«Digitisation without Leadership is like Schnitzel without French fries»

The 14th «Focus on Future» event was dedicated to the topic «Digital Leadership» and took place, as usual, in the beautiful Villa Boveri in Baden.

After a quick introduction by Urs Prantl, founder of focus on future, Prof Dr. Arnold Weissman, founder of Weissman-Gruppe, held a keynote about leadership in the digital transformation, discussing the two key questions:

• Digital leadership: how should the management of an SME (Small-Medium Enterprise) work to accomplish the digital transformation of the company?
• How can managers and owners successfully involve the employees in the digital transformation journey?

The digital transformation starts with culture.

According to Weissmann, the digital transformation is not a technology thing, but rather a cultural one. The focus should, therefore, be not on strategy, but rather on setting up the right culture and mindset by digital leadership.

A first step in the correct direction is to understand that all that can be digitalised will be digitalised. There is no way to escape the digital transformation, and the sooner a company starts dealing with it, the better. Management and owners of SMEs and particularly of family-enterprises (where manager and owner are often the same people) should start asking themselves how can they run the business, ensuring that the company will be fit for the future.
Since digital transformation will pervade every aspect of enterprises, including their very business model and core competencies, a company cannot start the digital transformation journey without beginning from transforming its business model and core competencies. To clarify this point, Weissman presented what he called the «tomorrow’s success snowman»:

Companies should analyse their status quo, understand what the future business model will be and where the transformation journey will head. That, in turn, leads to identifying which new core competencies are needed and which will not be required anymore. Only this way a company can get a competitive advantage which will allow its success.

Survival of the fittest.

Paraphrasing Darwin, «the fittest, not the strongest, survives.» In other words, company owner and managers have to understand what the framework is, what the frame conditions are and adapt to them; change themselves and drive the company’s cultural change.
The mainframe conditions are not trying to identify, and Weissman named some of them:

• Digital Markets are global
• Marginal costs are almost null
• There is a convergence to a monopole

It is therefore clear that there is a tendency to a global monopole with meager minimal prices.
However, there also is another condition, of the utmost importance: Customer Centricity. The digital transformation is about people. To express what customers want, Jeff Bezos was quoted: «Customers want lower prices, faster delivery, and a wider choice.»

The «House of Change»

However, how can companies understand what is their current condition regarding digital transformation, where they are in the transformation journey? Weissman introduced the powerful image of the «house of change.»
Imagine being in a house, with different rooms. There is the «Room of Comfort», where companies sit when everything is going well. They don’t want to leave this room and risk to stay there for too long, missing important opportunities and risking to be all of a sudden degraded to a worse room – the «Room of Denial.» In this room, there is a refusal to change, which implies a rejection to communicate. That can only lead to bad consequences.
Another room in this house is the «Room of Puzzlement.» Sitting in this room means being uncomfortable and being under pressure. Moreover, when animals (humans are animals) are under pressure, they react in one of the three ways: stay still, escape or fight. The third choice, the willingness to fight, to dare to change, leads to a hidden room: the «Room of Renewal.» It is through this room that successful change occurs.

Companies who can get out of their comfort zone and embrace change will make the transition from the «Room of Puzzlement» to the «Room of Renewal» and will be able to complete their transformation successfully.

Employees-orientation

A company cannot be successful in the digital transformation without the actual involvement of its employees. In a digital world, which is individual-oriented, companies must be employees-oriented!
Employees should not be just passively transported in the digital transformation journey, but they have to take an active role. It can only happen if they are truly empowered. Digitalisation is fast, and a critical success factor is a reaction to it. Just an enterprise with empowered employees can have a quick enough reaction time to an ever-changing situation. Weissman made a distinction between managers and leaders. Leaders do inspire people and empower them, enabling their best performance. Maria Montessori expressed the principle almost a century ago: «Help me to do it myself.» That should be the guiding principle for the leaders.

Cultural change

As already mentioned, a critical success factor in digital transformation is culture. A specific aspect of companies’ culture is their organization. The old organization structure, which worked very well since Taylor’s time for over a century, is not going to work in the digital era. The digital world is involved, but the traditional organization structure is complicated and hence not fit for purpose!
Digital leadership means companies must dare to change their organization by changing their culture, by promoting a change in behaviour. It takes around five years to change company’s culture, and that can only occur if a real difference is wished, if there is a master plan for cultural change, if employees are actively taking part in it and if the organisational structure itself is going to change.
Weissman summarised its whole presentation into the difference between «known» and «conscious.» What is «known» can be forgotten; what is «conscious» stays as the setting has changed. The cultural change must be «conscious.»

Podium discussion on digital leadership

After the keynote, a podium discussion was moderated by Oliver Wegner, seeing the participation, besides Weissman, of Michael Liebi, founder of United Security Providers, and Thomas Winter, Head of Partner- und KMU-Geschäft at Microsoft Switzerland.
Two topics particularly attracted my attention:

• A strategy is not a project; it is a process. Moreover, this process should be regular. People do seek secureness, rituals. Change brings unsureness intrinsically; hence strategy should be a ritualized process. But not a project! If the strategy becomes a project, then there is a cultural problem.
• A common problem to all SMEs is how to keep employees and to avoid a significant turnover. Money is known not to be a good motivator at all. The only way one can try is to provide a proper culture, a warm atmosphere and to give employees the chance to develop themselves. Finding new clients is sometimes easier than finding the right people, with the right attitude. Hence, again, the focus should be put on employees, trusting them and keep them growing.

My key learnings – culture is key and digital transformation is so much more than just using new technology.

Click on the link to access the presentation Digitisation without Leadership is like Schnitzel without French fries.