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DIGITAL LEADERSHIP - Character and Competency Differentiates Digitally Mature Organizations

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This article describes digital leadership-specifically character and competency-that differentiate digitally mature organizations from digitally developing organizations. We assess the differentiated actions of leaders of digitally mature organizations and discuss their results. The study is based on Patterns of Digitization survey with insights from 559 decision makers across five geographic regions-America, Europe, Asia, Africa, and Oceania designed to assess how companies are implementing digital transformation, the various strategies they employ, the investments they make, and the actions they take to achieve large-scale institutionalized digital transformations. The insights gleaned from the study should help lagging companies understand what is involved in implementing a digital transformation and what they need to do to catch up.
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DIGITAL LEADERSHIP - Character and
Competency Differentiates Digitally Mature
Organizations
Haroon Abbu
VP, Analytics Practice
Bell & Howell
Durham, NC 27713
haroon.abbu@outlook.com
Alexander Kwiatkowski
FIR Institute for Industrial
Management
RWTH Aachen University
Aachen, Germany
kwiatkowski@fir.rwth-aachen.de
Paul Mugge
Center for Innovation Management
Studies
North Carolina State University
Raleigh, NC 27659
pmugge@ncsu.edu
Gerhard Gudergan
FIR Institute for Industrial
Management
RWTH Aachen University
Aachen, Germany
gudergan@fir.rwth-aachen.de
Abstract This article describes digital leadership—
specifically character and competency—that differentiate
digitally mature organizations from digitally developing
organizations. We assess the differentiated actions of leaders of
digitally mature organizations and discuss their results. The
study is based on Patterns of Digitization survey with insights
from 559 decision makers across five geographic regions—
America, Europe, Asia, Africa, and Oceania designed to assess
how companies are implementing digital transformation, the
various strategies they employ, the investments they make, and
the actions they take to achieve large-scale institutionalized
digital transformations. The insights gleaned from the study
should help lagging companies understand what is involved in
implementing a digital transformation and what they need to do
to catch up.
Keywords— Digital Leadership, Digital Transformation,
Trust, Character and Competency, Innovation Management,
Corporate Culture, Change Management
I. INTRODUCTION
Digital Transformation leads to a renewal of companies’
production, logistics, communication, and human resource
management [1]. The latter factor also includes top
management, which is facing major challenges with
digitization.
Digital transformation is forcing companies to rethink the
role and value that data have in their business models [2]. [3]
found that data-driven companies are on average 5% more
productive and 6% more profitable than other competitors in
the market. The ever faster changing environments raise the
question of whether the leadership skills of recent years will
change significantly in this often-called VUCA environment
(volatile, uncertain, complex, ambiguous). As [4] states, “it is
naive to believe that the management challenges of the digital
age can be overcome with the traditional management
methods of the 20th century.
Researchers have highlighted the need to create new
leadership roles with new responsibilities for digital
transformation [5, 6]. As [7] observe, “digitally mature
leaders are knowledgeable, exhibit entrepreneurial behaviors,
foster timely and open communications, and promote digital
transformation.” Furthermore, they argue that the behaviors
of executives affect the implementation of digital
transformation strategies as they directly impact on employee
performance.
Organizations have started to take note - both digitally
developing and digitally mature companies consider the need
for leadership skills to be very high [8]. However, when [8]
asked whether organizations are effectively developing those
“digital age” leadership capabilities, the difference in
responses was considerable. While around two-thirds of
respondents from digital maturing companies said that they
are doing so, only 33% of developing-stage companies and
13% of early-stage companies said the same.
These observations have motivated us to study digital
leadership skills considering existing leadership models. In
this paper, we take a closer look at digital leadership through
the lens of character and competency of Steven Covey’s Trust
Model [9]. We operationalize this widely used leadership
framework from Covey, strengthen its relevance, and
conceptually connect the model to the results of digital
transformation. We present the results of our international
survey Patterns of Digitization on the relevant leadership
factors for the digital transformation. The current study
informs senior management that digital transformation is not
just about deploying technology; that the human aspect of
digital leadershiptraits, competence, intent, and integrity
of a leaderplays a key role in success.
II. RELATION TO EXISTING THEORIES
A. The Fears of Senior management
The Enterprise Risk Management Initiative of the Poole
College of Management collaborates with Protiviti each year
to assess the top risks facing organizations. In their recent
2019 survey [10], they interview 825 members of the top
management teams representing industries from around the
world. In this survey, sixty-eight percent of respondents rated
rapid speed of disruptive innovation” as the top strategic
threat to their organizations. In an even larger survey (n =
3300) with the open-end question: “What is the biggest
difference between working in a digital environment versus a
traditional one”, the most frequently mentioned phrase was
speed and rate of change” followed by “culture and the
mindset.” Furthermore, in a large McKinsey business survey
(n = 2135), ‘culture and the associated behavioral changes’
were assessed as the main obstacle to digital effectiveness.
They further emphasize that “executives who wait for
organizational cultures to change organically will move too
slowly as digital penetration grows, blurs the boundaries
between sectors, and boosts competitive intensity.” [11, pp.
