Leadership in the digital future
9th November 2020 | Rainer Stern
What are the required leadership behaviours that will help leaders succeed in the digital age, and to what extent do our leaders need to change their leadership behaviour in the future?
Why is the concept of “digital” so important for us today?
Technologies are changing the way customers conduct business. Communication has found new ways that I would have never foreseen. The younger generation of employees often rather use emojis than real words. These observable phenomena force corporations globally to react and increase customer centricity (Brett, 2019).
This driving force of accelerated change is the foundation for a new paradigm of leadership I call “Leadership in the Digital Future”. It describes the ability to anticipate waves of accelerated changes based on new technologies that disrupt the business: “Today’s pace of change is the slowest we will ever see” (Brett, 2019:67).
I have focused my research on how digitalization is impacting leadership and how leadership needs to be different in the digital future: will digitalization replace the “human factor” and core values like trust? Here, as well as interviewing current leaders within and outside of SAP, I also included Dietmar Hopp (SAP founder) in my research because I believe that his personality and experience are essential to leadership at SAP.
Another factor is becoming increasingly important: what is the view of the young generation of digital natives? What are their hopes and underlying values? Their expectations towards the existing generation of leaders will be significant, because they will be the next generation of future leaders themselves.
My research focuses on what will be needed from leaders to succeed in the “digital” future.
Over 24 years I have held various sales and sales support roles at SAP. I had the chance to work with the largest customer (Siemens) as a Global Account Manager, I spent three years in our channel organization selling to the smallest customers (some of them with as few as ten employees) directly and through partners, and I developed the Competitive Intelligence Network to support salespeople in competitive sales deals across all industries in Asia Pacific. Today, I am responsible for global sales enablement at SAP.
The most important lesson I learned very early in my career was “Listen to your customer.” Why? I never signed a contract with a company, only with an individual with whom I had created a personal relationship. Putting myself into the situation of the other person, the human individual, creatively finding joint solutions and celebrating project successes always motivated me most. As a manager of a global sales enablement team, I now train and inspire around 6.000 salespeople and leaders how to engage successfully with our customers. My focus is always on the individuality of my customer and this focus is also reflected in SAP’s vision statement: “SAP helps the world run better and improves people’s lives” (SAP, 2019).
Today, our customers are confronted with fast-paced changes due to technologies which were not around just a few years ago. Most people I know complain about the expectation that they can be reached 24 hours, seven days a week. Upcoming technologies like artificial intelligence, blockchain or big data are creating disruption in markets and this digital transformation of businesses has an impact on leadership. I follow the argument of Sheninger (2019) who emphasizes that, while technology will continue to drive change, human interaction remains the key component for change in business now and in the future.
What is a digital leader?
These changes in technology are disruptive and they also disrupt leaders who must constantly act outside their comfort zone, outside their typical reference for behaviour: “Digital Leadership” is the new reality. But what exactly does it mean: is it a new leadership approach or just a trend that rides on the current wave of technology innovation? What’s new about the phenomenon of a “Digital Leader”?
Today, another factor is becoming increasingly important: what is the view of the young generation of digital natives?
I see a lot of uncertainty when I talk with sales leaders about a growth mindset, leading with trust and dealing with five generations as part of the current workforce.
Identifying how leaders can deal with the new reality is my new passion and thus I use my thesis to find relevant insights that I can use in my enablement programs.
Generally speaking, “a Digital Leader represents the digitalization in the organization and is responsible for digital transformation” as Velten et. al. (2015:8) point out.
The sociologist Utho Creusen (2018) has defined the term “Digital Leader” as a digital company leader who does not necessarily have detailed technological knowledge, but rather a specific mindset. They demonstrate the ability to learn and to flexibly adapt to new challenges: nonlinear thinking which opens new perspectives in contrast to logical and rational thinking is the key to value increase and success. This includes the personal curiosity to learn and try in order to achieve innovation. Creusen points out that a general understanding of software and technological context is important to evaluate new developments, but technology is not in itself the driver for change, it is an enabler.
Dweck (2014 and 2016), Marasek (2016) and Braehmer (2017) add that digital leaders have two main competencies in addition to being a transformative leader: a digital mindset that enables them to view digitalization as a chance for innovation and digital skills that they can leverage as a role model.
