Leading in the digital age

imgresHere is a brief excerpt from the transcript of a roundtable discussion sponsored by McKinsey & Company for publication in its Quarterly. To read the complete article, check out other resources, learn more about the firm, obtain subscription information, and register to receive email alerts, please click here.

To learn more about the McKinsey Quarterly, please click here.

* * *

The automation of work and the digital disruption of business models place a premium on leaders who can create a vision of change and frame it positively.

How disruptive will accelerating workplace automation be for organizations in the future? For decades, businesses have deployed technology to reduce costs and complexity, make better products, and develop new business models. But the new potential of artificial intelligence and advanced robotics poses major new challenges for leaders as they seek to reset their strategies for a digital age.

Last November, Bloomberg chairman Peter Grauer and Nadir Mohamed, the recently retired CEO of Rogers Communications, sat down with Manfred Kets de Vries, a professor at INSEAD, and Harvard professor Robert Kegan to debate some of the issues with Claudio Feser, head of McKinsey’s leadership development initiative. Their conversation started at the movies….

Peter Grauer: Recently, I was watching Spencer Tracy and Katharine Hepburn in a 1957 movie called Desk Set, about the early stages of computerization in offices. The workforce was petrified that it was going to end up out of work. In the end, the employees learned that they weren’t going to lose their jobs. In fact, their jobs were going to become more interesting because, as we see in Bloomberg’s global data operation today, the computer does the more routine work and humans can do the more analytical work.

The top-line benefit is that the quality of what we do gets better. Bloomberg is the largest provider of news-related data analytics and execution for the financial-services sector worldwide. Obviously, given what the sector has gone through during the last eight years, we’ve restructured our business dramatically. In the end, though, we’ve also become more efficient and able to provide increasingly higher-quality information to customers.

Claudio Feser: Recent research on workplace automation from the McKinsey Global Institute suggests that advances in artificial intelligence and robotics mean that we’ve only taken the first few steps of a long journey that mainly lies ahead of us. From your perspective, are we at a turning point, or is none of this necessarily that new?

Peter Grauer: I happen to think companies have been living with this for a long time. For us, deploying technology is an absolute necessity, and we have to reinvent ourselves all the time. What’s new is that the speed of change in automation is dramatically faster than it once was.

Nadir Mohamed: Automation isn’t new. I think what is different, just in the last few years—and will become more significant and more frequent—is the intersection between automation and changing business models.

Automation itself may or may not lead to business-model change. It depends on how you think about this. Automation can mean taking a process and doing it much faster, better, and cheaper. Or automation can fundamentally change what a business offers, requiring a new business model and profoundly disrupting an organization or industry in the process.

We tend to see these two things as the same, but they aren’t. In banking, for example, you could think of discount brokerages either as the automation of tasks or as the potential disintermediation of a bank’s offering to customers. The implications are profoundly different.

Robert Kegan: I agree. Some kinds of automation help organizations to move faster and more efficiently, versus transforming the business and bringing about a new paradigm. You have to be mindful of the difference. Take the simple example of student papers today. Thanks to technology, they are more handsome to look at than they were in earlier times. You could be forgiven for thinking, sometimes, that they’d been published by a professional publisher. But the thinking of the students isn’t necessarily any better. Technology can keep us where we are, but moving faster. Looking at it another way, you could say, “the greatest opportunities are going to require transformation. How can technology help me with that?”

Nadir Mohamed: The word “automation” itself is part of the problem. Take Uber as an example. You could argue that what they’ve done through automation is to make dispatching better. But, clearly, what they’ve done is more significant than just refining the same process so it’s faster and cheaper. Automation today is about reconfiguration, transformation, disruption.

Claudio Feser: What changes for leaders in this new technology environment?

Nadir Mohamed: From a leadership perspective, I don’t think the challenge is an intellectual one of knowing which disruption is coming. The challenge is how you get the organization to embrace the looming change.

Why didn’t cable companies launch their own version of Netflix? Intellectually, they surely knew what was going to happen. For a long time before they were hit by the new model, even their own customers were moving toward delivery over the Internet. It wasn’t that cable-company executives didn’t see this coming. Their challenge was organizational—“how do we set up the capabilities to make change happen?”

Manfred Kets de Vries: I think the leadership challenge is even deeper than that. When we talk about leaders, we too often think about an individual with specific abilities. But no one can do everything. Leadership is a team sport. What’s really at stake here is finding the right combination of complementary talents. The CEO playing Moses is a distortion, particularly in America, compared with Europe. Leaders should be asking themselves “how do we build a diverse and creative team that can reach better decisions?”

Peter Grauer: You’re right. There’s something fundamentally broken about the CEO model, given the accelerating speed of change and the shortening “life cycle” of chief executive officers, particularly in public companies.

In our interconnected, global environment, 60 percent of our business and 47 percent of our employees are outside North America. Our fastest-growing markets are the emerging ones. We check our smartphones when we wake up in the morning, and that’s the last thing we do at night. We are totally wired. The only time CEOs are not bombarded by electronic media is when they are on airplanes. How can one person run the business? I don’t think the old model of the supreme CEO works anymore.

Nadir Mohamed: I’m perhaps more “old school” on this. I agree the speed of change is intense. And I agree that glorifying the leader is a problem. Even good leaders can lead us astray.

But I do think the response to automation starts with the CEO. It starts with the leadership saying, “the company is going to change. We see this coming.” Obviously, you have to build teams, collaboration, and what have you. The leadership, at the top, must embrace and drive change because organizations will not have the luxury to play out change over time, particularly in the midst of disruption. The leadership has to recognize the need for change and get the organization to change fast enough.

Robert Kegan: One way to think about the leadership implications of a major technology-driven change—whether for an individual or a team—is to start by asking more broadly what the functions of leadership are, by which I mean the position, not the individual.

I think there are a small number of functions for the leader. One is asking whether the organization is realizing its fullest potential. That’s a question about the future. Most people in an organization are paid to think about optimizing the present. There are other functions for the leader, but this one—unleashing potential—is perhaps the most relevant to our discussion.

Automation is not an inspiring topic. It creates the specter of employees losing their jobs. Talking about the tools that will make our lives better, about unleashing potential, is a more uplifting way of looking at it. Leaders have to frame the story differently, as an opportunity, not a threat.

* * *

Here is a direct link to the complete article.

This roundtable was moderated by Claudio Feser, a director in McKinsey’s Zurich office.

Posted in

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.