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January – June 2020

Management skills in the digital era

Management skills in the digital era

By Prof Martin Butler

  • AUG 2020
  • Tags Strategic management
21 minutes to read

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Leading when the context is changing

By the year 2025 machines will perform more traditional work tasks than humans according to the World Economic Forum’s Future of Jobs Report (WEF, 2018). This is in comparison to 71% of these tasks being performed by humans in 2018. However, the rapid evolution of machines and algorithms in the workplace could create 133 million new roles in place of 75 million that will be displaced. The development of the digital skills required to fill these new roles is well recognised..

Offerings to develop capabilities – ranging from digital literacy and programming to understanding blockchain, applying machine learning and leveraging artificial intelligence – are plentiful. These skills are in demand and will be required, but what about the management skills for the future? Do managers also need to study machine learning and digital strategy to prepare for the digital reality and virtual future? This leads me to reflect on the interesting debate that Don Tapscott and Michael Porter had nearly two decades ago about the impact of the internet on strategy.

Offerings to develop [digital] capabilities … are plentiful. These skills are in demand and will be required, but what about the management skills for the future?

Porter (2001) contended that in our endeavours to see how the internet is different, we forgot to see how it is the same as previous technologies that influenced strategy. The central premise of his argument was that the internet would change industry, like so many things before it, but that does not change the fundamentals of formulating strategic intent. Porter implored business leaders to use the traditional tools and methods but to incorporate the impact of the internet on the different dimensions to mitigate against threats and exploit new opportunities. He saw the internet as a powerful force shaping business as usual.

Tapscott (2001) had a very brave subtitle to his rebuttal, “Why Michael Porter is wrong about the internet”. Duelling with the strategic management guru of the 20th century in a Harvard management journal requires equal amounts of bravery and robustness in the argument. In his article about rethinking strategy in a networked world, Tapscott provided compelling evidence about how the business context was busy changing at the turn of the millennium. With a fundamentally different structure to the economy, his ideas centred on playing a game in which the rules were about to change. The internet was leading to business unusual in Tapscott’s opinion.

The world of strategic management has evolved … Although some of the fundamental principles embedded in the resource and market-based views are still useful … the new strategic management principles of dynamic capabilities and transient advantage are essential to formulate strategy in 2020.

Tapscott implored managers to recognise how the internet is altering the business context completely. In 2001 already, he firmly believed that the societal impact of the internet and the accompanying structural changes would change the business and consumer landscape fundamentally. Supplementing the traditional strategic management toolset with new techniques was a necessity, in his opinion.

Since the debate, 20 years have passed, and the horse has mostly bolted. Leaders appreciate that we operate in a network economy that does not align with the somewhat outdated market and resource views. The network transcends these traditional foundations of strategy. With the benefit of hindsight, there are well-known examples like Kodak and Toys R Us that simply could not compete with new digital and online business models. The same happened to local mainstays like Musica and Mr Video.

The internet also led to the birth, or in some cases re-birth, of e-commerce giants like Amazon, Google and Facebook and closer to home the multiple digital businesses like m-pesa in Kenya, and Media24, Takealot and Showmax in the Naspers stable. Add to this social media giants like Twitter and Facebook and the unicorns of the sharing economy like Uber and Airbnb, and it is evident that many of the largest corporates in our country, continent and globally either did not exist in 2001, or were fundamentally different organisations.

The world of strategic management has evolved with the new networked economy as well. Although some of the fundamental principles embedded in the resource and market-based views are still useful, the new strategic management principles of dynamic capabilities and transient advantage are essential to formulate strategy in the year 2020. The question is whether the same management skills that built the S&P500 in the previous millennium, or even the JSE100 over the past few decades, will be applicable when working in a virtual global company serving double-sided markets? Should we not look for the appropriate skills for managers as well?

I believe the same principles apply when looking at the collective management skill set for the digital era. The fundamentals that were important 50 years ago, are essential today and will probably be for decades to come. Like the world of strategic management, transient advantage and dynamic capabilities only make sense once the resource, market and capabilities views are understood and appreciated. Similarly, some new skills are essential or may increase in importance, but not necessarily at the expense of some of the time-proven and fundamental management skills.

It is the essence of leadership to ensure sustainable organisations that are context-resistant.

The fundamentals

The fundamental skills have always been important and required in order to succeed as a leader in any context, and will remain as such. It is the essence of leadership to ensure sustainable organisations that are context-resistant. The skills are equally important in a time of economic growth and a time of contracting markets, or when products and services need to be optimised, culled or added. These management skills are timeless.

