Leadership 4.0: The Deal With Digital Transformation And How To Prepare For Disruption

"The greatest leader is not necessarily the one who does the greatest things. He is the one that gets the people to do the greatest things." - Ronald Reagan

“From good to great, to unstoppable.” Tim S. Grover captured the point when talking about evolving toward greatness that leads you to win. In the previous articles of our series on leadership 4.0 and digital transformation, we discussed whether leadership is a set of learned skills, potentially achievable, or whether it is an inherited gift. Moreover, leadership styles, traits, and theories investigated over the last century and more recent approaches to understand, control, and predict the development of successful leaders.

Today we shift the focus on digital transformation and Industry 4.0 [1], particularly analyzing the role that leaders have to play in response to new challenges brought by our 21st century. A few studies will be discussed that investigate behavioral leadership approaches in relation to Industry 4.0 to foster the development of a “4.0 leadership style matrix” [2]. Moreover, the effect of digital leaders and a design thinking mindset in transforming and leading a novel culture into industries toward cross-hierarchical, team-oriented, and cooperative organizations will be presented [3]. Finally, we'll conclude with a preview of what will be in the following article. Hence, the identification of the “six characteristics of a digital leader for digital transformation success” will be reviewed to a leadership model [4], as well as and the four needed leadership skills in Industry 4.0 [5] for further research.

Industry 4.0: a new leadership was born

The 21st century represents an emerging era of trends. Among these are a novel approach to working, different geopolitics, climate change, and the impact of innovative technologies. Moreover, this century represents the beginning of the fourth industrial revolution (Industry 4.0), characterized by the internet of things (IoT), machine-to-machine communication, manufacturing facilities, and the intelligent networking of machines and processes. The support of information and communication technology (ICT) is implemented to digitize information and integrate systems during each production stage. This would allow for flexible production, smart factories, customer-oriented solutions, optimized logistics, use of data, and resource-efficiency circular economy. Digitalized production is enhanced to extend global corporations.

In this context, Industry 4.0 represents a dynamic business that requires adopting an innovative and sustainable business model; highly flexible, creative, and technologically advanced, able to adapt to disruptive changes rapidly. To foster the development of Industry 4.0,  Kagerman et al. (2013) [2] identified a few key points: standardization, managing complex systems, comprehensive communication structure, safety and security, resources efficiency, regulatory frameworks, work and organization design, and training for continuous professional development. Notably, in the perspective of a transformed work and organization design, new management operations and leadership styles are needed [6,7].

Digital leaders: highly on demand

Managing digital transformation, logistics, communication, collaboration, and human resources requires innovative approaches to generate values from Industry 4.0 challenges and competitions. Hence, design thinking, an iterative process based on creativity and analytical methods, is needed to stimulate innovative ideas and business concepts and promote a novel digital culture and skills inside the organization [2]; an outstanding leadership style is necessary to guide toward this change.

Concerning digital technologies and how a business manages a novel behavioral style, the “4.0 leadership style matrix” was designed to develop a revised leadership culture that is cross-hierarchical, team-oriented, and cooperative, with a clear direction on innovation [2]. A few elements were identified as determining digital leaders:

1. Organizational objective: assessing teams and employees based on situation evaluation and feedback;
2. People: tasks are assigned based on competencies, skills, and team roles, creating a networking intelligence;
3. Change: willingness and encouragement toward changes, exchanging interaction among the market, customers, partners, and employees;
4. Output: cross-functional and cross-hierarchical process of controlling processes, task evaluation, and team performance to implement resources more effectively;
5. Mistakes and conflicts: managing and resolving conflicts creating an open and collaborative atmosphere;
6. Communication: information is communicated with transparent, responsible, proactive behavior among team members;
7. Innovation: multidisciplinary teams, flexibility, and creativity adopted in work environments are essential to promote innovative processes.

A two-dimensional matrix model to design “4.0 leadership”

Moreover, Oberer and Erkollar (2018) proposed a two-dimensional 4.0 leadership matrix to identify the most suitable 4.0 leadership style according to technological advances, innovative methods, and people. The matrix builds on two axes. While the X-axis, oriented toward technology and innovation, represents the ability of individuals to implement this approach.  With education, expertise, and motivational factors, the Y-axis oriented toward people expresses the individual's concern based on education, skills, interaction, and communication. Divided into four quadrants, the matrix presents a list of four leadership styles, designed for each individual and personal approach:

• 4.0 Freshmen Leader (FL) focuses on manufacturing structures, particularly on the finalized product. However, this approach has a minor interest on employees, customers ’ needs, and technological advancement;
• 4.0 Social Leader (SL) focuses on creating a friendly, communicative, and empathic atmosphere among team members, although lacking in attention toward innovation and technologies;
• 4.0 Technological Leader (TL) focuses primarily on technological advances and how to deliver an innovative value, with a low consideration for individuals in the team;
• 4.0 Digital Leader (DL) focuses on generating massive impact while implementing technologies, influencing the organization structure and the people (considered the most productive approach).

