Digitalisation is being described by many as a “global megatrend that is fundamentally changing existing value chains across industries and public sectors” (Collin, 2015). When listing long economic waves, expert Michael Vogelsang stated, “after the steam, steel, electricity, and petrochemical revolutions, network-based digitalisation is the driving force today on the stage of business and private life” (Vogelsang, 2010). Fundamentally digitalisation can be defined as the use of digital technologies to change a business model and provide new revenue and value-producing opportunities; it is the process of moving to a digital business.
Now that we have defined its precedence. To understand how digitalisation affects top management leadership, we need a clear definition of the different forms of leadership and their characteristics as determined by an expert in leadership studies, Bernard M. Bass in his book Transformational Leadership (Bernard M. Bass, 2006), as well as the attributes of digitalisation that affected the fore-mentioned leading styles.
Different leadership styles:
Value-based leaders lead through morality, empowerment and followership (Yukl, 2012). They empower the organisation toward achieving its overall goal by communicating their visions and engaging the workers through encouragement.
The four key characteristics of a value-based leader are:
4) Respect for followers
Transformational leaders view the organisation as an entity in which one can, through encouragement and motivation, induce change (MacGregor, 1978).
The four key characteristics of a Transformational leader:
1) Idealised influence: A leader that serves as role models to the followers.
2) Inspirational motivation: A leader that remains inspirational and motivating to lift their team’s spirit and challenge their co-workers.
3) Intellectual stimulation: A leader that encourages the input of their co-workers, without destructive-criticism.
4) Individualised consideration: Leaders engage in a role of teaching and coaching whilst paying particular attention to each follower’s wants and needs.
Authentic leaders develop the perspective that to truly impact and be of benefit for individuals, corporations, nations and societies. Genuine leaders must possess inner characteristics beyond transformative and charismatic leadership (Copeland, 2014)
The four key attributes of an Authentic Leader:
1) Self-Awareness: A leader that seeks feedback from their followers. The leader gains inner insight through exposure to others (Kernis, 2003)
2) Relational Transparency: A leader that instils trust and promotes involvement, by sharing their appropriate feelings, thoughts and information with others. (Kernis, 2003)
3) Balanced Processing: A leader that makes objective data-analysis based decisions (Kernis, 2003)
4) Internalised Moral Perspective: A leader that is guided by values and moral standards who stands against a group’s social pressure (Fred Walumbwa, 2008)
Now that we have defined the leadership styles, we will identify the characteristics of digitalisation that affect the fore-mentioned leadership styles.
Six characteristics of Digitalisation:
1) Interconnectedness and integration: the sharing of knowledge and practices which drive productivity, sustainability and quality in business environments also promote creativity, innovation and participation among co-workers (Nachira, 2007).
2) Diminishing time lag and abundance of information: Shorter timeframes for decision- making, increased speed of information, and real-time organisational management (Bounfour, 2016) are results of digitalisation.
3) Increased transparency and complexity: As organisations become more complex, further clarity is needed to manage organisational transformation (Kakabadse, 2011); (Rogers, 2016)
4) Hierarchy removal and dissolution of personal barriers: George Westerman, an MIT research scientist, introduces the notion of “reverse-mentoring programs” (Westerman, 2014). This notion enables top management and senior executives to learn from the younger generation, by diverging from formal and professional barriers as well as corporate positions in the company.
5) Decision enabler and enhancing integrity: Digitalisation enables faster decision-making processes: from strategic decisions in the corporate boardroom to consumer purchase decisions.
6) Humanising effect: According to David Rogers, an expert in digital strategy, digitalisation enables humans to easier interact, communicate and interlink through virtual platforms.
These characteristics will now be used to analyse the effects of digitalisation on the three top management leadership styles.
Leadership in the digital age
1) Integrity: Most of the leaders interviewed highlighted integrity as a core attribute for leaders to be firm and strict about. (1) Interconnectedness, (3) increased transparency and (5) decision enabling characteristics of digitalisation. Utilising the interconnected nature of technology, leaders today can show strong integrity and be more transparent with their vision and values. However, although digitalisation can act as an integrity enhancer, it also enhances the pressure on the leader and the possibility of scrutiny through increased transparency.
2) Trust: Most leaders’ interviews stated that they shared the privileges and responsibilities of the organisation with the followers. However, trust was now not just between leader and followers, but also between the workers and digital systems utilised to enable the shared and co-created leadership. This understanding allowed the leaders to humanise their behaviour to their followers, gaining loyalty, trust and influence among the groups. (4) Hierarchy removal and the (6) humanising effects of digitalisation manifest themselves in these situations.
“A document [for a client] can now be sent back and forth seven times before lunch. It quickly gets finished and onwards to the client. Digitalisation simplifies good business. We can provide customers with very quick service so that they can move on and agree with all the other parties and make them satisfied. This creates trust, and it’s amazing how things flow and the whole business work better. “– Leader G
The (2) diminishing time lag and abundance of information makes the process of instilling trust easier by swift delivery of complex analysis and legal documents as described by Leader G.
3) Listening: leading in today’s digital climate sets pressure on the gaining of insight within as well as and outside the organisation (Westerman, 2014). Leaders need to have the ability to understand and manage the abundance of information and adapt accordingly. Digitalisation allows for more comfortable, faster communication through virtual platforms. These platforms encourage leaders to listen to their followers and share data between one another quickly. (1) Interconnectedness, (6) humanising effect and (2) Diminishing time lag and abundance of information are contributing factors of digitalisation.
