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Jan Bosch is a research center director, professor, consultant and angel investor in startups. You can contact him at jan@janbosch.com.

4 July

There are few topics with as much hyperbole around them as leadership. Everyone is supposed to be a leader, either informally or formally. At least you need to lead yourself based on whatever you want to get out of life, both professionally and personally.

My experience is that many so-called leaders are managers who are very good at keeping the ship on the course that was put in place long ago. By attempting to keep tomorrow as similar to today and yesterday as possible, we create a sense of stability that allows us to specialize and become even better at what we were already good at.

This may seem very critical, but there are systemic challenges in modern hierarchical companies concerning exercising leadership. Some of the key ones include incentives, obedient R&D and excessive process compliance.

First, the incentives in the companies I work with are squarely focused on short-term results. What matters is delivering on the next quarter, the next product upgrade, the next marketing campaign, and so on. Anything longer term tends to be assigned to strategy and business development functions that, although considered relevant, are viewed as outside the mainstream in the company. As a consequence, even if individuals see the clouds on the horizon and want to do the right thing, the entire organizational culture and incentives make it a very hard uphill battle.

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The second challenge is that in most organizations, R&D views itself as servicing the business. In my posts, I’ve frequently mentioned the BAPO model that explicitly stresses that business strategy should be driving architecture and technology choices. However, while the business side can change its mind very rapidly, R&D typically takes quarters and years to operationalize a new business strategy in the product portfolio.

As a consequence, R&D needs to know the business strategy a few years out to prepare. In practice, no one on the business side is willing to commit to anything that far out. So, if R&D waits until business asks for something, it will be way too late. Instead, R&D needs to exercise leadership, predict or even define the business strategy on the time scale it needs and start executing. In reality, in most companies, it’s R&D that sets the real business strategy for the company for precisely this reason.

The third challenge is process compliance and organizational roles. Any relevant innovation in digitalization will upset the apple cart quite fundamentally as it typically requires a change in business model and a transition toward continuous value delivery. Even if R&D can provide the offerings that facilitate this, we still need the rest of the organization to change their ways. In quite a few companies, salespeople are the most effective destroyers of relevant innovations as they’re unwilling or unable to sell them either because of lack of incentives or lack of skills.

So, for all the hyperbole, we need leadership in digitalization. To me, leadership is convincing others to join you on a path that they might not have taken themselves. It requires painting a picture of what the future could look like as well as a picture of what bad things will happen to the company if we don’t change. It requires outlining a path from here to there, recognition of the pain we’ll experience but also of the short-term wins we can score along the way.

Leaders use many tactics. There’s the David-versus-Goliath tactic, where a small group of digitalization advocates takes on the organization as well as the industry at large. The Chicken Little tactic, where we claim that the sky is falling, is also quite popular to instill fear.

For all the talk and hyperbole about leadership, most so-called leaders are managers who are rewarded for changing as little as possible. And even those who really want to drive change face an uphill battle driven by inverse incentives, a reactive R&D organization and existing processes and organizational roles. Still, we need leadership in digitalization as it’s the only way to make organizations change. So, even if it may seem insurmountable, remember what Margaret Mead said: “Never doubt that a small group of thoughtful, committed, citizens can change the world. Indeed, it is the only thing that ever has.”