Influencing an organization’s direction toward digital transformation

Transforming an organization toward a digital structure requires high flexibility and executive and technological skills to successfully manage this change in a long-term perspective. Hence, an adequate leadership approach can be successful in making an impact toward disruption. However, organizations would experience different outcomes based on the adoption of varying leadership styles and the recruitment of leaders. In this regard, Mouhamadou and Solomon (2018) [3] investigated the influence and the effect of implementing different leadership strategies on digital transformation within an organization.

The methodology was based on interviews to explore different leadership styles and their impact on digital transformation. A few approaches, such as transformational and transactional leadership and technical knowledge needed to make decisions upon an organization’s strategic development actively, were investigated. Six semi-structured interviews of 30-45 minutes were conducted. Leaders with different profiles were selected, particularly those whose organization underwent a digital transformation (or that was in the process of transforming). Furthermore, innovative leadership skills were investigated based on Goleman’s theory of emotional intelligence to evaluate emotion management in different situations and Berman’s concepts to identify customer needs and the organization's processes toward digital transformation.

To prepare for disruption, digital transformation requires human, technical, and financial resources, in which leaders need to adopt novel strategies to implement this change for an organization’s growth [8] successfully:

However, to appropriately respond to customers and stakeholders demands while switching the system to a digital platform, a novel organizational culture is needed to welcome this change and in which leaders play a central role in guiding decisions and actions to enable a “digital disruption” [9] in an e-leadership model [10]. Digital leadership, while embracing and interfacing digitization and advanced technologies, has a vision of the future toward this change to support and align with an organization’s objective. Thus, transformative leadership holds a vision of the future from employees’ empowerment and creativity. Besides, antithetic leadership is also necessary when combining business operations and designing innovation [11].

Preparing for digital transformation requires advanced technical skills, a tendency to afford risks, rapid experimentation, talent, hard work, and excellent soft skills. Moreover, assigning roles based on expertise is essential to establish a digital culture, while leaders empower employees and stakeholders [12]. Against limiting traditional and bureaucratic systems, digital leadership explores changes and different processes to generate an innovative culture and leading strategy toward disruption; hence, revised training and education would be necessary [13].

The study's results showed that although there was not a specific and most effective style leading to positive digital transformation, a few factors were considered when applying a novel strategy toward innovative organizational culture. Awareness and high competence in adopting technologies were central for leaders to take action and make decisions. Indeed, a lack of technical knowledge would have required the assignment of this role and competence to others, decentralizing the leading control of processes. Furthermore, a transformational leadership style was found to be productive toward positive generative impact and leading changes. However, to properly realize the most effective process of digital transformation, a change in the management strategy is also relevant, and it needs to be in line with the organizational culture.

Moreover, emotional intelligence, motivation, and empowerment were identified as the most needed factor leading to a successful digital transformation outcome. Although a particular leadership style was not defined, a leader must be willing to support the change and motivate the entire team toward the process while recognizing individual capabilities and skills.

Organizational leaders need to develop critical thinking and a deep understanding of digital transformation processes, accordingly with a revised strategy management skill. To adapt more effectively to changes inside the organization, leaders should enhance trust in the team’s abilities, expertise, and creativity, while supporting and evolving toward a new organizational culture embracing those challenges brought by disruptive innovations. Recognizing and empowering team members' strengths is necessary to adopt a flexible approach toward innovation and continuous change, minimizing and preventing negative results in the perspective of a long-term transformative process [3].

Qualities and skills to face Industry 4.0: the effective leader

Having seen trends and challenges brought by Industry 4.0 and digital transformation, leaders need to develop novel skills and leadership approaches to overcome 21st-century challenges. Hence, to digitally transform an organization to reach innovation and success in a long-term perspective, a revised leadership culture that is mostly is cross-hierarchical, team-oriented, and cooperative should be adopted.

In the following article, the focus will move on to describing the “six characteristics of a digital leader for digital transformation success” while developing a novel leadership model [4]. Lastly, the most needed leadership skills for Industry 4.0 [5] will be revealed to foster and stimulate further research.

“Leadership is not a person or a position. It is a complex moral relationship between people based on trust, obligation, commitment, emotion, and a shared vision of the good.” (Joanne Ciulla)

References:

1. BMBF-Internetredaktion (2016). “Zukunftsprojekt Industrie 4.0 – BMBF”. Bmbf.de. Available at: https://www.bmbf.de/de/zukunftsprojekt-industrie-4-0-848.html. [Accessed May 13, 2021].
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3. Mouhamadou Sow & Solomon Aborbie (2018). Impact of Leadership on Digital Transformation. Business and Economic Research, Macrothink Institute, vol. 8(3), pages 139-148, September.
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