  1. Creativity and an innovative mindset remain critical management capabilities. The well-known quote ‘Insanity is doing the same thing over and over again while expecting different results’ (at times attributed to Albert Einstein) applies equally to management. If we want a situation to change, we need to try something different. Where creativity refers new ideas, innovation is the successful application of these ideas, within a specific context.
  2. Emotional intelligence and social intelligence remain top of the pile for managers who have to manage teams. The ability to compromise pragmatically, based on the social context and all the different attributes of emotional intelligence, leads to more robust and trusting teams. Every systems thinker knows that the collective team is stronger than the sum of the parts only when the interactions between team members are optimal. This skill is key to creating more robust and trusting teams.
  3. Communication and persuasion are the abilities needed to effectively communicate ideas and persuade colleagues and stakeholders that it is in their collective best interest to follow a desired path of action. Employees value individuals who can explain not just what needs to be done, but also why specific actions are required. Being able to communicate and persuade across all levels and functional areas remains imperative.

Every systems thinker knows that the collective team is stronger than the sum of the parts only when the interactions between team members are optimal.

  1. Diversity management and cultural intelligence are powerful allies, with cultural intelligence often defined as the ability to manage diversity. This includes the ability to overcome explicit or unconscious bias, an understanding of culture and cultural differences, and the ability to adapt verbal and non-verbal behaviours. This skill decreases the risk of miscommunication and helps to lead diverse team members in a manner that conveys respect and builds trust.
  2. Critical thinking and decision-making are the skills needed to make sense of multiple levels of complexity, to use the tools and techniques required to see potential outcomes, and to make informed decisions. The ability to think critically allows for the execution of bold ideas, rather like Tapscott felt he could challenge Michael Porter because he had a solid argument based on his critical thinking. Good leaders make decisions. Poor leaders will get back to you tomorrow.
  3. Integrity encapsulates various skills. It includes being authentic and sincere. Managers with integrity maintain consistency in their work, know their limitations, are honest and accept responsibility for their mistakes. When you are creative and also brave enough to make those bold decisions, you will make mistakes. Owning up to one’s mistakes and being authentic in one’s remedial efforts is the mark of a true leader.

I believe that these six skills are the evergreen attributes of management behaviour that will stand the test of time, no matter how the context changes. However, managers will lead a workforce that is increasingly expected to develop digital skills to operate efficiently in a digitised environment. Some of the following capabilities, for instance virtual collaboration, have strong roots in these fundamental management skills.

Good leaders make decisions. Poor leaders will get back to you tomorrow.

The digital imperatives

Digital technologies are advancing real-time engagement with distributed teams and communities. Artificial Intelligence and Machine Learning platforms support various business processes, and open-source communities are sharing ideas and solving problems. Projects are recognised as the engines of creation and the routine work of monitoring discrete activities are becoming automated. The following skills are necessary to thrive in the current digitised organisations:

Analytical thinking ability is crucial as every single business process has become digitised and decision making has become data-driven.

  1. Analytical thinking ability is crucial as every single business process has become digitised and decision making has become data-driven. It is no longer acceptable to make business decisions without looking at the correct data appropriately contextualised. Many of the foundational aspects, such as validity and reliability, need to move from academic papers to the boardroom to ensure the rich sets of data accurately represent that which they should, and are used to make the best possible decisions.
  2. Computational thinking involves a host of capabilities, but in essence, modern managers have to understand the basic principles of the pervasive technologies that share our working space. This includes the elements of digital literacy, managing data digitally, and an appreciation of the complementary roles of technological speed and accuracy, and human brilliance and adaptability. It includes working in harmony with the multiple forms of artificial intelligence increasingly sharing our working space.
  3. Virtual collaboration is the new normal, and it is well recognised that high-functioning teams can accomplish more than any individual. Leaders can significantly lower the opportunity cost to collaborate internally and externally, and need to develop the skills and embrace the opportunity to ensure high-quality engagement.
  4. Flexible adaptability looks like a tautology, but it indicates the multiple layers of change in society and business that are highly fluid. Leaders need to embrace the reality of constant change and display a positive attitude and open-minded professionalism when dealing with a new customer, served by new processes, supported by new systems, in the face of new competition and regulatory and societal pressures brought about by hyper digitalisation.
  5. The ability to learn independently could be the least appreciated skill for the current digital work environment. My go-to question in job interviews is this: “What was the last [insert role-specific word] skill that you learned and how did you accomplished this?” I do not want to hear how the company sent you on a course; that is a disqualifier. Managers have to take responsibility for working out what they need to know and where to find that knowledge. This is an ongoing process in knowledge-based work because the knowledge base is continually changing.

In an era when automated algorithms decide how much we pay for insurance, where deliveries are made by driver-less vehicles, and when we have digital twins for any corporate asset or even customer, it is difficult to see into the future when we cannot yet make sense of the fast-moving ‘current’. Nevertheless, if there is anything that we can learn from the past couple of decades it is that there is a future that will be fundamentally different from the current reality and that will require new skills for leaders.

