Leadership 4.0—The Future of NextGen Leadership
In recent times, the world has moved well beyond basic and enhanced process automation. It is entering an era of cognitive automation leveraging on artificial intelligence and robotics that the World Economic Forum termed as the “Fourth Industrial Revolution” (also known as Industry 4.0) (Bawany 2019).
To ensure their readiness toward digital business transformation, most organizations would deploy state-of-the-art technology. But do they have a relevant structure and the right talent in place? Will they be equipped to attract, develop, and retain digital talent? Do they know what it takes to lead in a digital era, which is expected to get only more intense in the coming years? These are questions that many, if not all, organizations are grappling with as they seek to succeed in developing their NextGen leaders in the digital era.
Organization and leadership transformation is expected to continue in the near future in view of the insurmountable challenges posed by a highly disruptive, digital, and volatile, uncertain, complex, and ambiguous (VUCA)–driven Industry 4.0.
No change happens without challenges, and most successful organizations will have transformational leaders at the helm to navigate those obstacles—the test is finding and developing these next-generation or future leaders today. Organizations that understand this need to place a high priority on leadership development. In turn, they can expect greater revenue return, stronger market position, and better growth potential than organizations that don’t leverage leadership development as an avenue for success.
In view of these challenges in the future, there are several issues that need to be addressed in the development of NextGen leaders. First, the organizations need to continuously reinvent themselves. In light of the future challenges, they would need to reassess their organizational purpose, strategy, structure, and leadership development approaches. Second, organizations need to reassess their individual future leader’s capability to drive transformation. This includes the development and implementation of intrapreneurial initiatives or innovation projects and the organizational capability to support such transformations.
At the Centre for Executive Education (CEE), as part of the ongoing dialogue with CEOs and C-Suite business leaders, it has been found that those who invest in the development of NextGen leaders ensure that their future leaders can drive the transformation of the companies and businesses that they lead. As well-functioning organizations typically recruit their senior leaders from within, the development of leadership capability is a way to organize transformation over the long run.
It is evident that conventional leadership development practices are no longer adequate. Organizations globally need to incorporate the NextGen leadership competencies in order to address the development needs of their future leaders. This expanded group of upcoming leaders need to have a broader skill set, one that equips them to think and act globally in the digital and VUCA-driven business environment. They must do so while embracing cross-cultural diversity and cultivating collaborative relationships within and outside their walls. These are the hallmarks of the mindset needed to develop effective NextGen leaders.
At the same time, globalization leads to the emergence of more complex organizations. There is a trend to move away from the classical hierarchical model to one that allows flexibility and rapid response to the evolving challenges in the marketplace where crucial relations and decisions need not necessarily involve the headquarters. Hence, both internal and external changes are required that would enhance the ability of an organization to adapt. The ability to drive such changes is related to innovativeness and entrepreneurship.
Redefining Leadership 4.0
Leadership 4.0 is about leaders creating their own digital transformation strategy and ensuring that it is aligned with the business and growth plans of their organizations. It is critical that there must be commitment to and sense of ownership on the part of the various stakeholders, including the boards of directors and senior leadership. For those willing to embrace this new world, it presents huge opportunities to be leveraged, offering the prospect of new markets and new customers. However, to accomplish this, it would be crucial for the next generation of leaders to develop the relevant knowledge and skills, which in turn will help them evolve into a digitally transformed leader (Bawany 2019).
Leadership 4.0 is also about a “digital leader” who can build teams, keep people connected and engaged, and drive a culture of innovation, risk tolerance, and continuous improvement. Even as digital disruption is now sweeping across every major industry, regrettably leadership capabilities are not keeping pace.
As part of the cognitive transformation, digital leaders’ thinking differently and applying innovative thinking is one step in creating an innovative, organizational response to changes resulting from Industry 4.0. What is required is to develop a culture of innovation throughout the organization where innovative and creative thinking is applied to solve problems and develop new products and services.
