, transparency, and accessibility.

Leaders should consider how to address the challenge of aligning effective and affective leadership measures. To what extent does alignment around purpose elevate morale? How important is high morale to Net Promoter Score and customer experience? How well do Net Purpose Scores and customer experience metrics predict customer lifetime value (CLV)? How strongly do rising CLVs correlate to increased shareholder value? These should not be rhetorical questions but rather testable hypotheses around future value creation.

Analyze Leadership Networks to Improve Culture

Leadership networks reveal the human connections where power truly resides. They can perpetuate patterns that have historically excluded all but a privileged few from positions of influence. Human networks and organizational cultures affect and shape each other. Leaders must accept, embrace, and explicitly measure that reality. Leaders can use their connections with others to better lead culture, and they can better lead culture to expand their own (and others’) networks.

Leaders must see the relationships among the people they lead, analyzing the frequency, diversity, and density of their connections. With network analysis, leaders can quantify how their leadership is experienced, both affectively and effectively.

Leaders benefit from reflecting upon the individuals who made their successes possible. MIT Sloan’s Reagans describes this process in his teaching: “When I’m teaching an executive education class, I feel comfortable saying, ‘That person got unlucky and got a job assignment that has a poor network. You got lucky and got a job assignment that has a good network.’ People start to realize their privilege. That’s when I start introducing the diversity material, because that’s also about how some people have an edge and other people don’t.”

Network visualizations invite more precise analytics around diversity, opportunity, and performance. Leaders can see not just overall representation by underrepresented groups but the extent to which individuals are being connected to high-performing teams and functions. Digital transformation makes leadership networks more transparent while creating data-enriched opportunities to be more inclusive.

Culture Amp’s Blanche sees traditional DEI efforts as wrongly focused on representation. “If we cut data in new ways, we understand different insights,” she notes. “We wouldn’t just say, ‘Run a broad set of DEI programs.’ Rather, we’d identify the individuals most likely to benefit from those interventions. We could pilot programs in places where they were most likely to have impact.” Better network analytics lead to a more targeted emphasis on professional development.

McKinsey’s Marvin Bower once pithily defined culture as “the way we do things around here.”10 By that definition, digital transformation is inherently cultural: Digital technologies are intended to comprehensively change the way organizations do things around here. But leadership teams must ensure that the cultural benefits of transformation outweigh its costs — that transformation amplifies the organization’s cultural values (say, teamwork and customer centricity) and avoids tendencies that can damage the enterprise (say, privileging cost-cutting over customer experience).

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January 28, 2021 at 07:39PM

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Dr. Sharon Lamm-Hartman