As digital disruption wreaks havoc on legacy businesses, the average life-span of public companies was reported to have dropped from 55 years to 12 years last year. In Amit Mukherjee's “Leading in the Digital World,” which comes out April 6, Mukherjee shares what steps legacy businesses can take to win at digital. He does this by suggesting a model for leadership that reflects today’s digital technologies.
Throughout the book, Mukherjee looks at how digital technologies are upending the nature of work and organizational structures and most importantly, how leaders need to change to unleash business creativity. Mukherjee writes, “business creativity is the ability to look past traditional approaches to derive new approaches to doing business.”
Looking Back at the 20th Century
To put the digital world into context, Mukherjee starts by analyzing the two business epochs which took place in the 20th century. The first epoch was scientific management. Its founder, Frederick Taylor, determined that productivity could be improved if workers were focused upon narrow tasks and prescribed business processes. This take no prisoners style of leadership favored authoritarian leaders in the 1980s like ITT’s Harold Geneen. For those who don't remember that far back, Geneen ran his businesses on a simple formula: return on assets (ROA). One division that I knew sold all its office furniture two weeks before the end of the quarter to make its ROA number. This attitude depersonalized the workforce. A professor of mine in business school suggested it wasn't a good idea to build work relationships because it could impact one’s career as you moved into a supervisory role.
Fortunately, the second epoch hit just as I started a second master’s in strategic planning. I remember reading books like "Theory Z" and "In Search of Excellence." Here, US companies lost their relevance against Japanese multinationals. This epoch, writes Mukherjee, “focused on quality and statistical process control negated many aspects of Taylorism.” The reason for this is quality approaches required collaboration amongst workers and raised educational requirements for entry level jobs. This led to Quality Control Circles at companies like Honeywell. Under JJ Renier, they became an institutionalized form of management.
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Digital Epoch: A Focus on Creativity Over Productivity
According to Mukherjee, the digital epoch is profoundly different. While the 20th century focused on driving productivity, the digital epoch focuses on creativity rather than productivity. Jeanne Ross, in her book “Designed for Digital” agrees, stating, “digital business design aims to make a company agile so that it can create an innovative and constantly evolving portfolio of digital offerings in response to rapidly changing technologies and customer demands.”
Mukherjee writes that digital does the following:
- Reduces the value of an elite group’s skills and enables the automation of its work.
- Augments the capabilities of less skilled people, helping them undertake tasks they couldn’t do earlier.
- Makes it possible for work to be distributed over time and geography.
- Enables work to be increasingly thought driven instead of being muscle powered.
- Creates needs that aren’t predictable and add disproportionately great value.
Creativity in the digital age can look at past wisdom and traditional approaches and give form and structure to new ideas is needed. This demands Idealab type experimentation. Here, the boss is not always knowledgeable or right. What is needed instead are facilitating leaders with empathy. It is time, Mukherjee writes, “to stop seeking uniformity and challenge your beliefs.” This argument aligns with Gary Hamel's, who suggests “the practices of management needs radical change.” This means doing the following:
- Making it easier for people to contribute regardless of distance.
- Giving space and time for creativity.
- Rethinking how people are hired and ensuring diversity.
Mukherjee goes on to argue that the digital age works on inclusion. McKinsey, Mukherjee writes, has found gender and ethnically diverse companies perform substantially better than less diverse ones. At the same time, Mukherjee suggests that deep expertise in only one functional area is no longer a good idea. It can lead to incremental thinking versus transformation.
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Distributed Leadership at the Team Level
Mukherjee believes leaders need the ability to navigate the in-between places that experts avoid. He posits organizations should allocate leadership responsibilities across a network because leaders cannot be everywhere. Leadership today is distributed and takes place through teams.
Given this, teams need access to key knowledge bases. As well, they need to be encouraged to bridge gaps in critical knowledge. According to James Staten, VP Disruptive Innovations at Forrester, "Our guidance is that leaders should not just form dedicated innovation teams, but they need to empower cross-company (and cross-ecosystem) innovation ideation so they have a broad set of ideas to choose from.”
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Flat, Aligned Organizations Required
Mukherjee argues that digital transformation requires flat organizations. At the same time, he suggests it is important to ensure people understand their business's strategic intent. They need to “get to the higher ground versus go take the mountain.” Making this work involves acquiring team members who come up with solutions rather than just define problems. This starts by redesigning the work teams do. According to Jeanne Ross, it also involves creating an accountability framework.
It is time for organizations to be truly collaborative — and this involves reaching outside the walls of the enterprise according to Mukherjee. He writes in the digital era, it is rare for one company to control every element of the IP they need. At the same time, leaders are needed who are trustworthy, relatable and authentic. Otherwise, collaboration will not occur. These leaders need to create the safe psychological environments required for a network of networks to be created.
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Parting Words
Mukherjee suggests the digital era demands bold, creative initiatives. These come from leaders flattening the organization and encouraging their teams to be creative. It is time to work the people and process side of digital disruption. It is time for what Whitney Johnson calls “personal disruption.”
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