Bawany (2019:29) defines the world of technology change as the new normal: “This new normal is challenging leaders to find new ways to lead their organizations and achieve sustained success”. The implication is that leaders will be confronted with expectations by their employees and other stakeholders that are new and unpredictable. I acknowledge that this implication is the main challenge for digital leaders and my intention in my research is not to focus on digital tools and platforms. Instead, I focus on the behaviours and perspectives that are important in tomorrow’s world: “It is the ability to learn, and not the technology, that will decide among winners and losers of digitalization” (Haack, 2018:40).
The aim of my research project is to identify how sales leaders at SAP can deal with the acceleration of change: what determines the evolution towards becoming the future leader in the digital age? And more precisely: what makes them more successful and stay ahead of the constant waves of change?
To achieve my aim, I needed to ask two main research questions:
- What are the required leadership behaviours that will help leaders at SAP (and outside of SAP) to succeed in the digital age?
- To what extent do our leaders need to change their leadership behaviour in the future?
My research project is a practitioner review through the lens of my experiences in business reality and my observations within and outside of SAP. Hence, I have defined my own hypothesis for my research project, because I am convinced that there is a relationship between the rate of externally driven change and leadership:
The more digital technologies influence the behaviour of people eventually resulting in different behaviours of companies, the more unforeseen and unplanned challenges will hit today’s and tomorrow’s leaders. They will have to deal with these challenges in new ways and demonstrate different leadership behaviours to be successful.
I believe that through my research, I can find insights from a business reality perspective that will be relevant to the sales organization, because I see an urgent need in our company to address the challenge that our customers are confronted with: leadership in the digital future.
Why is “Leadership in the Digital Future” important?
Whiteman (1998) created the term “VUCA-world” with its individual elements “Volatility”, “Uncertainty”, “Complexity” and “Ambiguity”. Although he originally used it in the context of the military, the term and its elements were soon adopted to describe the rapid changes that are occurring in the business environment (Whiteman, 1998; Bennet et. al., 2014; Saleh and Watson, 2017).
What are the most significant implications of a VUCA-world for leaders?
In a study by McKinsey, Goran et al (2017) surveyed 2,135 business leaders and identified that cultural and behavioural challenges are the single most important metric for leaders to meet the priorities of the digital age (Figure 1).
The results imply that there are multiple risks for companies not to be ready for digital transformation from an organizational, process or infrastructure perspective. But the largest challenge deals with the cultural environment and behaviour of leaders and employees. While this outcome is very interesting in the sense that digital priorities do not rely so much on technology but more on the human factor, Goran et al do not provide additional insights in how this special focus could be initiated or implemented.
Schwarzmüller et al (2017) take a more holistic approach in their study of 44 digital experts in economy, science, public associations and politics in Germany. Their results show three areas of impact. First, there is an impact on companies: although Skype is the largest phone company, it only manages telephone infrastructure without owning it. Facebook and Twitter represent the most known media companies, yet they only manage content provided by others. These are representative examples on the changes in the value chain and thus on the new business models that are possible due to new technologies. “Digitalization leads to the growing importance of customer requirements so that companies have to align their offering to fit better with the specific demands of their customers.” (Schwarzmüller et al, 2017:2)
Second, leaders must deal with the impact on how people work. While I have been used to going to my office for more than 20 years, the importance of the company´s workspace is decreasing. Telekom (2015) points out that the virtualization of meetings and even corporate events increase the importance of cultural aspects which is true for SAP where the workforce is being recruited on a broader worldwide basis.
Third, the impact for the role of the leaders themselves is the following:
- Decrease of power, democratization (less influence of leader)
- Increase of relationship-building measures (coaching, enabling, networking)
- Increase of required skills and competencies (agility, change management, distance leadership).
Marasek (2016:109) adds that leaders should provide opportunities for networking and openness, personal development and participation, so that they enable their employees to work more in a more agile way: “This is the reason why leaders must learn to trust their employees.” However, while these authors structure their arguments very well, they don’t provide further recommendations for leaders to take specific action.
How are leadership models evolving to reflect Leadership in the Digital Future?
As part of my research project I wanted to identify how leadership needs to evolve and how the latest evolution in literature reflects the requirements and urgency for leadership in the digital future. Marasek (2016) is one of the authors who shows how such a leadership framework could look (Figure 2). She focuses on the conservative and change leader in relation to transformation intensity. Based on a higher level of digital intensity of leadership, her framework then adds two leadership types: expert and digital leader.
