With so much changing around us, it is not surprising that leadership should change as well. Even before the pandemic, Heather McGowan and Chris Shipley suggested that "new times call for a new approach to leadership" in their book The Adaptation Advantage: Let Go, Learn Fast, and Thrive in the Future of Work. The authors say that best leaders are constant learners, which is why McGowan and Shipley continuously emphasize the significance of learning and adaptability.
A critical aspect of the new approach to leadership is the leader's ability to be vulnerable and open with the team about who the leader is and what the person cares about in business and life. The best leaders create psychological safety and build trust. Establishing moral authority helps the team decide whether the person is a real leader whom they should follow.
The shift from the Second and Third Industrial Revolutions, where the focus was on productivity, efficiency, and value extraction, to the Fourth Industrial Revolution requires a new leadership approach. The Fourth Industrial Revolution embraces innovation, creativity, and value creation from learning and adapting faster than the competition. This kind of environment demands a leadership style that inspires human potential.
Leaders often feel that they need to know everything and be the unquestionable expert. That is no longer the case. McGowan and Shipley differentiate between a complicated world and a complex world. We used to live in a complicated world that was deterministic and where we could predict outcomes. We have now entered a complex world with many moving parts, properties, and behaviors that are constantly changing as the situations vary. We cannot predict outcomes in a complex world. In this world, we need to adapt to direct outcomes.
Expressing vulnerability on the part of a leader was not the norm in the past. Some might argue that vulnerability was a sign of weakness. However, vulnerability is essential in order to establish trust with the team and create an open, collaborative, creative, and adaptable environment. Leaders who conceal their shortcomings or hide their knowledge gaps compromise their teams. To create an effective team, leaders must be willing to raise their hand when they need help and encourage their team to do the same.
Another big shift in the Fourth Industrial Revolution is the transition from value extraction to value creation by learning and adapting. Best leaders optimize throughput rather than measure output. McGowan and Shipley argue that the conditions in which we make products will matter more than the actual products. The reason for that is products and services are short-lived. Optimizing for a specific production will have limited results. In contrast, a company with agile, adaptable, and learning conditions will thrive in the new economy by continuously creating value.
Web strategist Jeremiah Owyang identified seven components of the digital transformation.
- Customer experience
- Organizational alignment
- Analytics and AI
- People and culture
This is Owyang's advice to the leaders in the Fourth Industrial Revolution:
Teams have to be empowered to make decisions based on common vision and common values because in a digital-first company you are making real decisions in real time based on real time data. A hierarchal culture won't work. You need to have the culture that works in real time.