38-39].
[12] emphasize that implementing a data-driven culture is one
of the biggest challenges in digitally transforming one’s
business model. This sentiment is echoed in other business
surveys, including a large one conducted by [11], in which
the need for culture change and associated behavioral
changes were identified as the main obstacle to digital
effectiveness. [13] were able to show in a large study (n =
1390) that leaders as role models with a convincing rationale
for change (e.g. strong vision) are the most effective means
of influencing organizational behavior.
In the context of digital transformation, changing culture,
attitudes and behavior are paramount. A strong top-down
direction from senior executive team coupled with methods
that engage employees in making the change happen is the
only effective way to drive digital transformation [14]. In
fact, the CEO of Microsoft, Satya Nadella, points out the
impact of culture on digital transformation: “Culture change
is not an abstraction; it is really walking the walk” [15, p. 13].
Senior management must step up to cultural impediments and
overcome their top operational challenge—the organization’s
resistance to change. Until digital transformation practice is
adopted at the department level—in other words,
internalized—the transformation is not complete. For
companies undergoing digital transformation, high levels of
internalization (that is, organization-wide commitment to a
practice) have been shown to complement and strengthen the
relationship between a practice’s implementation and its
success [16].
Studies have shown that the digital efforts of digitally mature
companies are initiated and tracked almost twice as often
from the CEO Suite [8]. Leaders of digitally mature
companies collaborate with cross functional counterparts to
achieve the level of integration and lateral cooperation
needed to go through digital transformation at a significantly
higher rate compared to leaders of digitally developing
companies [17].
B. Digital Leadership
What exactly is digital leadership? How does digital
leadership differ from traditional leadership? To answer these
questions, we must first understand, what does digital
leadership solve. Digital Leadership stands for everything
that a lot of organizations currently lack: “innovative spirit,
value orientation, potential for disruption and contradiction,
flexibility in the matter at hand, but also steadfastness in
essence, a high level of social competence and a great deal of
courage” [18, p. 27].
We take inspiration from Covey’s Trust Matrix (Figure 1)
to conceptualize digital leadership and look to leaders of
companies that have undergone successful digital
transformations. We observe that Trust enables companies to
succeed in their communications, interactions, and decisions,
and to move with incredible speed. The true transformation
starts with building Credibility at the personal level, which is
the foundation of trust. When a leader's credibility and
reputation are high, it enables them to establish trust fast. As
a result, speed goes up, cost goes down [9]. [9]’s Framework
emphasizes 4 Cores of Credibility broken down into two main
factors: Character and Competence. The two cores of
Character (Integrity and Intent) and two cores of Competence
(Capabilities and Results) work in tandem as part of building
a culture of high trust.
Fig. 1. Four Cores of Stephen Covey‘s Trust Matrix (Covey, 2014)
[9] breaks Character down into different character traits. The
emphasis of [9] is on two factors: Integrity and Clarity of the
leader’s intentions. Integrity is walking the talk [9, p. 68]. It
also includes honesty, humility, courage and congruency.
Clarity of the Leader’s Intention means the intention not to
pursue hidden intentions. The Competencies category
emphasizes the individual capabilities of the leader, as well
as the regularity with which results are achieved. [9] breaks
individual capabilities down into five categories: Talents,
Attitudes, Skills, Knowledge and Style.
The concept of trust has been explored in prior organizational
studies. [19] theory explains that perceptions of trustee
characteristics (ability, benevolence, and integrity)
comprising trustworthiness are antecedents of trust. Through
an integrative model of organizational trust, they define
Ability as the perception that a trustee has skills and
competencies in the domain of interest; Benevolence as the
trustor’s perception that the trustee cares about the trustor;
and Integrity as the perception that the trustee adheres to a set
of principles that the trustor finds acceptable. [20] study
provides empirical support that employees focus on tasks that
need to be done to add value to their organization when they
trust in management.
The concept of trust has also been employed in the context of
digital transformation in prior literature. For example,
Congruency has already received an important significance
for the digital transformation in previous practice analyses of
over 100 transformations with regard to the congruence of
applied strategies plus their operational counterparts [21].
The regular achievement of results strengthens the
competence aspect. The track record helps to build trust in a
digital leaders, which is therefore also recommended to
consider while hiring e.g. a Chief Digital Officer, CDO [8].
In his book 'Digital Leadership', [22] emphasize that the
competence factor will become increasingly important in the
context of digital transformation. "A Chief Digital Officer
(CDO) is important, not because of the title on the business
card, but because of the competence to implement the digital
transformation in a company.” [22, p. 173]. Furthermore, the
creation of a CDO position signals the strategic nature of
digital transformation for the entire organization [23].
[11, p. 41] argue that trust must prevail at all levels of the
company, regardless of industry, in order to be able to take
new risks in the digital environment. Other sources confirm
that trust and integrity in the digital world is a higher priority
than before [24]. Without this trusting leadership mindset, all
aspects of digital leadership will only partially succeed or
become a meaningless duty exercise for employees [25, p.
62].