… modern managers have to understand … the complementary roles of technological speed and accuracy, and human brilliance and adaptability.

Future requirements

It is highly likely that the future will see flatter organisational structures. There is bound to be performance-based organisations focusing on the ability to contribute value, and less on the governing of processes and employees. Advanced artificial intelligence algorithms using gigantic sets if real-time data will select tactics, tailor offerings and monitor fulfilment without human intervention. With outputs increasingly controlled by intelligent machines and fewer human workers, the role of business leaders will be redefined.

The ability to understand extremely complex problems that do not have natural domains or boundaries but that are simply a slice of multiple interdependent systems could become one of the most sought-after management skills.

Many of the current management problems will be resolved before they occur, creating the impression that leadership somehow becomes irrelevant or obsolete. On the contrary, it makes the appropriate management actions more important than ever before. However, it will transform what managers have to do, how they need to work, and how they will lead their teams and organisations. In the absence of a new model of management, these are the skills that I believe should be valuable, without necessarily replacing any of the previous abilities. These skills are not new; it is just they will probably be in higher demand.

  1. Networking agility and active listening. As organisations flatten and virtualise, the focus of work will be horizontal and not within traditional business functions. Managers will need to organise temporary structures to seize emerging opportunities and squash fast-moving threats. Active listening will become a critical skill as insights to challenges will reside somewhere outside of the traditional work team and experts. Good decisions will require an extensive network in order to tap into the right resources at the right time.
  2. Cognitive flexibility. This is not multi-tasking, but there is a clear relationship. The rise of digital technologies means leaders need to be able to handle the plethora of opportunities and challenges that come with it. Instead of focusing on optimised processes, managers need to pay attention to the behavioural dynamics that shape organisational performance – why and how people act, their constraints and resource requirements and, most importantly, how to combine individual behaviours to create the collective behaviour underlying new definitions of performance.

Managers will need to organise temporary structures to seize emerging opportunities and squash fast-moving threats.

  1. Mixed-methods problem solving. Making sense of and solving management problems considerably more complex than what they are currently dealing with, managers will need to use multiple methods of analysis and synthesis. The ability to understand extremely complex problems that do not have natural domains or boundaries but that are a slice of multiple interdependent systems could become one of the most sought-after management skills. It will require the ability to make sense of vast amounts of data, using machine learning to narrow down options, making systems diagrams to present influences and interviewing stakeholders to get qualitative data. I do not believe we will employ any future leaders without asking them to perform an analysis of and make recommendations about a complicated and messy management challenge.
  2. Empathyand recognising the contributions of people. This skill will move from valuable to critical in an increasingly virtual environment. In my lifetime, the meaning of the word work has changed from the place my father used to go to in the mornings and return from in the evenings to play with us, to the things we do at night in our laptops when the children are playing on tablet computers. Blurring the boundaries of work on both time, locality and what constitutes performance means considerable pressure from multiple perspectives on employees. The best leaders will have the ability to place themselves in the numerous different pairs of shoes of their team members and be empathetic to their lived realities.

Active listening will become a critical skill as insights to challenges will reside somewhere outside of the traditional work team and experts.

For many of us, the future organisations requiring these skills are somewhere over the horizon. Not every organisation will adopt technology at the pace of an organisation born digital; nor will all organisations be reshaped to the same extent. Most organisations will evolve at the speed of their industries, competitors and customers. In all of this fuzziness and excitement, leaders will still be leading. We need to develop the leadership competencies for the future.

What are the management skills that will be required to make a success of Elon Musk’s colony on Mars in 2035? I do not profess to know, but I do think it will be a healthy balance between the evergreen fundamentals, the digital imperatives and a splattering of the future requirements.

Footnote: The alternation between managers and leaders is intentional. I do not subscribe to the low-value debate about a clear distinction between leadership and management.

  • The article was written by Prof Martin Butler who lectures in Digital Enterprise Management and Technology Futures at USB. He is also head of Teaching and Learning at the business school.

References

Porter, M. E. (2001). Strategy and the Internet. Harvard Business Review. https://hbr.org/2001/03/strategy-and-the-internet

Rainie, L., & Anderson, J. (2017). The Future of Jobs and Jobs Training. Pew Research Center. https://www.pewresearch.org/internet/2017/05/03/the-future-of-jobs-and-jobs-training/

Tapscott, D. (2001). Rethinking strategy in a networked world (or why Michael Porter is wrong about the internet). Strategy & Business, 34-41. https://www.strategy-business.com/article/19911?pg=0

World Economic Forum (WEF). (2018). The Future of Jobs Report 2018. http://www3.weforum.org/docs/WEF_Future_of_Jobs_2018.pdf

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