Leading in the Digital Age

BY ANKITA SINHA, SUHANI BEDI, AND SUMIT HARJANI

“A deep passion for learning and a spirit of massive collaboration is a key
capability that a leader should demonstrate during a digital initiative.”
SENIOR LEADER, LEARNING & DEVELOPMENT

WHEN STEVE JOBS INTRODUCED the iPhone to the world At Harvard Business Publishing, we recently updated our
in 2007, nobody thought that it could be a catalyst for list of critical capabilities for leaders as we look towards a
the ride-sharing industry. Yet in 2019, booking a cab on future of work that leverages these opportunities. Building
your smartphone through Uber to go to work is a morning digital fluency has risen to the top of the list of capabilities
ritual for many. While technological advancements like today’s leaders require. Being digitally fluent goes beyond
iPhones, iPads, ride sharing, and hotel booking feel as comfort with technology; it means having the ability
though they’ve been in our lives for eternity, they did not to use the technology to unlock its potential and grasp
even exist 10 years ago. opportunities for an organization. We wanted to explore
what that concept means specifically for businesses in the
Today, next-generation technologies such as artificial
Asia-Pacific region.
intelligence (AI), automation, big data, blockchain, cloud
computing, connected devices, robotics, and virtual/ We surveyed both business and HR leaders from over 50
augmented reality have created a more connected world: Fortune 500 organizations across the Asia-Pacific region
According to a recent World Economic Forum report, and asked them what they believe are the key capabilities
“8 billion devices are now connected to the internet; by a leader requires to navigate a digital transformation.
2030, that number is forecast to grow to 1 trillion.” Our sample included a range of organizations with varied
levels of digital maturity, from traditional brick-and-
As a result, businesses are going through a paradigm shift
mortar companies to leading high-tech companies. We
with respect to people, processes, and practices. They must
supplemented the survey findings by speaking to HR
reimagine the way they serve customers and how society as
practitioners in India to understand both what makes leaders
a whole interacts to build smarter, more agile organizations.
successful and also what might sometimes derail them.
Aware that we are living in the midst of a technological
revolution, organizations are starting to think about
Our research indicates there are three critical
what that means for the individual leader. As market focus areas for leadership to successfully lead a
environments become increasingly digital, leaders need digital initiative:
to expand and evolve their leadership capabilities to step up • Reinventing the customer experience to make it more
to the new challenges. According to Deloitte’s 2017 Global personalized and relevant
Human Capital Trends report: “Only 5% of companies • Strategically applying new technologies to unlock
feel that they have strong digital leaders in place. In a productivity growth
sign of positive change, however, 72% of respondents are • Promoting disruption to build more innovative solutions
developing or starting to develop new leadership programs and reinvent their business
focused on digital management.”

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 Critical Capability:
Building Digital Fluency
Leaders who excel at this capability recognize digital
technology’s potential to help their organization more
effectively serve customers and create new value for
customers and the business. They keep tabs on digital
trends, and with others in the enterprise, they explore
ideas for using digital to reinvent their organization’s
business model, competitive strategy, or operating
model to get maximum value from digital technology.
In addition, they make smart use of data and analytics while making decisions and crafting
plans for their teams. And of course, they promote ethical use of data and make security of
customers’ data a top priority.

KEY CAPABILITIES MAP TO THE FOLLOWING CRITICAL FOCUS AREAS, RANKED BY RESPONDENTS BY
IMPORTANCE WHEN UNDERGOING A DIGITAL TRANSFORMATION

RANK CAPABILITY

CRITICAL FOCUS
AREA #1  athered and used relevant information about customers’ needs for mass
G
1 personalization and contextualization
REINVENTING
THE CUSTOMER
EXPERIENCE TO
MAKE IT MORE  pplied new technologies and ways of working t o existing infrastructure
A
PERSONALIZED AND
2 and processes
RELEVANT