In their long-term research on digital transformation with
over 20,000 business executives, managers, and analysts
around the world, [26] found four main foci points of digital
leadership: Transformative Vision, Forward Looking
Perspectives, Digital Literacy, and Adaptability.
Transformative Vision includes knowledge of market and
trends, business acumen and problem-solving skills. Forward
looking perspectives is specified as clear vision, sound
strategy and foresight. Digital Literacy means the pre-
existing experience and knowledge about digital technologies
such as Data and Analytics, Artificial Intelligence, Block
Chain etc.
Digital literacy helps C-Suite managers to anticipate crucial
emerging trends [26, p. 101]. It is evident that the three
greatest leadership skills—Transformative Vision, Forward
Looking Perspective, Digital Literacy—can be categorized as
competencies while Adaptability represent Character of the
Trust model.
Digital leadership is a fast, cross-hierarchical, team-oriented,
and cooperative approach, with a strong focus on innovation.
The personal competence of the leader, their mindset as well
as their ability to apply new methods and instruments are
critical dimensions for digital leaders [1]. Regarding the
digital transformation of companies, we state that the track
record means the successful digitization measures that have
been implemented (i.e. hiring data scientists, creating a
visible data strategy etc.). For the purposes of digital
transformation, we consider the skills and knowledge, i.e. the
‘digital capabilities’ of the leaders, as success factors. In the
context of digital transformation, this refers to operational
models, piloting, prototyping and agile practices [27]. In
addition to skills and knowledge and, in line with [11, p. 41],
we also consider a specific attitude—the entrepreneurial
thinking—to be one of the main components of successful
digital leadership. At the heart of digital leadership is a
mindset shift, which is even more important than the method
shift [25, p. 66]. By this we mean willingness to take risks
and promote innovation at all levels of the company.
III. METHODS
A. Research Questions
The question that remains unanswered is which leadership
principles and capabilities are given special significance in
digital transformation. Which capabilities are required to act
digitally mature? Do companies with a higher level of digital
maturity pursue certain leadership aspects more or less
strongly? Does the competency sector really dominate the
character part of digital leadership in its effect size? And
which steps could be taken by leaders of those companies
standing behind? These considerations give rise to our
strategically far-reaching hypothesis:
H1: The character and competencies between leaders of
digitally mature and digitally developing companies show
significant differences.
B. Survey & Study Design
With the help of our academic and industry partners, we
designed and tested a survey instrument, labeled Patterns of
Digitization, to assess how companies are implementing
digital transformation, including digital leadership, the
various strategies they employ, the investments they make,
and the actions they take to achieve large-scale
(institutionalized) digital transformations. We gathered data
from 559 decision makers (middle and senior managers)
across five geographic regions—America, Europe, Asia,
Africa, and Oceania.
In the Company Characteristics section, we asked
respondents several standard demographic questions,
including the region and industry sector their company
operates in, their company’s size, age and number of
employees. Nearly 61% of the respondents are from large
companies (with over 200 employees) including about 35 %
from companies with over 1000 employees. About 37 % of
the respondents were from companies with less than 200
employees including 20% from companies with less than 10
employees. Sixty percent of the companies that took the
survey predominantly operated in America followed by 35%
in Europe, and the rest from Asia, Africa and Oceania. Please
refer to Appendix 1 for sample characteristics.
We also asked participants to rate the digital maturity of
their organizations on a 5-point scale, from Level 1 adhoc (‘no
formal plan or approach’) to Level 5 optimum (‘new business
model is fully internalized; results are repeatable and
predictable’). Results are shown in Figure 2.
Fig. 2. Digital Maturity ratings from survey
Figure 3 shows top ten predominant industry sectors
represented in our survey along with breakdown of digitally
mature and digitally developing responses within each sector.
Fig. 3. Ten predominant industry sectors in our survey
We asked respondents to assess the digital leadership and
communication practices their organizations had employed to
build their digital businesses. Respondents were asked how
often these attributes are observed: 0% = Never, 25% of the
time, 50% of the time, 75% of the time, 100% = Always, and
lastly the option I don’t know. These components address the
softer factors of digital transformation, digital leadership, and
organizational culture. The six digital leadership items and
their alignment with Covey model are listed in Table I.
TABLE I. LEADERSHIP ITEMS IN THE SURVEY
To enable a more in-depth analysis of digital skills, we also
asked for concrete design structures of the companies. This
refers to formal structures, information, processes and
decision-making dynamics as well as informal guidelines
(mindsets, networks, standards, etc.) We also asked what
specific investments (Track Record) the company has already
made in digital transformation to build up competencies and
strengthening trust in the transformation. Table II shows the
seven strategic digital investments (collectively categorized as
Results) asked in the survey.
TABLE II. DIGITAL TRANSFORMATION STRATEGIC INVESTMENTS
(RESULTS) USED IN THE SURVEY
We also discussed the results with senior management of two
digitally mature companies in a semi-structured expert
interview who verified the practical utility our findings.