The model may provide a good starting point to engage with a leader about current and desired state. But the definition of the digital leader does not differentiate very much from my own management approach except that it adds focus on and knowledge about digital technology.
Abbatiello et al (2017) provide a more comprehensive view on the required leadership skills in the digital age (Figure 3). Their model consists of three main levels of required transformation: cognitive transformation describes the personal aspiration to deal with disruption and refers to the mindset; behavioural transformation includes all adaptive activities to deal with the changing environment including other colleagues; and emotional transformation is important to deal with situations when they happen.
This model reflects the required skill mindset and digital mindset of a digital leader which I have experienced as the biggest challenge in our sales organization. Sales leaders struggle to start to implement personal change on an ongoing basis and they spend too little time on reflection and learning from experiences.
The latest evolution in literature enhances existing approaches dramatically. Brett (2019:67) points out that future leaders “need to evolve faster than the pace of change”. He even goes beyond that: if you are not fast enough, you will be selected out (Darwin, 1859). Based on technology as the origin of these waves of change, his idea unfurls as one of “unnatural selection”:
“All too often, leaders and innovators achieve success and then stagnate. They fail to paddle back out into the swell, to adapt, change, and learn new skills. Digital Leadership is a game of survival of the fittest” (Brett, 2019:3). What he calls the “Unnatural Selection” framework can be applied by leaders throughout their entire work life (Figure 4). Brett’s intention is to build a community of leaders who may adjust the approach continuously, applying the relevant experiences to eventually build “a meta-application of the framework on itself” (Brett, 2019:76).
The framework contains four phases:
- Awareness describes the consciousness of the leader, the state and change of beliefs, values, preferences, motivations, emotions of the leader and interacting people.
- Intention focuses on investing time on dealing with the situation and responding to the environment on personal, team and stakeholder focus (eg, enabling others, creating long-lasting relationships).
- Attention drives proactive choice how to perform and interact with teams and stakeholders, valuing and supporting the other person, for example through coaching.
- Reflection covers all previous parts of the framework and can be supported by various methods like journaling, feedback gathering, mentoring.
Ideally the reflection phase leads to a higher level of perspective, a new cycle and a permanent growing process. The framework provides a simple structure for a very comprehensive leadership approach which also reflects the models of Marasek and Abbatiello. Like the models of the other authors, it does not provide a detailed roadmap or specific action plan to put it immediately into practice. To address this shortcoming, I needed to continue my literature research as well as validate my ideas with the interviewees in my research project.
What behaviours do leaders need in the digital future?
In 2012, Erik Qualman developed the first action-oriented comprehensive activity guideline for digital leaders and called it STAMP, representing the five main recommendations: Simple, True, Act, Map, People. For each recommendation he suggests specific actions and behaviours. What stands out in his approach is his clear focus on the person: it is fine to make mistakes if you openly admit them, be true to yourself and trustful to others. He also embraces one of the foundational principles of Design Thinking: fail often and fail early. I have started to apply this behaviour with my team members and received very positive feedback when I encouraged them to experiment and provoke mistakes so that they make new experiences which will help them to grow. It felt disruptive in the beginning, but soon it has been recognized as my new and distinctive leadership style.
Wilen (2018:63) points out that “disruptive leadership need to integrate change in the operation in a company”. She proposes five key behaviours:
- Seek out the truth. It is critical for the leader to also take their employees on the journey.
- Help others through the chaos. Communication skills are critical to explain all required changes in relation to the objectives of the company.
- Be decisive. The leader needs to explain exactly what needs to be done, by when and how the team can be supported.
- Provide rationale. The leader must always explain why specific action is required and how new approaches should be found.
- Deal with uncertainty. The leader should encourage experimenting instead of predicting the future.
These behaviours can foster collective intelligence because of new networks that can be leveraged or experts that need to be included. In addition, these behaviours instil credibility and trust among the people involved. “Trust is the new currency” says business futurist Leonhard (2017), which provides stability in a world of uncertainty. Marlier (2017) adds that trusted leaders “align their Ethos (actions) with their Logos (words)”, and thus mobilize their employees emotionally. At SAP, I have experienced that gaining trust is very important when engaging with colleagues in any project: if I demonstrate being authentic, credible and inspiring – the behaviours that I focus on as part of my personal practice – I observe that I gain trust of people.
The more digital technologies influence the behaviour of people eventually resulting in different behaviours of companies, the more unforeseen and unplanned challenges will hit today’s and tomorrow’s leaders. They will have to deal with these challenges in new ways and demonstrate different leadership behaviours to be successful.