3 Promoted disruption and creation of new ideas

CRITICAL FOCUS
AREA #2  isplayed sound understanding of how digital technologies can impact
D
4 the business
STRATEGICALLY
APPLYING NEW
TECHNOLOGIES
TO UNLOCK 5 Used big data and analytics to make decisions CRITICAL FOCUS
PRODUCTIVITY AREA #3
GROWTH
 emocratized decision making—gave importance to all types of data sets
D PROMOTING
6 while making decisions
DISRUPTION TO BUILD
MORE INNOVATIVE
SOLUTIONS AND
REINVENT THEIR
7 Built high-performing teams and aligned the entire team to the initiative BUSINESS

8 Designed new experiences and business models

9 Attracted new partners to co-create and co-innovate

Source: Harvard Business Publishing survey of HR and business leaders in Asia-Pacific, 2019

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CRITICAL FOCUS AREA #1

Reinventing the customer experience to

make it more personalized and relevant
In our survey, “gathering and making effective use of customer data for mass personalization”
topped the list of capabilities that a leader needs to successfully navigate a digital initiative.

Our discussions with top HR leaders also substantiated the idea that digital initiatives are largely
directed towards creating an immersive experience for customers. This means HR leaders have a role
in driving business transformation by helping to change the way their organizations work, reimagine
the way that they serve customers, and use data to create personalized customer experiences.

Research from McKinsey has found that personalization contributed to increasing ROI on marketing
spend by five to eight times and in improving sales by 10% or more. In another survey of more
than 600 business executives by Harvard Business Review Analytic Services, eight in 10 survey
respondents reported that personalization is paramount to their organization’s strategy, and more
than half of the respondents reported that it is an important contributor to their profit and revenue.
Personalization now has started playing a significant role in improving business performance and
financial results.

To understand customers better, organizations store and analyze a wide variety of data ranging
from simple demographic data to more deductive methods, such as tracking your phone signal to
uncover where you spent the most time in their store. In addition to direct and indirect data gathering,
companies also purchase data from third-party sources. This data is used to get feedback on customer
experience or even predict future behavior patterns of consumers to open up new revenue streams.

As many experts have noted, data is the oil that powers the engine of personalization. For example,
according to Sunil Gupta, author of Driving Digital Strategy, Amazon has leveraged big data and
predictive customer analytics to anticipate what the consumer wants to buy before they even
make the purchase. Amazon’s express two-hour “Prime Now” delivery service for loyal customers
capitalizes on that data. According to research by Gartner, demand-driven supply chains are able
to reduce inventory by 15%, increase revenues by 2% and gross margins by 3% to 5%.

With the rise in customer data generation, collection, and storage, data privacy has become one
of the major concerns for regulators and customers alike. As customers are pushing companies to
stay relevant, organizations need to ensure that they are aware of and compliant with data privacy
laws and regulations that give customers control over how their data is used. For instance, the
European Union’s General Data Protection Regulation (GDPR) lays out the rules of data capture,
storage, usage, and sharing for companies, and stiff penalties for those that fail to comply. Such
regulations are signaling a new era in how companies gather, store, and analyze consumer data.

However, our research found that data privacy is not deemed critical among the Asia-Pacific
organizations we surveyed. Participants ranked factors that they consider as they are preparing
for a digital transformation, and data privacy was ranked second to last. Hence, while leaders are
focused on capturing consumer data and using it for personalization, data privacy is still a low-
ranked priority. Rising public awareness of data breaches and increasing cyber incidents will ensure
that privacy takes center stage in the coming years, and organizations will need to make sure their
leaders are able to think wisely about how they use and protect customer data.

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“We’re moving away from traditional approaches and towards
models better suited for our current, agile context, and workforce.”
SENIOR LEADER, LEARNING & DEVELOPMENT

Consumer behavior is transforming, and most organizations today are designing their digital strategies
around their customers’ growing need for and rapid adoption of technology. Organizations are
making focused efforts towards collecting deep knowledge of their customers, enabling them to
build continuous, collaborative engagements. With data protection gaining prominence globally,
leaders in the Asia-Pacific region will need to address consumers’ growing need for transparency
in data collection and usage.