To determine if significant differences existed between these
company groups multiple t-tests were conducted with a
Bonferroni correction to control for the family wise error rate
regarding multiple comparisons [28]. To rank order and
directly compare the mean differences across groups,
Cohen’s d, a measure of effect size, was used [29]. For all
tests, the significance level was set to α = 0.05. IBM SPSS
v25 was the statistical software used for all analysis.
C. Digitally Mature vs. Digitally Developing Organizations
For this study we distinguished between “digitally mature”
and “digitally developing” organizations. Our definition of
digital maturity is based on the Carnegie Maturity Model
Integration (CMMI) process. CIO Magazine describes
CMMI as a “process and behavioral model that helps
organizations streamline process improvement and
encourage productive, efficient behaviors that decrease risks
in software, product and service development” [30]. The
CMMI model breaks organizational maturity into five levels.
For businesses that embrace CMMI, the goal is to raise the
organization to Level 5, the “optimizing” maturity level.
CMMI considers organizations that achieve Levels 4 and 5 as
high maturity— these organizations are “continuously
evolving, adapting and growing to meet the needs of
stakeholders and customers” [30]. We use CMMI to classify
companies into digitally mature and digitally developing
categories (Figure 4).
Fig. 4. Carnegie Maturity Model Integration (CMMI)
We classified companies at Levels 4 and 5 as highly
mature organizations and labeled them digitally mature
organizations. Companies operating at Levels 1, 2, and 3 we
designated less mature and labeled them digitally developing
organizations. Using the CMMI process, the literature on
digital transformation, and the direct feedback from
practitioners, we developed the following definitions for each
level of digital transformation maturity in an organization:
Level 5 is the optimized state. Companies operating at
Level 5 have achieved digital maturity and are primarily
concerned with the continuous improvement of the new
business model and business processes.
Level 4 is the level where synergies occur; the company
involves competencies and people from outside the
organization.
Level 3 is where managers’ actions reflect the new, desired
behaviors; their goal is to institutionalize the new model.
Level 2 is where organizations make digitization a
strategic imperative, and a transformation strategy is
developed.
Level 1 is the initial state, with no concerted efforts on
digitization.
The separation of digitally mature and digitally maturing
classification occurs between Level 4 and Level 3. Level 4
companies have had to involve competencies and people from
outside the organization to achieve the external initiation
strategies, for example, developing an ecosystem, entering a
merger and acquisition, or creating a digital spinoff. By
contrast, Level 3 organizations typically concern themselves
with improving project performance with the goal to
institutionalize the new model. In our observation, this last
step of institutionalization may be the hardest task of all, and
that is where most digitally developing organizations find
themselves today.
IV. F
INDINGS
The findings are summarized graphically based on
responses to “how often these attributes are observed (0% =
Never, 25% of the time, 50% of the time, 75% of the time,
100% = Always).
A. Character
Figures 5 and 6 show results of questions related to
character for organizations in each level of maturity. The
range along the maturity scale is from 44.5% to 75.75%, the
resulting delta is Δ
1,5
= 31.25%. In other words, the attribute
“our leaders act and behave as promoters of the digital
transformation process” is observed 44.5% of the times in
organizations with digital maturity rating of 1 versus 75.75%
in organizations with digital maturity rating of 5. The
difference between digitally developing and digitally mature
companies is significant with a medium to strong effect
strength (t
(415)
= 5.784, p < 0.01, d = 0.639).
Fig. 5. Average value comparison of Integrity Item
For question regarding the corresponding ‘fail fast
culture’, the range between the different maturity levels is
from 47.75% to 74.25%. The overall delta is Δ
1,5
= 26.5%.
Furthermore, a strong increase can be seen from maturity
Level 4 to 5 (Δ
4,5
= 10%). The difference between digitally
developing and digitally mature companies is significant with
a medium effect strength (t
(416)
= 4.987, p < 0.01, d = 0.554).
Fig. 6. Average value comparison of “fail fast” culture
B. Competencies
For question related to leaders representing extensive
digital technology expertise (figure 7), range is from 39% to
76.5%, with an overall delta of Δ
1,5
= 37.5%. Also, in this item
the difference between both groups is significant (t
(418)
=
6.647, p < 0.01).
Fig. 7. Average value comparison of digital technology expertise
For question related to the utilization degree of analytics
(Figure 8) to make more elaborated decisions, the range is
from 50% to 72.75%, with a delta of Δ
1,5
= 22.75%. The
difference between digitally developing and digitally mature
companies is significant with a medium effect strength (t
(417)
= 5.368, p < 0.01, d = 0.587).
Fig. 8. Average value comparison of Analytics Utilization
For question related to promoting entrepreneurial mindset
to employees (Figure 9), the range is from 52.5% to 77.75%,
with the resulting delta is Δ
1,5
= 25.25%. The difference
between digitally developing and digitally mature companies
is significant with a medium effect strength (t
(419)
= 5.314, p
< 0.01, d = 0.586).
Fig. 9. Average value comparison of Mindset
For question related to leaders collaborating with cross
functional business counterparts (Figure 10), the range is from
49% to 74.75% with a delta of Δ
1,5
= 25.75%. The difference
between digitally developing and digitally mature companies
is significant with a medium effect strength (t
(414)
= 5.035, p
< 0.01, d = 0.562).
