Digital Transformation: The Right Leadership Style as a Prerequisite for Success

Digital Transformation Part 3: A Different Leadership Style is Essential

A contribution by TRANSFORM-First® – the expert network for corporate transformation.

Authors: Günter Conrad and Dr. Errit Schlossberger

In this third of five articles by TRANSFORM-First about the phenomenon of Digital Transformation, it is shown that digital changes can only be successful with team-oriented leadership at all levels.

The question in the first article “Digital Transformation – just a new hype?” was answered with a clear NO. Rather, Digital Transformation has existential significance for most companies. The second article presented the five most important steps for a successful transformation.

1. Digital Transformation also requires transformation of leadership

Digital Transformation requires a new kind of team-oriented leadership culture as a prerequisite for successful digitalization. Pepe Guardiola or Jürgen Klopp are excellent examples of modern team leadership that can create high-performance teams in sports almost “from scratch”.

• “Jürgen Klopp enchants England,” headline reputable daily newspapers. Within just two months, Klopp has turned the mid-table club FC Liverpool into a title contender in the British Premier League. His transformed team has won seven out of eight games since he took over. Klopp brilliantly and individually utilized the strengths of his players needed for each match.

• Another outstanding example of success with “High Performing Teams” in business is, of course, dm drugstores. For many years, the company has continued its growth trajectory, while competitors such as Schlecker had to file for bankruptcy. With the strategy of “dialogic leadership,” dm consistently implements decentralized responsibility transfer, decision-making competence, and self-control according to the principle “wisdom of the many”. This also creates space for new and wonderfully emotional, digital innovations, such as the “product designer” for family photos on shampoos and soaps.

These modern leaders and coaches of our time manage to inspire their players in such a way that they want to use their mental, emotional, and physical abilities for the success of the team and out of an authentic sense of togetherness in every second. With a clear and strong vision, the potentials of even the most pronounced egos in the team are focused on the common cause.

Digital Transformation: Impulse 1

Qualified team-based leadership can turn ANY team into a top team. With them, the team-oriented management can then succeed in digitally transforming their company and leading it to the top. The tools for implementing such a team organization are ready and have proven themselves many times. The entire management just needs to consistently want it. What’s stopping you now?

2. Success is the result of team-oriented digital leadership

What skills must a digitally transforming leader bring?

As in sports, it’s about

• disciplined development of a strategy and guidelines and implementing them consistently with good entrepreneurial instinct
• still being agile, attentive, and fast
• having technical understanding to recognize and use the possibilities of digitalization, and thus surprise with clever innovations
• having talents of a Change Manager to get everyone on board with digital and inspire them
• also having genuine joy in doing and being fit, and
• leading fairly and, above all, based on values with one’s own strong personality.

Such abilities are, of course, rare. The most important thing is probably that “digital leadership” manages to interweave the existing strengths and passions of its own employees with a network of external service providers in such a way that the best possible progress and success for the company will emerge.

As coach Pepe Guardiola recently said after a lost game against Arsenal London: “Why crisis? The main thing is we played well.” Guardiola knows best that winning is the logical consequence of playing well. As long as the big picture is right, you can lose a game now and then.

Digital Transformation: Impulse 2

Only the company that inspires employees and customers with team-oriented digital leadership has the chance to become a market leader nowadays

3. Command and obedience are outdated

Of course, the necessary digital leadership can only function in a corresponding team-based organization. A digital transformation is doomed to fail if conventional and outdated organizational forms and styles prevail. It’s that simple. Then a genuine cultural change is due. Do you recognize yourself in these characteristics of the past?

• Ingrained departmental thinking and permanent hedging strategies
• Lack of inspiration is compensated for and concealed by inflexible and slow process thinking
• Anxious and conformist employees with reduced productivity do not stand out (negatively) within the existing set norms
• Non-performance of individuals can be masked with bureaucratic processes
• Many are held collectively responsible for the failures of individuals
• Blanket clean-up using the lawnmower method and without regard to individuals
• No common whole, but a collection of self-centered events
• Change efforts, even from top leadership, remain stuck in the ‘paralysis layer’
• The high and promising expectations of customers towards a company’s brands can only be met with difficulty by employees.
• …

These energy drains are the proverbial sand in the gears of many companies. And they appear wherever you look. The effectiveness of each individual and every well-intentioned action is massively reduced – often imperceptibly, let alone clearly visible. Euphorically launched actions lead to disillusionment and end abruptly in disappointment.