WHAT THIS MEANS Define your strategy around your customers’ pain points; think beyond
FOR A LEADER: your organization’s products and competitors by using big data
and analytics

Build transparency in how consumer data is being used and ensure

compliance with prevailing data privacy regulations and laws

CRITICAL FOCUS AREA #2

Strategically applying new technologies to unlock

productivity growth
With the aim of accelerating growth and productivity, companies are investing more in new
technologies. Our research indicated that one of the top capabilities displayed for leading a
successful digital transformation was “applying new technologies and ways of working to existing
infrastructure and processes.”

Customer-facing technology gets the limelight; however, technology that is at the core of business
processes—technology that people outside the company never see—provides structural strength
for organizations. Smooth and efficient internal processes, back-office systems, and internal
infrastructure are key to organizational efficiency and effectiveness. No single technology platform is
perfectly suited to improve productivity across all parts of an organization. The choice of technology
tools adopted must be tied to the organization’s strategy and goals for the digital transformation.

In the Harvard Business Review article, “Digital Transformation Is Not About Technology,” authors
Behnam Tabrizi, Ed Lam, Kirk Girard, and Vernon Irvin cited an example about the efforts of
supply chain company Li & Fung in using digital tools to reduce production lead time as it worked
on serving a marketplace for mobile apps. The company started by defining its end goals for the
initiative and only then decided which digital tools it would adopt. The adoption of virtual design
technology enabled the business to save half the time spent from design to sample, among other
wins. Similar gains were seen in the finance department as they “reduced their month-end closing
time by over 30% and increased their working capital efficiency by $200 million.”

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 1. Agile mindset—ability to learn and unlearn
2. Making the customer central
3. Upskilling the digital competence of employees
4. Rapid prototyping—emphasis on design, test, and learn
5. Collaboration among internal stakeholders

Top organizational needs to 6. Obsessively focusing on innovation

prepare for changes in the 7. Building external alliances and ecosystems
business environment due 8. Data privacy
to digital technologies 9. Evidence-based decision making

Source: Harvard Business Publishing survey of HR and business leaders in Asia-Pacific, 2019

The role of the leader is evolving and requiring new skills as digital technologies become more
prominent within organizations. Leaders not only need to strategically use digital technology for
improving internal processes and existing infrastructure, but they also need to create a work culture
where their teams are enthusiastically adopting these new ways of working.

“Applying new technologies” and “displaying a sound understanding of digital technologies” were
ranked high in the list of capabilities being displayed currently in leading digital transformation. It
was interesting to note that when asked about the barriers to successful implementation of digital
initiatives, leaders reported building high-performing teams as a key challenge.

Similarly, the leaders we interviewed reported that their teams have basic knowledge of the latest
digital technologies and how they impact the business. However, to successfully respond to rising
digital demands, leaders placed an even higher priority on fostering and maintaining a culture of
agility in their organization. They felt that their teams need to disrupt themselves, learning and
unlearning continuously, to drive that culture.

Digital technologies, operations, and people that are in sync can boost an organization’s performance
and efficiency. The leader’s challenge is to find the best way for digital and humans to interact with
and contribute to each other.

WHAT THIS MEANS Implementing a digital initiative is more than just adopting new
FOR A LEADER: technologies—to truly ramp up productivity, have a clear use case for
each of your digital investments

Balance the hard knowledge of digital with soft skills, such as agility,
team management, and digital upskilling, which will be imperative in
the new normal

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 CRITICAL FOCUS AREA #3

Promoting disruption to build more innovative solutions

and reinvent their business
Our survey findings highlighted “promoting disruption and creation of new ideas” as one of the
top three leadership capabilities that aid the successful implementation of a digital initiative.
Organizations are using trial-and-error methods, lean digital transformation, rapid prototyping,
minimum viable products, open innovation, and crowdsourcing to promote innovation.