Fig. 10. Average value comparison of Collaboration
C. Digital Capabilities
Next, we present the results of methodical approaches
deployed by surveyed companies. The approaches with the
largest delta and effect strengths between digitally mature and
digitally developing companies are shown below.
For question related to agile project management approach
(Figure 11), the range is from 44.75% to 73.5%, with a delta
of Δ
1,5
= 28.75%. The difference between digitally developing
and digitally mature companies is significant with a medium-
strong effect strength (t
(418)
= 5.66, p < 0.01, d = 0.639).
Fig. 11. Average value comparison of agile project management approach
For question related to open innovation (Figure 12), the
range is from 45.75% to 72.5%, with a delta of Δ
1,5
= 26.75%.
The difference between digitally developing and digitally
mature companies is significant with a medium effect strength
(t
(421)
= 5.261, p < 0.01, d = 0.584).
Fig. 12. Average value comparison of Open Innovation
D. Digital Results
Next, we present the results of strategic measures
employed by organizations. Three items with the strongest
effect sizes are discussed below.
For question related to the appointment of a CDO (Figure
13), the range is from 13.13% to 36.59%, with a delta of Δ
1,5
= 23.45%. Furthermore, a strong increase can be seen from
Maturity Level 4 to 5 (Δ
4,5
= 20.71%).
Fig. 13. Average value comparison of Appointing a CDO
The same is true for hiring or training data scientists
(Figure 14). The range is from 13.13% to 32.93%, with a delta
of Δ
1,5
= 19.8%. However, the biggest delta is between Level
1 and 4: Δ
1,4
= 26.55%.
Fig. 14. Average value comparison of Integrating Data Scientists
The third measure with the biggest effect is moving a
product or service into the cloud (Figure 15). The range is
from 32.32% to 53.66%, with a delta of Δ
1,5
= 21.34%.
Fig. 15. Average value comparison of moving product/service to Cloud
List of all questions, mean and standard deviations
between digitally developing and digitally matured
organizations, statistical significance, and effect sizes are
listed in Table III.
TABLE III. ALL ITEMS: MEAN, STANDARD DEVIATIONS, SIGNIFICANCE,
AND EFFECT SIZES BETWEEN DIGITALLY DEVELOPIN G AND DIGITALLY
MATURED ORGANIZATIONS
V. DISCUSSION
As discussed in literature review, top level engagement is
crucial to the success of digital transformation initiatives. Our
findings confirm and underscore the importance of digital
leadership. Leaders of digitally mature companies walk the
talk much better than the leaders of digitally developing
companies.
Digitally mature organizations align resources with their
strategy. Appointing a chief data officer (CDO) was one of the
least likely actions taken overall, but our respondents
indicated it is vital for a digitally mature organization, as are
hiring or training data scientists and moving products and
services to the cloud. Our results indicated that digitally
mature organizations were much more likely to support agile
principles; transparent and open communication about digital
projects and are more likely to generate new ideas from
communication with clients, supplier, and business partners.
Digitally mature leaders are knowledgeable, exhibit
entrepreneurial behaviors, and promote digital transformation.
The behaviors of executives and leaders directly impact on
employee performance and therefore affect the
implementation of digital transformation strategies.
According to our results, digitally mature companies were
much more likely to have leaders with extensive technological
expertise and make decisions less from intuition and more
based from data and facts and demonstrate an entrepreneurial
mindset to employees.
We also found that digital leaders foster timely and open
communications. There is a sizeable disparity between
digitally mature and digitally developing organizations in their
level of open communication. Specifically, our results show
that digitally mature organizations have higher amounts of
transparent and open communication across their
organization.
It is particularly interesting to note that the integrity factor
in the character category shows the strongest effect between
the groups. According to Covey, integrity is the root of
leadership and we can emphasize its importance with our data.
We also show that digital leaders leverage agile and
collaborative development approach and are seen as
innovative and responsive to the ever increasing and
accelerating change in customer needs. Furthermore, we
observe that stakeholder integration, the “open innovation” is
a challenging, but a competency exhibited by digitally mature
organizations.
The degree to which digital leadership is required depends
on the size of the company, the industry sector, and a
multitude of other factors. In order to create trust, however,
Covey highlights the need to demonstrate Results as nothing
creates trust as quickly as solid results [9]. Furthermore, it is
necessary that organization’s leaders stay abreast of emerging
digital trends and understand their impact to their business.
VI. LIMITATIONS
The study has certain limitations. The current study is
based on survey responses containing subjective measures of
digital transformation practice, digital leadership, and the
associated actions. Although it is common to use subjective
measures in this type of research, subjective measures reflect
the imperfect information and biases inherent in judgmental
assessments of any kind. Future studies may benefit from the
use of objective measures that gauge aspects of to gauge
implementation of digital initiatives and its relation to
performance results.
VII. CONCLUSION AND OUTLOOK
In this paper, we have established a conceptual link
between Covey's Leadership Framework and attributes of
digital leadership. Using the dichotomous categorization of
digitally developing and digitally mature companies we have
structured the results using data from Patterns of Digitization
survey.