Even in the face of powerful competitors and truly threatening market situations, the paralysis in the structures remains (like a mouse freezing before a cat). Only serious economic problems lead to a change in thinking. Often, however, it is then too late to steer the tanker onto a new course. Change must therefore start early and holistically so that the willingness to change behavior can take sufficient hold. A forward-looking strategy helps to develop and advance new ideas from a still comfortable position, instead of lagging behind and only trying to save what can be saved.

Digital Transformation: Impulse 3

Digital Transformation only works with timely course and behavior changes. This requires the entire top management of a company. If there is a lack of common and convincing thinking, appearance, and action here, no one will leave their existing comfort zones. Today’s markets react negatively to such human persistence and the associated noticeable resistance in dealing with customers.

4. Today’s complexity and speed can only be managed with High Performing Teams

As soon as competitors with their High Performing Teams appear in your own market or the consistent digitalization of your own key areas in the company must take place, the ‘command and obedience’ approach is at an end. All previously successful leadership ‘attempts’ will fail due to the dictates of speed and the complexity of decisions to be made at the top. By the time a decision reaches the ‘last in the chain of command,’ the next wave of conquest by a competitor is already underway. The overwhelming of management teams – mentally as well as physically – then becomes the rule. This can be observed in many places today, even with ‘still’ famous market participants – despite their attempts to still present themselves as successful.

If an organization is ‘digitalized’ without replacing the old leadership style at ALL levels with digital leadership, the expected positive effects of Digital Transformation will fail to materialize – worse still, they will be reversed – and the paralysis will only increase. The crash is then only a matter of time.

Digital Transformation: Impulse 4

High Performing Teams are the basic prerequisite for the successful transformation into a powerful digital organization.

5. High Performing Teams lead and organize themselves

The future task of a digital leader will be to form High Performing Teams and give them the trustful framework and space for self-leadership and self-organization.

• Employees are inherently self-motivated. Building trust is necessary to ‘unlearn’ extrinsically practiced motivation and allow intrinsic motivation to become visible again. Variable monetary incentives should be reduced or eliminated, at least with regard to individual performance, to make room for broader team orientation.
• The leader of the future is a strategist, coach, and moderator – as much, but no more. This may sound provocative at first, but it’s true. They themselves cannot grasp and recognize complexity as well as a team will in its entirety. The team can develop itself, be creative, gather necessary information, and make quick decisions within set parameters on its own initiative.
• The leader assumes ‘roles’ rather than a ‘position’, is a role model and embodies the company’s purpose, values, and guidelines. Thus, ‘command and obey’ and interfering with the teams’ autonomy are outdated. The leader can provide strategic guidelines, give impulses, and ask questions, but should refrain from giving operational answers.

6. Positive Effects of Digital Leadership and Digital Transformation

Companies that dare to transform in this sense are usually rewarded with diverse positive effects. Their teams…

• work primarily for the company’s purpose and not just for quarterly results
• are “empowered” and no longer need to be ‘controlled’ down to the smallest detail,
• dare to experiment again and no longer plan endlessly to avoid mistakes
• are transparent and their results are visible again
• are inspired rather than just motivated, and thus regain trust in their own strength, the strength of other team members, the strength of their own and other teams, and the strength of the company’s mission
• are resilient and physically and mentally fit – in modern terms, “resilient”

Moreover, revenues will increase because pointless projects are no longer maintained for political reasons, and employees can focus again on truly meaningful issues. Costs will decrease because efficiency and speed of action increase. The fear that costs will rise due to lack of control is usually unfounded, as employees now handle the resources provided even more responsibly. Individual failures, which always occur, are more than compensated for by the overarching positive effects. The creativity of individuals and teams creates the prerequisite for successful digital transformation

Digital Transformation: Impulse 5

Digital leaders are primarily strategists, moderators, and role models who give their teams the space for creative and business-effective development. This allows high-performing teams to emerge and help make the company successful and lead it into the Champions League. Everything then happens without pressure, so to speak, playfully.

One of the central tools for creating high-performing teams is described on our website:

TLEX – Transformational Leadership for Excellence

Learn in the fourth part of our five-part series how you can digitally transform your products and services.