According to Crummenerl et al (2015) and Reibmayr (2017), these behaviours are factors that influence trustworthiness. She states that “If you want others to trust you, then you need to stand in the center of yourself” (Reibmayr, 2017:8). With this statement she confirms the proposed leadership models of Abbatiello (2017) and Brett (2019) which both start with cognitive transformation of the leader and then embrace other people.
From my experience in business, trust is key in leadership and it will become even more important in dealing with people in the VUCA-world. But what precisely are the leading factors to build personal trust? Covey et al (2006) have identified 13 behaviours which help to express and develop trust. It is a practical guide which is lacking the aspect of the digital age: while some of these behaviours such as “talk straight” or “demonstrate respect” represent fundamental manners in a professional world, others like “listen first” or “confront first” should gain a higher priority in that list given their importance in the digital leadership frameworks.
I chose the qualitative research approach: I intended “to select information-rich cases for in-depth study” (Patton, 2002:43) so that I could derive important learnings in relation to my research objective. As Yin (2010:8) states: “Qualitative research differs because of its ability to represent the views and perspectives of the participants in a study”.
I used two qualitative research methods: observation and interviews. Using semi-structured interviews helped me to explore the personal beliefs and feelings of the three different target audiences in my research (existing sales leaders, digital natives and external CEOs). In personal conversations, I captured their individual contextual conditions (eg, career maturity, value system, internal or external pressures), a process which is more challenging to achieve with quantitative research. Instead of using a predefined survey with fixed questions and response categories, I sought to be flexible for potential new questions or additional topics that could arise throughout the research (Denzin and Lincoln, 1994).
I conducted the interviews in-person or virtually using Skype, depending on the location of the interviewee. I formulated eight questions in relation to my literature review and research objectives of my project. For each question I also prepared further descriptions to explain the context. The questions were the guideline for the interview and built upon each other. In addition, I prepared an activity by leveraging the 13 behaviours of Covey et. al. (2006). My plan was to let each participant prioritize these behaviours and explain their thought process. By introducing this exercise, I intended to provoke additional comments to gain further insights from the participants.
Whenever I had the opportunity to meet the interviewee in person I arranged face-to-face interviews. The advantages are the direct feedback, the possibility to observe the facial expressions and body language, and to see and observe the work environment of the other person. I conducted most interviews (13 out of 20) by phone, because of the international spread and working locations of my interviewees. Being unable to see the other person required me to listen carefully to every spoken word and to concentrate on the tonality of the voice.
Analysis of the data indicated that trust is the one overarching theme that was consistently mentioned in all my interviews. Trust is the foundation for successful leadership, and it will continue to be the ultimate value in the digital future. SAP’s former CEO, Bill McDermott, stated that “trust is the ultimate currency” (McDermott, 2014; Eades, 2016). Indeed, 12 of my interviewees used the exact quote from McDermott. Trust is the core value that human beings connect with and when it is absent, people will leave and follow other leaders (Taylor, 2018).
I then identified three additional themes: communication, ability to change, and innovation. Each of these aspects builds on trust.
I created the following theme names: 1) Trust is the ultimate currency; 2) Communication is key; 3) Disruption is the new normal; and 4) Only those who fail will learn to lead.
Trust is the ultimate currency
“I had the most success, when I built teams with a diverse set of skills, expertise, culture and gender. In the future, we need to focus more on demonstrating unity, expanding a growth mindset, be authentic and reachable. All of this leads to trust. And trust will remain the most important value in the future.” Response from a CFO at SAP
The CFO not only confirmed my literature research, he pointed out that trust is the most important value in the future. Following Leonhard (2017), I wanted to further investigate my hypothesis: the more digital disruption leads to accelerated exponential change, the more human behaviours and personal interactions that lead to trust will become important.
In my research, I have identified three important elements of trust which will be relevant for the digital leader.
- “Trust” is perceived as the foundational value and “extend trust” is the most important behaviour.
- The factors that lead to trust are numerous. The most common factors have been described as:
a) Authenticity: “Leaders behave how they are. They walk the talk.”
b) Empathy: “Leaders are able to put themselves in the shoes of others.”
c) Honesty: “Leaders mean what they say and are truthful.”
d) Humanity: “Leaders include the human aspect in their behaviour.”
e) Values: “Leaders with the same set of values create followership and trust.”
