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Digital Leadership: Competencies, Leadership Styles and Challenges of the Leader 4.0

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"Success is no longer about changing strategies more often, but having the agility to execute multiple strategies concurrently. And success requires CEOs to develop the right [digital] leadership capabilities, workforce skills, and corporate cultures to support digital transformation."

Digitization is and remains the number one topic of conversation. In this context, consultants and managers have to deal with the human factor in particular. Because nothing is more crucial to the success or failure of a company and nothing is more affected by the digital transformation. That’s why, as former Accenture CEO Nanterme emphasizes, leadership quality and corporate culture are especially important in this time of upheaval. These must adapt to current developments and be rethought.

A so-called digital leader can actively shape and organize this change in the company and support employees in the process. Despite the recognizable benefits and effectiveness of this leadership style, it has regrettably still not been established in a sufficient number of companies. That’s why it’s time to take another closer look at the topic ofdigital leadership. We’ll give you an overview of the most important information on the topic and tell you what skills are important for managers in the digital age.

Then the only question is: Do you have what it takes to be a digital leader?


When it comes to digital transformation, there is a huge discrepancy between aspirations and reality at management level. Managing directors and CEOs are aware of the importance of digitization. Appropriate leadership methods and competencies are rated as important. However, if we look at the implementation of the measures prioritized in theory, the result is sobering(source). Deloitte ‘s Human Capital Trend Study 2023 concurs. This also concluded that 59% of respondents believe that the focus of the next few years will be to achieve workplace redesign. Most respondents agreed that these measures will have a significant impact on the company’s success. However, companies would lack the right talent and skills to implement these measures. The inclusion of innovative technology would also play a major role here, but according to 22% of respondents, this is not prioritized enough in the companies. So, in this case, too, these results show the enormous need for consulting in the context of digital transformation.

The digital maturity level of a company depends on where the company is in the digital transformation and says something about the extent to which digital leadership is already pronounced. Is it a start-up that is in the process of being established and needs to find the working methods first? Does the company already digitize existing business processes? Or is the company perhaps already completely digitized? Anyone who needs support in upgrading for digital transformation will find suitable candidates on consultingheads.

What does digital leadership mean? Our definition

Digital leadership, also known as Leadership 4.0, is a new style of leadership that accompanies and drives the digital transformation in one’s own company with the aim of making corporate processes more agile and flexible. As a digital leader, you need to lead by example and are a mix of digital expert and change leader.

Challenges for Digital Leadership

But why do companies need this new form of leader in the first place? There are some developments that pose a challenge to existing leadership models:

  • Pressure to innovate: The smartphone, for example, is nowadays only current for one year until it is replaced by a newer device with better functions. Technologies, disruptive business models and products are developing dynamically and at breakneck speed. The pressure to innovate and change is increasing in all areas of work.
  • Competition: The market situation is becoming more uncertain and competition even more global and intense. After all, the next competitor is just a click away and the motto is: “The winner takes it all.” Digital markets tend to be monopolies, as the economies of scale of the early pioneers are difficult to catch up with.
  • Decentralization and open source: Value creation is decentralized. Many new market players are entering and processes can increasingly already be carried out by the customer himself using digital tools.
  • Knowledge Revolution: Data is growing exponentially and collective knowledge is becoming more important. Digital platforms and marketplaces create transparency, offer more choice and better service to customers.
  • Internal communication: Flexible working models, such as virtual workplaces in different time zones, are changing communication.
  • Changing employees: Not only the product market has a fast rhythm, but also the labor market. It is becoming increasingly difficult to retain good employees. There is a rapid change of employees as well as competitors and market situation.

The three main elements of digital leadership

You should always consider the following three pillars when making your decisions: Employees, Company and Technology (MUT).

Employee (Work Design)

You create a work atmosphere(work design) that strengthens the productivity and satisfaction of the employees. You actively involve each individual in the transformation process and try to win them over to the topic so that they can develop their full potential.

See also: The VOPA+ model for productive and satisfied employees

Company (Business Design)

You have a vision for the digital future of the company and provide clear direction. As a digital leader, you are responsible for new organizational structures(business design) that ensure that companies can react quickly and agilely to changes. Only through agility will you manage to guide your company through the digital transformation.