We find support for our hypothesis that the character and
competencies between leaders of digitally mature and
digitally developing companies show significant differences.
Results confirm that digitally mature companies are more
ambitious about digital leadership than digitally developing
companies. Leadership thus seems to be approached
proactively by digitally mature companies and is understood
as an important key component for future success. The
character and competency motivate digital leaders to build
trust and credibility; to take differentiated actions that set apart
digitally mature organizations from digitally developing
organizations. The specific lists of differentiated practices
identified in this study should give management a work plan
as they embark on their digital transformation journey and
achieve digital maturity.
Future studies may aim to better understand the
relationship between digital leadership and certain
performance attributes of companies. It would also be
beneficial to explore the longitudinal effects of digital
leadership or lack thereof on company performance.
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IX. APPENDIX
APPENDIX 1 - SAMPLE CHARACTERISTICS
... Digital transformation of organizations enhances the creativity, and co-generation of ideas and knowledge that drives innovation processes facilitated by leaders (Cortellazzo, Bruni & Zampieri, 2019). A strong focus on innovation in digital leadership requires a mindset shift, toward promoting innovation at all levels of the organization (Abbu et al., 2020). ...
... Leaders are collaborating across industries and countries, learning best practices from leading firms, and improving their digital strategies accordingly (Philip & Gavrilova Aguilar, 2021). Leaders of digitally mature companies collaborate with different stakeholders to achieve the level of integration needed for the implementation of digital transformation (Abbu et al., 2020). Digital technologies offer the new opportunities to collaborate in hybrid teams (Kennedy & Moen, 2017), and to collaborate in new ways. ...
... The competency of experimentation is a behavior related to experimental learning, risk taking, and agile strategies aimed at quick response and adjustment to failures in the digital transformation processes (Imran et al., 2020). In order to be able to take new risks in the digital environment, employees must trust leaders at all levels of the organization (Abbu et al., 2020). Leader behaviors that encourage experimentation and taking risks in implementing solutions contribute to more effective digital transformation (Remus, 2016;Trenerry et al., 2021). ...
Article
Full-text available
Leadership inspires digital transformation. Values, skills, and behaviors of leaders are key in driving and leading organizational development processes. The aim of this study was to examine the existing scientific research and develop an integrative framework focused specifically on leadership competencies for digital transformation. For this purpose, a systematic literature review based on Web of Science and Scopus databases has been conducted. In order to analyze and synthetize the qualitative data, the method of content analysis was used. The identified leadership dimensions (competencies) are: why (vision, innovation, flexibility); what (understanding digital technologies, empowerment, collaboration); and how (multiple intelligences, experimentation, continuous learning). The resulting competency framework can be used in the field of business management by leadership and organizational development specialists, educators, as well as current and aspiring leaders of digital transformation. By implementing a proposed future research agenda, the presented results can be further validated, compared and contextualized.
... Their leaders "align human and financial resources with the strategy", "create a collaborative, and nimble development environment", "promote open and transparent communication", and initiate other important activities [7]. Additionally, we showed that the character and competency of digitally mature leaders help set them and their organizations apart [8]. Our in-depth interviews with proven successful digital leaders, i.e., the architects of new business models, provided us a perspective on how, exactly, digitally mature leaders are changing the design of their companies [9]. ...
... For example, [15] provides empirical support that employees add additional value to their organization when they trust in management. We demonstrated that a culture of trust is more common in digitally mature companies than in digitally developing companies and that the topic of leadership plays a central role in creating this culture [8]. In addition, we know trust has a higher priority in the digital world than in traditional business environments [16]. ...
Preprint
Full-text available
Many digital leaders are currently dealing with expanding into the highly sought-after "holy grail" of digitization by deploying Artificial Intelligence (AI) solutions. While AI projects of all types are being launched prolifically, clouds of doubt are forming around the credibility of AI results. AI has many potential benefits for businesses, but these will be realized only if people trust these tools to produce unbiased results. Managing transformation in the digital age requires leaders who not only understand the potential of these tools but also possess the necessary human skills to reshape the organization. This paper addresses one particular human dimension in some depth-ethical AI-and the actions successful digital leaders take to build trust in its results. It introduces a conceptual model of ethical AI considerations to ensure the use of this potentially lucrative, yet disruptive technology is indeed fair, explainable, and productive.
... The difference between the organizations that succeed at digital transformation and those that lag-or fail-goes back to the ability of their leaders to build and maintain their employees' trust Abbu et al. 2020;Mugge, Abbu, and Gudergan 2021;Abbu, Mugge, and Gudgergan 2021). Trust is built on two foundations-character and competence. ...
Article
Full-text available
The speed of innovation is accelerating, which means that leaders need to move more quickly and be able to pivot their whole organizations faster than ever before. The critical leadership skills needed for successful digital transformation therefore differ from what has proven to be most effective in the past. In the digital landscape, leadership must change from an emphasis on competency to a focus on trust.
