The famous saying ‘Perform or Perish’ has made way to a new phrase ‘Disrupt or be Disrupted’.
In today’s VUCA world, digital disruption has impacted nearly all sectors and markets. It will be interesting to understand how the boards tackle this technology conundrum.
Directors should look resort to look-in, look-out and look-forward approaches, to stay up to date on the latest developments related to emerging technologies and overall innovation.
A study of C-suite leadership in Europe and US has got an overwhelming consensus that a majority of Fortune 500 companies will be wiped out in the next 10 years or so if they don’t disrupt.
In 1958, corporations listed in the S&P 500 had an average life of 61 years. By 1980, numbers from research firm Innosight reveal that the average stay had declined sharply to 25 years. In 2011, the average tenure dropped to 18 years.
Research shows that since 2000, 52 percent of companies in the Fortune 500 have either gone bankrupt, been acquired, or ceased to exist as an outcome of digital disruption. At the present rate of churn, Innosight’s research estimates three-quarters of today’s S&P 500 will be replaced by 2027.
A relatively new study finds most leaders unprepared to meet the demands of digital disruption
The report, Redefining Leadership for a Digital Age, was issued by the Global Center for Digital Business Transformation (DBT Center) an initiative led by one of the top global business schools IMD.
The report identified four competencies and three behaviours that business leaders need in order to excel in the era of digital disruption based on findings from a global survey of more than 1,000 executives across 20 different sectors.
In turbulent times, leaders are caught in a technology-change vortex that is drawing in whole industries and creating disruption on an unprecedented scale. An eye-watering 92% of leaders said they are feeling the effects of digital disruption, with one-third rating the impact of digital disruption on their companies as “very significant.”
Despite the quickening pace of digital innovation, less than 15% of leaders said that they were “very prepared” to meet the demands of a digitally disrupted business environment. The majority of participants (almost 80%) indicated that they were “starting preparations” or were “fairly prepared” to tackle digital disruption.
The research further reveals:
• Less than 20% of respondents indicated that digital technologies such as analytics, mobile and social media are fully integrated into their organisations
• 30% of respondents either rarely or only occasionally use digital tools and technologies
In light of the clear understanding of the importance of digitisation, the report outlines the following “HAVE” competencies as the most important success criteria for leaders facing a landscape characterised by digital disruption:
• Humble — In an age of rapid change, knowing what you don’t know can be as valuable in a business context as knowing what you do. Digital leaders need a measure of humility, and a willingness to seek diverse inputs both from within and outside their organisations
• Adaptable — In a complex and changing environment, an ability to adapt is critical. The global reach of digital technologies has opened up new frontiers for organisations, shrinking once insurmountable continental divides and erasing traditional boundaries between territories. Dealing with the cultural and business impacts of this requires adaptability.
• Visionary — In times of profound disruption, clear-eyed and rational direction finding is needed. Having a clear vision, even in the absence of detailed plans, is a core competency for digital leaders.
• Engaged — Painting visions for the future, successfully communicating these visions and being adaptable enough to change them, requires constant engagement with stakeholders. This broad-based desire to explore, discover, learn and discuss with others is as much a mind-set, as it is a definable set of business-focused activities or behaviors
These digitally-engaged executives are called “Agile Leaders” — those who have adapted and evolved their practice for an environment continuously disrupted by digital technologies and business models.
Nearly half (42%) of those identified as Agile Leaders said that they were making more informed business decisions as the result of well-directed data gathering, effective analysis, and good judgment.
The report identified the following additional practices that Agile Leaders adopt in a digitally-disrupted business environment:
• 26% of Agile Leaders use digital tools and technologies frequently, compared with just 7% of non-Agile Leaders
• 32% of Agile Leaders seek disruptive approaches to deal with challenges (1% non-Agile Leaders)
• 76% of Agile Leaders encourage their team to challenge their observations and opinions (19.4% non-Agile Leaders)
• 26% of Agile Leaders take risks to speed up execution (4% non-Agile Leaders)
Based on the findings from this survey, if you are a Board member it is worth asking yourself the following questions:
- Are there competencies and behaviours relevant to my organisation?
- Do my fellow board members also see the relevance?
- If not, what do we need to do to convince them?
- Assuming we all agree that we need some / all these skills, how do we recruit new board members with these soft skills.
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David W Duffy