Technology (Customer Needs Design)

You know the latest trends and make the company future-proof against competitors in the digital age. You will also be committed to absolute customer centricity (Customer Needs Design) in the development of new technologies. Testing prototypes and collecting and analyzing Big Data about customers helps to predict customer behavior and quickly develop the business model.

"Digital leadership ultimately means pursuing absolute user centricity."

Video: Efficient leadership in the digital age

Digital Leadership Models & Leadership Styles

The digital leader can take their cue from existing models and leadership styles.

The VOPA+ model for productive and satisfied employees

The VOPA+ model describes the type of collaboration and atmosphere in a company that the digital leader should ensure is implemented. This is about networking (V), openness (O), participation (P) and agility (A). These four elements can only be implemented on the basis of trust (+). Together they strengthen the productivity and satisfaction of the employees.

  • Networking: All employees should be networked with each other so that exchange and collaboration can take place as easily and effectively as possible. This includes internal social media, virtual communities and digital information platforms that any relevant employee can access at any time.
  • Openness: Employees live openness by actively providing and sharing information to achieve the best possible results.
  • Participation: Hierarchies are becoming flatter and employees must be enabled to really get involved in decision-making processes and create their own working environment. This is the only way they can fully exploit their potential and creativity so that their projects become their heart’s work.
  • Agility: The more agile a system is, the faster and more effectively it can respond. This is also reflected when managers encourage autonomous work and tolerate mistakes. Flexible working hours, home or remote office should make working more flexible and pleasant for employees.

The SMART Model for the Digital Leader

Since employees are given more responsibility under the new management style, as a digital leader you must ensure that you set goals together. It is not about control, but about orientation for the employees and the company. The ultimate goal is to digitally transform your organization and make it agile. But it doesn’t happen overnight, because there are many milestones to reach along the way. To define these goals, the SMART model can help you:

  • Specific: As a digital leader, you should define goals with your employees as clearly and concretely as possible. This way, you ensure that everyone understands the goals and can effectively collaborate on their implementation.
  • Measurable: You should also determine qualitative and quantitative metrics for the goals. This way you can measure your success and detect errors as early as possible.
  • Attractive: Digital leadership only works if your employees accept the new leadership style. You must therefore convince them of the benefits and make it worth their while to achieve the goals you have set.
  • Realistic: The goals should of course be realistic and can be implemented with the available resources. Anything else leads to frustration and a bad working atmosphere.
  • Scheduled: What should be done by when? The time frame for the agreed goals should also be defined so that an effective result can be achieved.

Leadership styles for the digital leader

There is no one perfect leadership style, but as a leader you can get the best out of your employees in very different ways. It depends on you, on your team and on the situation. In theory, a distinction is made between nine different styles:

Because of the known challenges, digital leadership usually focuses on communication and collaboration across functions, which tends to mean a participatory style. But, of course, it is important, as always, to respond to the level and personality of the employee. Beginners need to be guided more than experienced employees, just as an insecure type needs to be guided more than a confident one.

Leadership styles for the digital leader

There are two ways in which the role of digital leader can be filled: Either the CEO takes it on personally or he or she seeks support. Through consultingheads, top candidates who can bring their digital mindset to the company are placed with companies at low cost. Depending on the industry, different leader positions may be appropriate. For example, the CMO may be appropriate for marketing- and product-driven industries such as retail. For technology-driven industries, the CIO or CTO is a better fit. However, a new leadership position can also be created, for example the Chief Digital Officer (CDO).

In any case, the digital leader acts as a link within the entire organization and connects all executives, board members and employees with each other. It creates a clear vision for the entire company and brings about the necessary changes in the organization to master the mission ahead. Deloitte compares the role of the digital leader to a conductor of a symphony orchestra (“Symphonic C-Suite“). The members and employees are masters of their art and experts in their field. They work together, finding a common sound, inspired by an empathic conductor personality who leads them.

However, the role of the CDO is in most cases only a temporary one, as the primary task is to transform the company into the digital age. Once this mission is accomplished, the CDO’s responsibilities will also change. If he has succeeded in building up new companies and lines of business with the transformation, he will subsequently either take over the management of these or assume a senior position in the area of business development and innovation. This will then eventually change its title.