I made another key observation: Trust was always seen as something personal in contrast to trust of an organization, government or institution. As defined by Botsman (2017:20), “personalized trust is about confidently relying on another person”. Having more interaction between individuals over time can lead to more confidence about the behaviour of the other person. This confidence leads to more trust. Why is this so important to my research question of required behaviours of leaders in the digital future? In the VUCA-world, moving from the current “state of the known” to a future “state of the unknown” means that there is risk. Trust can help to overcome this risk in the big ocean of uncertainty. Botsman (2017) calls this the “trust leap” (Figure 5).
Trust in advance
One aspect of trust which I did not find in my literature research was the concept of “trust in advance”. It was one of the digital natives who pointed out that she expects her leader “to extend trust in a blind way”. When I asked her to explain this in more detail, she responded: “as a digital native I can take on any task. You can expect me to know how to find the solution to any problem. That is the reason why I expect to receive trust in advance.”
Of course, I can imagine many situations where extending trust in advance is applicable, but I believe that there needs to be a comfortable level of established trust as a foundation. Based on my experience I would not trust someone who claims to be able to figure out how to fly a plane for the first time. There needs to be established trust first. Thus, the leader needs to gradually increase the level of expectation towards a team member to gain this established trust.
“I turn around this argument of trust in advance” said a sales leader in an interview. “If I extend trust up front, I also clearly communicate my expectation and need confirmation that we have a joint agreement on what needs to be achieved in detail.” This statement demonstrates that there may be different views on “trust in advance” and that this concept needs an honest conversation to bridge the risk gap.
Communication is key
“Defining a clear vision, mission and strategy is important. Communicating with people will be the art. You need to communicate in an open, honest and transparent way. Only then you can get people behind you and your vision.” Response from a COO at SAP
I fully agree with the COO’s statement above; however, my personal reality looks different. When I look at my own communication at SAP, I often wonder what I would do without email: on average, I receive about 80 emails per day, most of which I must respond to. For years, I have applied the Eisenhower principle or “Urgent/Important method” to navigate through the ocean of never-ending emails. Over the last few years, digital databases, collaboration tools, chat rooms, integrated messaging apps, or social media functionalities have added to the height and frequency of the information wave. It seems that it is more important to be able to find relevant information than to consume all the content. But if I am struggling, how are others coping with this phenomenon of perceived communication overload?
Communication is about connecting people through trust
“First, you need to establish your vision and objectives. Then think about how to connect with your team members.” This statement is the summary of a sales leader and it covers the key point of setting the targets and connecting with people.
The first aspect, setting the targets may include vision, mission, strategy, programs, projects, operations, goals, objectives, key performance indicators, processes, in short: the why, the how and the what of working with the team. I once had a new manager who was reporting directly to the Board of SAP. In our first meeting, he lectured me about communication: “Rainer, you should know that I’m not a micromanager. But at this point, I want you to send me all the details on anything you do, every day.” Certainly, this was an unexpected answer (which included a brilliant definition of micromanagement). Yet it gave me clear directions.
Digital leaders have two main competencies in addition to being a transformative leader: a digital mindset that enables them to view digitalization as a chance for innovation and digital skills that they can leverage as a role model.
The second aspect, connecting with people, is at least as important, because as a leader you need to bring people behind your goals, behind you as a leader personally and you need to get them on board for the joint ride ahead. In the example with the new manager, this connection finally happened. After three months he not only asked me to stop the daily flood of communication. He also demonstrated openness by including me in sensitive communication, he asked me for my opinion, and he encouraged me to provide thought leadership in executive conversations. I realized that he had his own and unique style of communication that eventually led him to trust me and have a trusted business relationship.
One of the sales leaders who I interviewed called this business relationship “people competence”. It is the ability to get people behind you and your vision: “It is important to understand that the journey is a collaborative one. You need to know your stakeholders, need to include feedback loops and provide customer experience in your communication.” She summarized very well why communication needs to connect people, within and outside of the organization. SAP’s new cloud-based business model only works if communication connects with all the stakeholders. I realized that she was explaining Brett’s model of “Unnatural Selection” which reflects the tornado of the VUCA-world in a continuous process of four phases: awareness, intention, attention and reflection. The communication must not only include yourself as a leader, the team and the stakeholders inside the organization, she also pointed out (and thus enhanced the model) that the outside view towards customers and external stakeholders is as important.
