A sobering majority of executives lack the skills and mindsets necessary to lead in the digital economy

A study released by MIT Sloan Management Review (MIT SMR) and Cognizant reveals that most executives around the world are out of touch with what it takes to lead effectively and for their businesses to stay competitive in the digital economy. Reliance on antiquated and ineffective leadership approaches by the current generation of leaders is undermining organizational performance. To remain competitive and lead effectively, executives will need to fully reimagine leadership, the study’s authors have found.

 

“We are on the precipice of an exciting new world of work, one that gives executives an opportunity to chart a new course for what their leadership should look like, feel like, and be like,” said Doug Ready, senior lecturer in organization effectiveness at the MIT Sloan School of Management and guest editor of the report. “Yet, our study suggests that digitalisation, upstart competitors, the need for breakneck speed and agility, and an increasingly diverse and demanding workforce demand more from leaders than what most can offer. The sobering data underscores the urgent need for a fully reimagined playbook for leaders in the coming digital age.”

 

The study, as reported in “The New Leadership Playbook for the Digital Age: Reimagining What It Takes to Lead” is based on a survey of 4,394 global executives from over 120 countries, 27 executive interviews, and focus group exchanges with next-gen global emerging leaders. The data reveals: 

• Only 12% of respondents strongly agree their own business leaders have the right mindsets to lead them forward, and only 9% agree that their organisation has the skills at the top to thrive in the digital economy.
• Only 13% strongly agree their organisations are prepared to compete in increasingly digitally-driven markets and economies.
• A large majority, 71%, of respondents believe that they are personally prepared to lead in the digital economy. The same group scores significantly lower when asked whether they possess specific digital skills, such as using data analytics to influence their decision-making (55%) or advocating for the use of machine learning technologies in their organisations’ operations (50%).
• While 82% agree the new economy will need “digitally savvy” leaders, less than 10% strongly agree their organisations have the right leadership to thrive in the new digital economy.
• Just 40% believe that their organisations are taking the necessary steps to build robust digital leader pipelines.

 

“A generation of leaders in large companies are out of sync, out of tune, and out of touch with their workforces, markets, and competitive landscapes. What got them to their current exalted status won’t be effective much longer — unless they take swift action,” said Benjamin Pring, report coauthor and director of the Center for the Future of Work for Cognizant. “Allowing unprepared senior executives with outdated skills and attitudes to stick around forces next-generation, high-potential leaders to move on to new pastures, which harms morale and ultimately shifts the organisation further away from where market demand is heading.”

 

The authors identify three categories of existing leadership behaviors (the 3Es); these include:

• Eroding behaviors, or antiquated leadership patterns such as relying upon hierarchy for influence, command-and-control decision-making, and rigid strategic planning.
• Enduring behaviors, evergreen and time-tested leadership attributes and behaviors including ethics, trust, and integrity.
• Emerging behaviors, including digital savviness and collaboration skills.

 

“Our experience suggests that the most advanced leadership teams are those committed to developing these 3Es in their organisations,” added Carol Cohen, report coauthor and senior vice president, global head of talent management and leadership at Cognizant. “A key to success is artfully introducing new leadership approaches that particularly appeal to a new generation of employees while at the same time honoring the time-tested behaviors and attributes that inspire trust, build a sense of community, and motivate employees to improve performance.”

 

The authors caution that the primary leadership challenges in the digital economy are not solved by merely adopting a group of these 3E behaviors but require developing new mindsets that anchor, inform, and advance these behaviors. They identified four distinct mindsets that together constitute what they believe are the new leadership hallmarks in the digital economy and illustrate through data and case studies how they can shape successful leadership. They include: 

• Producer mindset: The producer mindset combines a focus on customers with a focus on analytics, digital savviness, execution, and outcomes.
• Investor mindset: Leaders with an investor mindset pursue a higher purpose than shareholder returns.
• Connector mindset: The connector mindset demonstrates a mastery of relationships, partnerships, and networks to drive organisational effectiveness.
• Explorer mindset: Explorers are curious, creative, and operate well in ambiguous situations. They engage in continuous experimentation, encourage failure, and learn by listening to a variety of voices.

 

The report also offers further recommendations for a new leadership playbook and briefs leaders on the need to articulate a powerful leadership narrative, build communities of leaders, demand diversity and inclusion, and align talent, leadership, and business strategies.