This week, Lee reflects on the leadership reform agenda we need to pursue to unlock the productivity gains we hope to see from digital innovation.

Somewhere over the rainbow?

It feels like there is so much potential value just over the horizon – such an opportunity to improve work, life and society by applying smart, digital tech – but somehow we are still stuck in a liminal space between old and new.

Of course, a lot of what passes for digital innovation is questionable. Are companies like Deliveroo high-scale tech firms or centralised dark kitchen operations with exploitative delivery operations? Will decentralised finance improve the world or continue to support criminality, money laundering and unregulated scams? Are NFTs … actually that’s not even a question.

But we know clean tech and renewables represent a huge need, and an immense opportunity for startups, as the Financial Times recently concluded. It is also likely that remote working, automation and other innovations will finally start to demonstrate the long-predicted (but hard to quantify) productivity boost we hope for in the services sector, as Noah Smith argues.

We also suspect that automation and AI will eventually prove very lucrative, albeit potentially at the expense of jobs. Open AI CEO Sam Altman’s recent essay is perhaps a high-water mark in AI optimism, arguing that it will produce such-outsized returns that its owners could be taxed to fund Universal Basic Income (UBI) for all. Critics of his essay suggest this utopia sounds more like dystopia, and anyway he over-estimates the capabilities of AI (as well as perhaps the readiness of the owners of capital to share their outsized gains).

High above the chimney tops…

One thing is for sure, to realise these dreams – and especially if we want to enable current large firms to re-invent themselves to share in this bounty – we have a lot of work to do in reforming management and leadership.

I have spent quite a bit of time recently working on leadership development programmes, in an attempt to help unblock the various barriers to digital transformation that can only be addressed at this level. One pattern I have noticed in some large organisations is that the emerging leaders 2 or 3 levels from the top are increasingly the most engaged, knowledgeable and constructive, whilst those above are in some cases more hamstrung, fearful and cautious, and often incapable of acting even when reality is staring them in the face.

One observation here is that we need to cultivate quite different skills and methods in different realms of leadership. For example:

  • Senior leaders need to act more like investors, and focus on the ‘why’ more than the ‘what’ or the ‘how’. In most cases, they should recognise their business has become more complex, and so they simply do not have the knowledge or the time to make so many of the decisions they own today. They need to push many of these further down the organisation.
  • Upper middle management need to act more like organisational architects, creating the conditions for teams and teams-of-teams to flourish. This means they need more skills in areas such as digital platform development, data sharing, design / systems thinking and employee experience. They need to take or request decision-making responsibility from above in these areas.
  • Operational and team leaders need to work more like coaches and facilitators, using the kinds of technique Cerys wrote about in our previous edition. Strong people and team development skills, and very specific domain knowledge to support the work their teams need to get done. And they need support from those above to protect and own the spaces in which these teams work.

Another, is that we should expect a major cull of generic middle management as a result of coordinating work using technology platforms such as the digital workplace, and this promises to save a great deal of time and money that can be recycled to help organisations develop the agility and adaptability they often lack today.

The New York Times covered the phenomenon of middle management automation recently in an article titled The Robots Are Coming for Phil in Accounting, which I thought was an interesting area to focus on. Most of the legwork involved in accounting is easy to automate, as it is literally made of algorithms, and this could free up accountants to do the kind of added value work that their clients need: advice, early warning, auditing, business consulting. But few have yet grasped this opportunity because they have built up such a surfeit of what we might call (to borrow Venkatesh Rao’s label) ‘premium mediocre’ management that they are often run for the benefit of these people rather than their clients or employees.

Bluebirds fly…

Another problem accountants and other traditional firms illustrate is burying technical talent beneath multiple layers of generic management meat, and this is perhaps one of the other ways we need to reform leadership and management more broadly – an injection of tech skills and digital culture at senior levels. This is one of the lessons that legacy firms can take from the startup world, as this 2017 paper on developing tech leaders from the Center for Creative Leadership covers.

We need more real leadership at the governance, organisational and team levels, with the right mix of contextual skills and attributes, and it needs to be digitally literate and confident; but we will need far less generic management in a world where work is digitally coordinated and basic processes increasingly automated.

Leadership development is often beset by touchy-feely buzzwords and abstractions. I suspect we will need to get much more practical (and challenging) with real-world frameworks, methods, techniques and technologies if we are to get there as quickly as we need to.