... This theoretical dynamic can be applied to modern leaders that have changed their style as per the requirements of the digital workforce. The modern leaders in the digital workforce environment have improved skills in network buildingAbbu et al. (2020) suggested that leaders are now actively attracting partners through information and technology opportunities. The ability to incorporate data in decision making has now become an organizational culture. ...
Article
Full-text available
This research paper focuses on the digitalization within the current industry dynamics and impact in the leadership. Digital transformation has impacted the leadership vision, mission and strategy objectives. A systematic review in the basis of industry case study has been done in this research. The four case studies have been based on Pope Francis, Elon Musk, Microsoft leadership and Apple leadership. The impact of leadership dynamics within the contexts of digital tools and technology like CRM, social media and big data has been identified. The impact of the digital transformation on the leadership choice and strategies has been discussed. Digital tools have contributed in the value creation and opportunity development.
... It reveals digital leadership is not considered as a determining factor in generating business performance directly. Digital leadership is character of digital leaders (Abbu et al, 2020). The digital leadership character could not directly impacting the business performance but it will drive new business transformation in an organisation (Peter et al., 2020). ...
Research
Full-text available
Internet of Things (IoT) is an emerging and promising technology but complex and technologically is in uncertain environment. In order to develop the effective solution and maintain the competitive advantages, companies have to innovate the business model continuously. Business Model Innovation for IoT companies requires to drive the company performance. Despite the need of IoT companies to renew their business model to effectively create value for customers and capture value for the company, the significant factors of business model innovation for IoT companies have remained under-research so far. This study addresses this knowledge gap by exploring the significant factors of business model innovation and ultimate impact towards IoT company performance. This study uses the PLS-SEM method involving samples of 75 IoT companies in Indonesia as developing countries who are still in a nascent stage of digitalization. Digital Leadership, Customer Orientation have been identified as significant factors of business model innovation while IoT company performance as the main expected outcomes. JEL Classifications: M00, O32, L10
... Digital maturity is achieved through commitment, investment, and leadership [17]. Character and competency motivate digital leaders to build trust and credibility; to take differentiated actions that set apart digitally mature organizations from digitally developing organizations [18]. Digital leaders build trust through their intentions, integrity, capabilities and results [19]. ...
Conference Paper
Full-text available
Companies are increasingly looking for ways to understand and innovate their business models by leveraging digital transformation. Evolving consumer attitudes and behaviors, technological advances, new competitive pressures, and laser thin margins—accelerated by the COVID-19 pandemic—are driving digital transformation in the grocery business. We introduce a conceptual model of digital grocery ecosystem to advance our understanding of digital transformation of the grocery business. We analyze digital transformation initiatives of the top five grocery companies in the United States using inductive research and content analysis. We find that brick and mortar, e-commerce companies, as well as new start-ups, are making major investments in all aspects of the digital grocery ecosystem—the online shopping experience for the digital consumer, digital store operations, pickup and delivery mechanisms, and advanced analytical and digital marketing capabilities. Retailers are also connecting their investments to enhanced customer loyalty, revenue, and ultimately profit.
... Digital maturity is achieved through commitment, investment, and leadership [17]. Character and competency motivate digital leaders to build trust and credibility; to take differentiated actions that set apart digitally mature organizations from digitally developing organizations [18]. Digital leaders build trust through their intentions, integrity, capabilities and results [19]. ...
Conference Paper
Full-text available
Companies are increasingly looking for ways to understand and innovate their business models by leveraging digital transformation. Evolving consumer attitudes and behaviors, technological advances, new competitive pressures, and laser thin margins-accelerated by the COVID-19 pandemic-are driving digital transformation in the grocery business. We introduce a conceptual model of digital grocery ecosystem to advance our understanding of digital transformation of the grocery business. We analyze digital transformation initiatives of the top five grocery companies in the United States using inductive research and content analysis. We find that brick and mortar, e-commerce companies, as well as new start-ups, are making major investments in all aspects of the digital grocery ecosystem-the online shopping experience for the digital consumer, digital store operations, pickup and delivery mechanisms, and advanced analytical and digital marketing capabilities. Retailers are also connecting their investments to enhanced customer loyalty, revenue, and ultimately profit.
Article
Full-text available
Overview: The digital transformation of organizations continues at a frenetic pace. While some companies have achieved trailblazer status, others are finding it difficult to change and therefore are lagging. Digital leaders play a pivotal role in this transition because they can increase the confidence of their organizations behind these often risky and disruptive initiatives. In this article, we present our efforts to i) separate the practices of digitally developing and digitally mature organizations-particularly those of their leaders, ii) determine the specific trust-building actions of digitally mature leaders, iii) develop a scale to measure the human dimensions of digital leaders, and iv) discuss the future development of a reliable scale and self-assessment tool that digital leaders can use to assess their own readiness to accelerate digital initiatives. Keywords: digital leadership, trust, digital transformation, leadership assessment
Conference Paper
Full-text available
The digital transformation of industry and society continues to advance. While some companies are achieving trailblazer status, others are finding it difficult to manage or even initiate the necessary changes. Top-level leaders play a central role in these transformational processes, as they have the opportunity to directly or indirectly influence decisive variables. In this article, we present the results of interviews with 13 digital leaders who have successfully implemented the necessary changes for the digital transformation of their companies. The results of the interviews provide key dimensions for leaders to digitally transform their companies.
