In the 1950s, it took 20 years for one-third of the Fortune 500 to be replaced, something that now happens about every five years. This fast-changing era is propelled by technology-driven transformation, and the impact is felt by individuals, corporations, industries and society itself.
Perhaps the greatest impact is felt by business leaders, who are under constant pressure to adapt to the changes or risk getting left behind.
The next few years will see an exciting “war of the worlds” between digital upstarts and industry incumbents. Industries like retail, hospitality and transportation are being disrupted by companies like Amazon, Airbnb and Uber, which leverage the power of technology to consolidate small pockets of distributed capacity on a common platform to provide economies of scale and compete with industry leaders.
This new digital age calls for a new definition of leadership.
Leadership in the Digital Age
For many decades, the notion that the smartest people make the best leaders was a widely-held belief. The idea of “smartness” — as measured by the Intelligence Quotient (IQ) — was viewed as a primary determinant of success, and it was commonly assumed that people with high IQs were destined for lives of accomplishment and achievement throughout their careers.
However, Daniel Jay Goleman’s groundbreaking writing on the concept of “emotional intelligence” — as measured by the Emotional Quotient (EQ) —theorized that traditional leadership qualities like intelligence, toughness, determination and vision were important, but that truly effective leaders also displayed a high degree of emotional intelligence, which includes qualities like self-awareness, inspiration, empathy, social and relationship management skills.
With digital technologies like mobility, social networks, big data analytics and cloud now deeply embedded in every aspect of our personal and professional lives, today’s business leaders need to possess a completely new set of capabilities in addition to IQ and EQ to succeed in the digital age.
Leaders then must develop or increase their Digital Quotient, or “DQ.” Just as organizations look for ways to improve the DQ of their strategies, capabilities and culture, leaders, too, will be measured by these important competencies and attributes. Some aspects of a leader’s DQ include:
Managing the Unknowable: The sheer volume, velocity and variety of information being generated in today’s world makes it impossible for one person to have all the answers. Digital age leaders need to acknowledge the limits of their expertise and build a reliable network of knowledgeable experts to help them navigate through the choices.
Entrepreneurship: Great leaders are not necessarily great entrepreneurs, but in an increasingly uncertain world, the ability to take risk becomes a critical success factor for every leader. The ability to identify and understand trends, place bets and, most importantly, scale up or cut losses in a timely manner needs to be embedded into the business as usual practices in every organization. “Failing fast” and “falling forward” are critical precursors to success in the digital era.
Mind Map: Organizations look to their leaders to interpret the big picture vision and chart a course for the organization through the maze of business and technological issues. The ability to visualize the big picture, understand the end game, and set operating boundaries in a fast changing, dynamic business environment are all part of the leader’s mind map.
Discern at Speed: Speed is the most distinguishing characteristic of the digital age. No matter how fast you are moving to transform your business, the depressing reality is that you still probably aren’t moving fast enough. The vast volume of information available and being generated requires leadership to be able to distinguish quality from quantity in real time to drive effective decision making. Leaders need to possess clarity of purpose, thought and action to align teams to achieve common objectives.
Succeeding in the Customer Age: A common management truism states that one can only ever choose two of the following parameters: speed, quality or cost — but the new digital age customer is uncompromising. They demand performance on all three metrics: they want it all, they want it now and they want it for free. Leaders in the digital age need to fundamentally transform themselves and their organization’s mindset to meet and exceed customer expectations in this new normal.
Inspiring with Technology: Technology presents infinite possibilities. Whether to generate ideas or propagate the vision across the organization, and digital age leaders must be able to harness this power creatively to benefit their organizations. Technology can be a great leveler, enabling every individual to realize their potential.
The New Leadership Mantra: Intelligence + Emotional + Digital
In the past, development programs like the MBA focused mainly on the development and application of both technical and “soft” skills to build managerial and leadership capabilities. In today’s digital world, however, these are quickly becoming threshold capabilities. In other words, solid cognitive and relationship-building abilities are now the price of entry – and anything above the minimum requirement does not significantly impact the quality of leadership.
While the news media often portrays startups as young exciting companies who can do no wrong, it is sobering to remember that the failure rate for startups is more than 90%. The ones that the media writes about are the 5-10% who make it through multiple rounds of heartbreak and failure, often in the span of a few months. Likewise, industry incumbents are not immune to failing in the new digital age. They must adapt to changing realities and deploy counter strategies to compete against and beat the upstarts at the digital game.
Today’s business leaders require more than a high IQ and EQ. Successful leaders will also possess and practice the qualities of a Digital Quotient; rapidly adapting and transforming their enterprise by injecting digital capabilities into the organization’s DNA. In practice, this can be accomplished through acquisitions, by setting up new divisions to stay relevant to the generation of digital natives, and by realigning organizations and business models that require every individual to reassess their skills and acquire new capabilities to compete in the disruptive future.
This article was originally published on CEO.com