Communication needs to be open
“It’s not what you say, it’s how you say it” (Qualman, 2012:123).
I could identify a common denominator across all interviewees about open communication: “communication needs to inspire me. It needs to fill my heart so that I work with my whole heart.” Inspiration is one important aspect about open communication that connects with people. In addition, I extracted further findings of open communication that leaders need to consider in the digital future.
Expect the unexpected
Communication does not necessarily end at a certain point in time. As a leader you are required to continuously communicate with your team members. Be open to new findings and expect the unexpected! One of my interviewees reminded me of my first telephone conversation with her and that I came across as strict and humourless. That conversation happened three years earlier! Why did she never tell me about her experience with me? When I reflected on that situation, I realized that I should rephrase my question: Why did I never ask her about it? I decided to practice my telephone skills by listening to recordings of my own voice, because I do not want to be perceived again as strict and humourless.
Be open to new communication methods
“When we conduct a team workshop, the usage of PowerPoint is not allowed.”
When an experienced sales leader shared this comment with me, I was very surprised, because PowerPoint is the de-facto standard for workshop-based communication at SAP. “I must integrate the innovative ideas of the early talents in my team” he said and pointed out that there are many tools that help to overcome communication barriers.1 The key factor is to agree on a select number of tools within a team (or organizational unit) and to consistently use it. That makes communication open, team members will feel included which increases trust.
1 For example: “Microsoft Teams” enables teams to virtually connect and work across time zones. “Mural” supports virtual Design Thinking exercises. “Allego” is a tool for video-based collaboration within project teams.
Without appreciation you will soon be lonely
To my surprise, the responses from all digital natives supported one particular argument: they want their leaders to implement and foster a communication culture of appreciation. Every time when a task or project is finished, they expect the manager to express their acknowledgement. One interviewee stated very clearly: “For every ‘please’, I want to hear a ‘thanks’ afterwards.” Why is this aspect so important? Digital natives want to be respected as equal, otherwise they don’t feel recognized and eventually look for a different job or even a new employer. This is clearly a different attitude compared to mine and it shows how important the human factor is for leaders to be part of their leadership behaviour.
An example given was in relation to leveraging new technologies: “By looking at Instagram, Fortune 500 CEOs can either roll their eyes and judge how entitled and vane the young generations are, or they can actually participate on the platform with an open mind and understand how the young generations are different and why Instagram is so popular.” Throughout the interviewing phase and also by my own experience I realized that many managers do not use social media, because they view them as not serious. Yet they are missing the understanding that digital natives communicate through these channels. I believe leaders could build a lot of trust by appreciating the behaviours of digital natives and by encouraging other leaders to do so as well. On reflection, I think this is a good example of behavioural change for the leader of the digital future and from now on I will encourage my peers to adopt more digital technologies.
Disruption is the new normal
“When I joined this team, my mission became to create an exciting experience for my internal customers. My manager encouraged me to invent something completely new. I felt that he truly trusted me on my specialized expertise in Virtual Reality technology.” Response from a digital native
Over the past 24 years at SAP, I have experienced change in our solution portfolio and related markets, in our organization, and in our culture. The speed of change is apparent across all Board areas and Lines of Businesses. It seems that disruption is the new normal and we have to identify new ways of dealing with uncertainty. In my research, I have identified four recurring patterns in relation to change at SAP.
A growth mindset to deal with disruption also leads to a culture of enablement.
Disruption requires a growth mindset
Almost every day I observe behaviour of fixed versus growth mindset. I typically call these situations “glass half empty” or “glass half full” which refers to the perception of the viewer, how to deal with a certain state. The pessimists tend to step back and point out the risks (and can spend a lot of time on it) whereas the optimists view anything from a positive angle and demonstrate an attitude that leads to solving any challenge.
Sales leaders whom I interviewed stated that many of the current leaders “are afraid of change and the corresponding risk”. This fixed mindset drives their behaviour as a leader, and they tend to stay on known territory, unable to bridge the risk gap. According to Dweck (2014:28), the implications are significant.
“Employees in a “growth mindset” company are:
- 47% likelier to say that their colleagues are trustworthy
- 65% likelier to say that the company supports risk taking
- 49% likelier to say that the company fosters innovation”
Consequently, organizational units of SAP with a growth mindset hire from within the organization, developing talent further for future growth.