4) Respect for the follower: Leaders empower their followers and encourage them to follow and internalise values, resulting in a broader and more co-created leadership within the group
“I think that as part of the digital leadership you must understand that you cannot preserve what you have, but must be willing to change and dare to ask questions. Leading and learning your way forward. I’m quite fond of explaining through a rather broad narrative, why are we here, what is the point of going to the office every day, if everyone understands the story then there is less need for control and more fore empowerment.” – Leader H
The complexity of generating ideas is solved by the encouragement and empowerment of the staff to co-learn and co-create initiatives in diverse groups (Iansiti and Levien, 2004). (1) Interconnectedness and (4) hierarchy removal are self-evident characteristics that advance the co-creation between the employees. Leader H also stressed how narratives (5) enabled decision- making of the individuals in the organisation: if everyone could self-guide their decision-making after the values and story set by the leader, the organisation would be more efficient.
1) Idealised influence:
Through increased transparency (3) and (2) abundance of information, several leaders found alternative ways to remain idealised influencers in the eyes of the followers: What people like about my leadership through the reviews, is that I am available and non-controlling.
“I let people run with their ideas, and that creates trust and admiration. I have no hard time to put my foot down and say now we do this. It’s probably a combination of factors of indirect influence and encouragement that enables them to act with very great freedom.” – Leader H
2) Inspirational motivation:
“I come from the world of hockey. In order to achieve something together, I set the scene, then step back. You have to create an environment where you can tell them that you have to work on all seven days of the week, and that’s no problem. In my previous roles, I have lead teams of people from different countries, without ever meeting them in person. Digital leadership then becomes about being honest when setting the goals, and letting the guys apply self-leadership.” – Leader J
In Leader J’s case, the (5) decision enabling and (3) increased transparency characteristics of digitalisation empowered his motivational range through technological and digital means, simplifying the process of motivating and clarifying the higher purpose of work to the employees. Several leaders emphasised this feature as a crucial part in the negotiation of commitment (Bass and Avolio, 1994): by co-creating, the vision and its fundamental structure with the employees, the shared vision was no longer a hollow document constructed by top management and the executives, but a living document, embodied in most of the staff.
3) Intellectual stimulation:
“Corporate culture is A and O in this digital climate. If you don’t foster a way of being where everything is up for discussion, whether you’re a new employee or the big dog chief, consider your organisation doomed. Before, management wasn’t interested in what people on the floor said, now it’s the opposite, and we crave the intel that our employees have about the business” – Leader B
(4) Hierarchy removal, dissolution of personal barriers and (2) diminishing time lag was essential aspects of managing organisations in a digital age according to Leader B. With lessened hierarchies and boundaries. Intel could be gathered and shared much quicker (Collin,2015). With the possibility of real-time, second-by-second market analysis, discussions and implementation of tasks, digitalisation had revolutionised the whole organisations way of conducting business (Korhonen, 2015). Everything according to Leader B was now in real-time, discussions between the leader and employees were no longer aspects of intellectual stimulation through safe environments and conversations, but part of the co-created organisational decision-making process (Chew, 2013). Suggestions and discussion were now used for direct actions.
4) Individualised consideration:
In contemporary organisations, digitalisation had now through its (1) interconnectedness and (6) humanising effect, lifted the soft side of management according to the leaders. Four of the most senior leaders had felt a substantial shift from previously being distant mentors, and now being on more equal levels with the staff, showing vulnerability through for example openness regarding their lacking digital competency
“People often feel shame about their lacking digital skills, that they are unskilled or unworthy because they lack digital competency in something. This is a saddening fact, as digitalisation also is making us very lonely. Even though you have the whole world at your screen, I always share my embarrassment regarding this with my employees, to level with them, so they know it’s normal.” – Leader F
The first feature of self-awareness demands a leader to understand and see meaningfulness through dialogue and improved inner insight. The speed of digitalisation, i.e. (2) diminishing time lag of information and (3) increased complexity through transparency aided most leaders in the process, nudging them into a (6) humanising, more open and honest leadership style:
“The digitalisation brings out that in me: nowadays, I almost can’t be anyone but myself at the office, at clients or anywhere else. If I’m trying to be something or someone I’m not, it will shine right through, and people will quickly lose respect for me as a leader. I have to be me fully, with my strengths and weaknesses.” – Leader D
2) Balanced processing:
Digitalisation had very strongly enhanced this feature of authentic leadership, according to the leaders (Rogers, 2016). The perspective of engaging in rigorous data-analysis to aid the decision- making was accepted as a critical factor by all leaders interviewed. However, most leaders confessed to ultimately basing the decisions on intuition and gut feeling.
3) Relational transparency:
Digitalisation had with or without their consent, forced or enabled them, to be more honest, transparent and straightforward as leaders. According to the leaders, the (4) dissolution of personal barriers, (6) humanising instead of idealising of leaders and overall (1) interconnectedness has led to a more effortless and genuine leadership style. Drawing compare to a pre-digital era, 7 of the 13 leaders mentioned that it was no longer necessary to uphold a certain leadership-persona and that the “The armour of leadership” as described by Leader E, was not required anymore:
“When I took on the role of Company X, it was a national undertaking. I made a personal decision, knowing that I wouldn’t be able to take off this amour or persona for several years. It was one of the toughest decisions of my life, but at the time, it was necessary to be respected and lead through the change. Today, the same challenge can be tackled and solved with ingenuity and honesty; instead, thanks to the openness of the digital era”. – Leader E
4) Internalised moral perspective
The increased transparency coupled with the interconnectedness of tools, processes and methods to virtualise one’s leadership, was used for both the further alignment of their values and morals with implemented actions, as well as to control that the employees mirrored this internalisation.