Studies have shown that the climate for creativity in organizations is directly attributable to leadership behavior. What this means is that leaders must act in ways that promote and support organizational innovation. They must demonstrate specific competencies, skills, and behaviors, known as cognitive readiness, which would support an innovative and knowledge-driven learning organization.
This new normal is challenging leaders to find new ways to lead their organizations and achieve sustained success as reflected in the 2019 Trends in Executive Development: A Benchmark Report, published by the Executive Development Associates (EDA), a pioneer in executive development. (Hagemann et al. 2019)
The impact of digital disruption has to be managed alongside the more general VUCA operating conditions of recent years. An ability to calculate and manage/mitigate risk will, therefore, be another key requirement of leaders seeking to propel their organizations into the digital age. Navigating a course through these difficult conditions may also force leaders to look at their individual leadership style and decide whether it needs to be adjusted.
According to the latest EDA research, in response to the question, “As you look down in the organization at the next generation of leadership talent (the ones who are most likely to fill executive level positions in the 3–5 years), what capabilities, skills, knowledge, attitudes, and competencies are most lacking?”, survey respondents indicated that the top 5 competencies most lacking in the next generation of leaders are as follows (Hagemann et al. 2019):
- Ability to attract, develop, and retain high-quality talent needed to achieve the business objectives
- Ability to create a compelling vision and engage others around it
- Ability to inspire others
- Ability to deliver results or is results oriented
- Ability to manage the stress and demands of a real-time overloaded leadership environment
Embrace and Encourage Innovation
Corporations need to offer some flexibility in order to adapt to digital platforms and strategies. Great talent thrives on impact and innovation—the same things a company needs to survive in the future. If a company prioritizes its processes over smart and impactful contributions, it is setting itself up to lose creative up-and-comers, not to mention potentially falling behind the competition. Innovators and change-makers set bold ambitions and work on the edge of possibility. Employees working in the trenches often find the most efficient solutions, and it is often best to follow their lead.
A good leader needs to be open to creative employee solutions and innovations, rather than trying to put limits on innovation. For example, at Google, one of its most famous management philosophies is something called “20% time.” Employees are encouraged to spend 20 percent of their time working on what they think will most benefit Google, in addition to their regular projects. This empowers them to be more creative and innovative. In some ways, the idea of 20 percent time is more important than the reality of it as it operates somewhat outside the lines of formal management oversight, and always will because the most talented and creative people cannot be forced to work.
Corporations need to set the stage for innovation by breaking down barriers and empowering the workforce. They need to give employees the opportunity to venture out of their standard career paths and customize their jobs to align with their personal and evolving skill sets, interests, and career goals. They need to provide a more open work environment with increased information transparency and trust in expertise by changing the default content and process working mechanisms from private to public.
Conclusion
Leadership 4.0 is, in fact, more important in times of change than at any other, but its nature has perhaps changed somewhat to take into account the more collaborative nature of the digital workplace. The digital revolution not only opens up new opportunities for how organizations arrange work and structure themselves but also leads to new ways of working and leading high-performing teams.
Although some traditional leadership capabilities still remain critical to successfully lead in the digital era (e.g., creating and communicating a clear vision, motivating and empowering others), there are also new requirements for leaders at all levels of the organization. These demand a dynamic combination of a new mindset and behaviors as well as digital knowledge and skills that are critical to leading teams in the digital era.
As digital technology impacts the entire organization, it requires effective leadership at all levels to drive the digital strategy going forward. As digital transformation expands across the organization and the “war for talent” continues, organizations need to consider a more structured approach to building a healthy leadership pipeline with the necessary capabilities to lead in the digital era. They can do this by placing potential leaders in positions that stretch them beyond their current competencies and skills and by coaching them and supporting them on building new digital capabilities as rapidly as possible.
Maybe one day in the future everyone in every organization will be a leader, but for now, the traditional practice of leadership remains as vital as it ever was.