One interviewee pointed out, that “as a leader I have to be a coach and mentor to others. But I also seek coaching and mentoring from my peers and other experts. It is a continuous process.” I realized that growth mindset requires us to learn and re-invent your own behaviours. To stay in the “glass half full” image: a true leader needs to learn and accept different points of view.
The leader of the future is an enabler
A growth mindset to deal with disruption also leads to a culture of enablement. “When I seek advice, I do not necessarily ask for the solution. In fact, I want to be challenged to create several options and then provide a solution. I am rather looking for help to remove any potential obstacles or barriers.” When I reflected on these remarks of a sales leader, I found two specific aspects that I consider as very relevant:
First, I remember from my coaching practice that asking the coachee to create options is a very suitable approach to foster creativity when confronted with change. Coaching is a method to develop a growth mindset even further.
Second, leaders sometimes forget to offer their support or to simply ask “what else can I do for you?” When one of my previous managers asked me this question I was not prepared and caught by surprise. I believe that encouragement to ask for help is a very gentle way of enabling the other person, because it is an ask that offers your support as a leader.
One of the start-up CEOs added that “a leader deeply cares about investing in her followers, their talents and their abilities to become leaders themselves”. Helping others to navigate through change so that they become navigators is the ultimate art of leadership.
Only those who fail will learn to lead
“Agile innovation is a combination of mindset and skillset. You can only develop both if you continuously learn from mistakes. Leaders define a culture of curiosity and experimenting. This is how you bring out the best of people.” Response from a CEO of a start-up
In the world of increased uncertainty, leaders will no longer be able to rely on traditional behaviours that led to past successes, they rather must innovate themselves and become innovators as leaders (Leonhard, 2017). All my interviewees mentioned innovation capability and flexibility as important factors for leaders. However, the CEOs of the start-ups were extremely clear about the aspect of business pressure: “If leaders don’t innovate constantly, they will be eaten by others”. Hence, they supported the argument of Brett (2019:3) that “Digital Leadership is a game of survival of the fittest”. I feel that as a corporate employee I don’t sense this pressure of survival like an owner of a small business. But as a leader I must understand how to innovate myself to succeed in the future.
Innovation curiosity leads to confidence
One of the start-up CEOs said: “as a leader in the digital future you have to look at what’s coming, identify new trends, learn, experiment, learn again, have no fear and take risks.” He pointed out that the theme of innovation is closely related to a growth mindset and the intrinsic motivation to explore new territories. Exploration includes failure and one of the fundamental principles of Design Thinking is to fail early and to fail often (Uebernickel et. al., 2015), because failure leads to learning and eventually succeeding. The interesting implication for leaders is, that experimenting, failing and succeeding also leads to a higher level of confidence. The higher level of confidence helps to overcome the next wave of challenges which is already moving towards us.
I found this connection of leading (curiosity to experiment) and lagging indicators (higher confidence) very interesting, because it captures Brett’s (2019) digital leadership framework very well. It is a continuous cycle and a permanent growing process which leads to higher levels of perspective. My key learning from the interviews with the start-ups is, that each cycle is a conscious process and it is driven by the reflection of the leader. Taking risks to bridge the gap to the unknown is required to build trust and closely connected to Botsman’s (2017) trust leap.
The aspect of confidence also applies to the team members: Leaders give their employees the permission and space to stretch outside their comfort zone even if it possibly means failing. Otherwise the employees will be like robots in an assembly and not independent thinkers who take the company to a whole different level that the leader couldn’t have imagined. It’s amazing what driven talent can achieve when trusted and encouraged in the right way.
Be open for craziness
I was very surprised that three start-up CEOs pointed out explicitly that leaders “have to be open for craziness”. They explained that “old school leaders have old mentalities”, yet the digital future needs different ways of doing things.
One example they provided was the current view of the hierarchy: Why should the org chart of the team not be upside down? The leader is shown at the bottom and the team members are on top. This organizational structure can be changed based on teams and their projects. The leader can be selected each time by the team. While I believe that this approach is rather hard to realize for a large corporation like SAP, I am intrigued to apply this idea in my team for a new project setup next year.
Emotional intelligence makes you more human
“As a long-term manager at SAP, I have innovated my leadership style to reflect the human aspect which will become very important in the future.” When I heard this statement in the beginning of my research, I was not very clear how emotional intelligence and innovation fit together as a theme. Through the interviews, I started to realize that emotional intelligence and the “human factor” are one of the most important required aspects of leadership in the digital future. It is the key area where leaders need to innovate, learn and change themselves to become the leader of trust. In the connected digital future, it is necessary for a leader to be able to keep re-inventing both their business as well as themselves as a leader. This is especially true when dealing with different generations and their respective expectations.