One of the leaders we interviewed described using hackathons for a large-scale transformation
effort spanning 40,000 people. A recent Forbes article, “Secret to Digital Transformation Success:
Fail Fast to Innovate Faster,” profiled the company IDEO and how it is applying various techniques
to rapidly experiment with new concepts such as structured brainstorming, rapid prototyping, and
field research. While only 12 out of its 4,000 experiments were successful, the core principle is to
embrace rapid production and testing of ideas and continuously learn. Thereby, IDEO believes in
the concept of failing to succeed.

Failure is critical for radical innovation. A leader from a top telecom company in India said that it’s
interesting to see that smart risk taking, getting the right insights from wherever they might come,
and seeking out experiences from failure are very important skills for leading digital initiatives.
Another HR leader from a traditional real-estate company in India said, “The ethos is changing
and now [the company] is completely disruptive and the mantra is fail fast and often, take risks.”

While in-house expertise is readily drawn on, our research showed that co-creation with external
partners is a growing space in the Asia-Pacific region. With new ways of work evolving, organizations
are harvesting the accumulated thoughts and perspectives from within and outside the organization
toward democratized decision making. A top consulting firm we spoke to mentioned that it was
expanding its partner ecosystem by using open innovation so it would have access to a greater pool
of skills and could enhance its solution-to-market time. Several organizations are also collaborating
with erstwhile competitors so as to benefit from the combined strengths of the partnership.

Even though organizations are opening up to co-creating with external stakeholders, they are still
moving cautiously. One of the organizations we interviewed stated that collaborating with external
partners creates anxiety about knowledge and intelligence sharing. While partnerships offer a quantum
of opportunity, there is a certain degree of risk with data security and sharing one’s “secret sauce.”

“Organizations may still be displaying other behaviors but at

threshold levels … they may need to display threshold behaviors
at higher levels to maintain their competitive position.”
SENIOR LEADER, LEARNING & DEVELOPMENT

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“The ethos is changing and now [the company] is completely
disruptive and the mantra is fail fast and often, take risks.”
HR LEADER, REAL ESTATE COMPANY, INDIA

WHAT THIS MEANS Encourage your employees to run experiments with new ideas; focus on
FOR A LEADER: learning from experimentation to increase an acceptance and comfort
with failure

Extend your organization’s capabilities through ecosystem thinking:

drawing in partners, competitors, and customers; using techniques like
open innovation or peer-to-peer networks

When collaborating with partners, don’t shy away from discussing

differences; instead, leverage these differences to create value

Prepare your leaders to leverage the future of digital

TODAY, many organizations need a new kind of leader: a “digital leader” who takes full advantage
of the unique opportunities that the digital era provides.

Harvard Business Publishing has had the privilege of working with leading organizations across
the world that are at different stages of digital maturity—from rural manufacturing units to the
unicorns of the world. We continue to partner with companies to help manage their transformation
and help organizations capitalize on the opportunities that digital offers.

The digital era presents exciting and innovative prospects, as leaders now have the power to
redefine their industry.

Are you ready?

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ABOUT THE AUTHORS

ANKITA SINHA is a program manager SUHANI BEDI is a senior research and SUMIT HARJANI is the director,
for Corporate Learning’s delivery team sales support coordinator at Harvard Corporate Learning for India and the
at Harvard Business Publishing and Business Publishing based in India. She Middle East for Harvard Business
also leads the delivery support services is responsible for supporting global Publishing. He has over 15 years of
team based out of India. In her role as sales and learning solutions teams in experience, national and international,
program manager, she is responsible for their sales and design activities. Prior to in consulting, organizational
equipping leaders across the globe to this she was a delivery specialist for the development, training, and corporate
effectively deliver on their organizations’ Harvard Business Publishing Corporate sales. He previously headed the
strategies. She serves as a trusted Learning team where she supported delivery organization for Asia-Pacific
advisor to clients, and partners with designing and coordinating leadership and the Middle East at Harvard
them to design and deliver best-in-class development programs for global Business Publishing for four years. He
leadership development programs. clients. Suhani holds a master’s degree can be reached at sumit.harjani@
She can be reached at ankita.sinha@ in psychology from Delhi University. harvardbusiness.org.
harvardbusiness.org. She can be reached at suhani.bedi@
harvardbusiness.org.

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