Article
Full-text available
Overview: Digital transformation is reshaping entire segments and industries: communications, retail, and, increasingly, health care, medicine, agriculture, and manufacturing. While a few companies reach front-runner status, most seem to lag. Digital transformation is a top concern of senior leaders worldwide and motivated the development of this study. This article describes the results of the Patterns of Digitization survey designed to assess how companies are implementing digital transformation. The survey covers the various strategies companies employ, the technologies they invest in, and, in particular, the actions they take to overcome the organizational resistance that is common in most large-scale transformations. We highlight important actions all companies are taking to digitally transform their businesses and the differentiated actions of digitally mature organizations. The insights gleaned from the study should help lagging companies understand what is involved in implementing a digital transformation and what they need to do to catch up.
Conference Paper
Full-text available
This article describes the results of a survey designed to assess how companies are implementing digital transformation, including the various strategies they employ and the actions they take to achieve large-scale transformations. While a few companies seem to reach front-runner status, the majority seem to lag behind. This phenomenon is a top concern of boardrooms worldwide and motivated the development of this study. To help these organizations, we highlight differentiated strategic principles and characteristics of the companies’ design processes digitally mature companies undertake to transform their businesses. These insights should help lagging companies understand what is involved in implementing a digital transformation and what they need to do to enforce this transformation.
Article
Full-text available
We draw on recent advances in Market Orientation domain to examine the synergistic effects of market orientation implementation and internalization on firm performance in the context of digital transformation within direct mail service provider industry. We introduce market orientation internalization as a mediator between market orientation implementation and firm performance relationship. In addition, the effect of learning orientation is considered as a moderator that strengthens the relationship between market orientation implementation and market orientation internalization. The research model is empirically tested using Hayes (2013) conditional process analysis utilizing a unique dataset from an industry that is undergoing an unprecedented digital transformation from physical to digital communication. The results suggest that firms that practice high levels of market orientation implementation and internalization perform better in both financial performance and customer service performance. Keywords Market orientation Internalization Direct marketing Digital transformation Hayes process model Moderated mediation Conditional process analysis
Conference Paper
Full-text available
More and more companies are installing Chief Digital Officer (CDO) positions in order to support the progress of their digital transformation. Since the employment of CDOs may influence companies' organizing logics, we conducted a multiple case study analysis to investigate the organization design parameters surrounding CDOs and their digital transformation activities. By examining the governance architectures in which the companies embed their CDOs (vertical dimension) and the horizontal coordination mechanisms utilized by CDOs (horizontal dimension), we shed light on two dimensions of companies' organizing logics. Our results indicate that CDOs need sufficient influence in the organization to pursue transformation activities and that the vertical and horizontal dimensions of companies' organizing logics are not independent of each other.
Article
Extant literature has increased our understanding of specific aspects of digital transformation, however we lack a comprehensive portrait of its nature and implications. Through a review of 282 works, we inductively build a framework of digital transformation articulated across eight building blocks. Our framework foregrounds digital transformation as a process where digital technologies create disruptions triggering strategic responses from organizations that seek to alter their value creation paths while managing the structural changes and organizational barriers that affect the positive and negative outcomes of this process. Building on this framework, we elaborate a research agenda that proposes [1] examining the role of dynamic capabilities, and [2] accounting for ethical issues as important avenues for future strategic IS research on digital transformation.
Conference Paper
The role of leadership in digital business transformation is a topical issue in need of more in-depth research. Based on an empirical investigation of eight Finnish organizations operating in the service sector, we gain understanding of the role and focus of leadership in the context of digital business transformation. Through a qualitative content analysis of data from 46 interviews, the four main leadership foci of digital business transformation are found: strategic vision and action, leading cultural change, enabling, and leading networks. The findings are discussed in the context of extant research on leadership and digital business development.
Chapter
Unternehmen dürfen die digitale Transformation nicht als technologisches Thema ansehen, sondern als grundlegende Veränderung von Produkten, Prozessen und Arbeitsweisen. Hierzu zählt insbesondere auch die Entwicklung eines neuen Führungsverständnisses. Svenja Teichmann (crowdmedia GmbH) und Christoph Hüning (4wrd consulting) beleuchten in ihrem Artikel „Digital Leadership – Führung neu gedacht“ die relevanten Aspekte eines digital orientierten Führungsstils. Sie zeigen, dass sich die Anforderungen an Führungskräfte signifikant ändern, während das Aufgabenspektrum weiterhin wächst. „Digital Leader“ im Sinne der Definition können mit dieser Herausforderung umgehen, verstehen den Mitarbeiter als wesentlichen Teil des digitalen Wandels und nehmen ihre Vorbildfunktion an. Aktuelle Beispiele aus Management aber auch Sport sowie ein Blick auf die sog. Generationen X bis Z runden den Artikel ab.