My key criticism in my literature research was the lack of specific recommendations for leadership action. Based on my field research, I believe that emotional intelligence will be a key area for leaders to be addressed. My interviewees outlined specific actions:
- Innovate the team structure and include a balance regarding diversity, skills, gender, culture.
- Implement a flexible project setup by including experts from other teams.
- Demonstrate unity and enthusiasm for the team.
- Empower team members to make decisions on your behalf.
- Openly challenge your own thinking.
The first four points may depend on the size, location and focus of the team. To me, the last point is universal and, based on my experience, it is the most difficult one: challenging yourself in front of others makes you vulnerable. However, if you have established real trust as a leader, the potential risk to be exploited is low. In fact, I believe that challenging myself in front of others is the first step to leading by example and making a conscious change.
Implications of my findings
Leaders need to constantly challenge themselves to stay ahead and set an example. Establishing trust remains the core component for leadership, yet it becomes even more important in the world of increasing digital change. Instead of acquiring a different set of leadership skills, leaders will need to focus on the human factor in their behaviours, which include the three main themes of communication with people, dealing with change. and mastering innovation.
My analysis confirmed my hypothesis that the more digital disruption leads to accelerated exponential change, the more human behaviours and personal interactions that lead to trust will become important. My research project will be significant for the sales organization at SAP: my findings will help me to redesign the enablement programs for sales leadership that I am responsible for.
Conclusion and recommendations
Based on the feedback from internal and external stakeholders, four themes were identified which address the required leadership behaviours today and in the future: trust, communication, dealing with disruption, and innovation.
Trust is the foundation for leadership in the VUCA-world of accelerated exponential change. New technologies may change the way how we accomplish tasks more efficiently, yet the human factor determines how leaders will interact with their people in the organisation. By establishing trust, the tornado of change morphs into a solid rock in the surf and employees raise their profile from workers to innovators.
One of the key behaviours of Leaders in the Digital Future is communication. The importance of communication is not to deliver a message through technology: the real opportunity lies within reaching the individual with a relevant message. Leaders in the Digital Future will need to put a lot of effort in identifying what is relevant to their team members. In particular, digital natives have different or “unusual” thoughts about their preferences and communication which leaders need to consider.
Dealing with disruption will continue to be a main challenge for most leaders: they need to demonstrate a growth mindset and be open for the unexpected. This behaviour goes hand-in-hand with innovation, because new challenges will need new and different solutions. At SAP, we need to innovate in leadership to stay ahead in the technology business with all its fast-paced technology-based disruptions.
Here are my recommendations from these findings:
- Personal trust is an aspect of the foundational theme of “trust”. Trust can help to overcome the risk of the unknown in the big ocean of uncertainty. I am convinced that this is a big opportunity for SAP because, if the company establishes trust within the organization, it will also have an impact on how we interact with customers and partners. Herein lies an opportunity for SAP and it is my first recommendation: establishing a culture of trust must become the top priority in our “How We Run” behaviours. My action will be to engage with the Center of Excellence in HR with the aim to include my findings in their leadership programs for SAP.
- Communication across age groups, cultures and experience levels will be the next big opportunity, or leaders “will soon be lonely”. My recommendation is to include all levels of leadership at SAP to be involved not only in the recruitment process of talent, but also in the development for growth of these individuals, because they will be vital for the continuous success of SAP.
- Innovation cycles are too complex and take too long. I remember when SAP was a small company with fewer than 500 employees: people were motivated, positive, energized and believed they could achieve anything. What has changed since then? The company moved from an agile speed boat–like behaviour towards a slow tanker–like big ship which cannot change direction quickly. My recommendation is to review opportunities where we can “be open for craziness” to truly foster innovation. If employees feel this new explorative thinking and sense their management trusts them in advance, I am convinced we will have many more speedboats surrounding the main mothership.
In conclusion, my research underlines the advice I would offer any sales leader, that you have to continuously learn, lead by example and encourage your team to learn – try, fail, succeed, gain confidence – as part of a continuous cycle. Extending trust, adjusting communication and innovating is a permanent growing process which will lead to higher levels of perspective and proficiency (similar to the model proposed by Brett).