Digital transformation leadership competencies

Digital transformation leadership

The concept of digital transformation has gained significant attention in recent years, both in academia and industry. As organisations increasingly rely on digital technologies to drive business models, products, and services, the role of leadership becomes crucial. Leaders must develop specific competencies to successfully guide their organizations through digital transformation.

Müller et al (2024) unpack a framework for essential leadership competencies with their research article 'Digital transformation leadership competencies: A contingency approach'. The article outlines the leadership competencies based on different digital transformation goals and contexts.

Understanding digital transformation and competencies

Digital transformation is broadly defined as organisational change driven by digital technologies, leading to transformations in business models, organizational identity, and service offerings. This process is multifaceted, requiring different leadership competencies depending on the goals and drivers of transformation. Competencies in this context refer to abilities encompassing technical expertise, business acumen, and people management skills, all essential for navigating digital change.

The need for digital transformation leadership competencies

Müller et al posit that digital transformation requires skilled leaders capable of formulating a strategy and fostering the (organisational) environment conducive to change. Most existing literature is noted as focusing on leadership competencies in a fragmented way that identifies competencies but does not show how leadership qualities align with specific transformation objectives. Müller et al's framework puts competencies into archetypical portfolios: the challenger, the bricoleur, the organiser, and the competitor.

An approach to leadership competencies

The proposed framework is inspired by the Competing Values Framework, which categorises organisational effectiveness across two dimensions: flexibility versus stability, and internal versus external focus. These dimensions inform the need for different competencies depending on whether transformation efforts prioritize innovation, efficiency, stakeholder involvement, or market competitiveness. The competency portfolios align with these dimensions and are then grouped as follows:

1. The Challenger - Focuses on exploring market innovation, driving initiatives in environments that require adaptability and creativity.

2. The Bricoleur - Emphasizes operational efficiency, supporting stable processes and integrating existing resources effectively.

3. The Organiser - Prioritizes active stakeholder involvement, ensuring that transformation efforts resonate within the organisation and encourage collective participation.

4. The Competitor - Aims at improving competitive positioning, aligning strategies with external market demands and optimising business outcomes.

Competency portfolio framework

The competency portfolio framework highlights how leadership approaches must be tailored according to the drivers and goals of digital transformation. Each portfolio contains specific leadership qualities that match the context in which the transformation takes place, enabling leaders to effectively guide their organisations.

Implications for business leaders

The framework provides business leaders with a practical tool for identifying the competencies they need to either develop or acquire within their organizations. Leaders must assess whether their existing skill-sets align with the demands of digital transformation or if new competencies are required to meet strategic objectives.

Conclusion

As digital transformation continues to shape business landscapes, the role of leadership becomes increasingly complex. Müller et al's proposed competency portfolio framework offers valuable insights into how different leadership competencies are required depending on transformation contexts. By adopting this contingency approach, organisations and leaders can better navigate digital change and position themselves for success in a rapidly evolving environment.

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