Competencies and characteristics of a digital leader

As a digital leader, you should be able to demonstrate certain competencies. These are, on the one hand, so-called “digital skills”, i.e. expertise in digital technologies. On the other hand, you should also possess certain qualities. First of all, this includes a “digital mindset“, i.e. a “digital-first way of thinking“, which allows you to favor new interactive and interdisciplinary innovations and ways of thinking. You’ll also need to bring social skills and leadership qualities to the table, as you’ll need to take your people with you on the journey of digital transformation.

Overall, we have identified the following six key competency areas of a digital leader:

Digital competence & continuing education

Specialist and industry knowledge should be a matter of course for you as a digital leader. It helps if you have work experience at digital companies (e.g. Google, Apple, Facebook, Amazon), technology companies (e.g. SAP, Microsoft, Adobe) or in IT consulting.

Regardless, you should always be up to date with innovations and change in the digital world. You should use digital tools yourself at all levels, be passionate about digital and want to deal with the topics around the clock, i.e. also in your private life. The main focus is on the following digital technologies:

  • Artificial intelligence
  • Big Data, Interpretation & Decisions
  • Internet of Things
  • Cloud computing
  • Mobile
  • E-commerce
  • Online marketing
  • Social media

It is of great importance that you not only keep an eye on your own training, but also on that of your employees. You should share your knowledge with them and find suitable external workshops and training opportunities. The digital maturity of a company depends not only on how much is invested in the technological infrastructure, but also in the training of its employees (source).

Positive error culture: courage & willingness to take risks

As a digital leader, it’s important that you act as a role model and be open about your mistakes. A positive culture of error is an essential element of digital leadership. This means that mistakes should not be seen as something negative, but as opportunities to learn from them.

As a result, employees can throw new ideas into the room and discuss them without fear or inhibition. People no longer cling to old structures for fear of making the wrong decisions and can give more room to innovations. Courageous decisions are essential, even if they involve risks. Only in this way can companies withstand rapid change and cross borders to new business models, groups and partnership ecosystems

Teamwork & Communication

Nowadays, the company alone is not enough to retain employees. Due to fast-paced change and digital transformation, people are more dependent than ever on social structures and a sense of teamwork, even in their workplace. Here, as a digital leader, you have a very crucial role that requires a high level of social competence. You are responsible for developing this important team feeling among all employees, so that communication can be open and there is trust within the team. This point is extremely important, especially for the younger generation.

To achieve this, you can use certain approaches, such as implementing a feedback culture or establishing common core values that your team can identify with. But most importantly, you must lead by example. What does it mean?

  • You yourself must communicate openly and honestly with each team member.
  • You yourself must give trust and empathy to each team member. Let them work independently so that they can develop freely.
  • You must be self-motivated and confident to face new challenges and changes.

Only then can you expect these points from your employees and ensure that they accept digital processes and transformations better. As a digital leader, you must be able to demonstrate these leadership skills, social competence and a positive attitude. In the best case, you will then also manage to retain employees, even if their jobs disappear due to digital transformation. Because motivated and self-reliant team members are not afraid of change, but see it as an opportunity to develop further.

Team Building: Identifying Talent & Creating Teams

Companies are made up of people who can differ from each other in many ways – whether it’s their age, work experience, time with the company, backgrounds, values, ideas or ways of working. An agile company takes advantage of this diversity by setting up flexible teams. If you are looking for qualified employees for your team, consultingheads offers a suitable candidate pool.

As a digital leader, you must be able to assemble a new, competent and diverse team, depending on the problem, that complements each other and can thus bring about the best possible result. You achieve this by never losing touch with your employees and by supporting and organizing the networking of different teams. To do this, you need an understanding of diversity and must be able to recognize and develop talents

Strategy & Vision

In digital transformation, you face the problem that even though things have worked in the short term, they may soon no longer be the right way to do things. Therefore, it is important that you always keep an overview, a kind of helicopter perspective, of the long-term strategy, your vision, your employees, the market and the competition.

You should also demonstrate a certain talent for quickly recognizing trends and being able to make forward-looking predictions. That means you should have a sense of which trends are short-lived and which may prove disruptive to your own business model. As a digital leader, you provide orientation and are able to think and act in a holistic and visionary way.

Flexibility, Dynamism & Innovation

Agility and flexibility are the keywords of digital transformation, and that’s exactly what you should embody as a digital leader. To even develop innovations before they turn into trends, you need creativity and the ability to think disruptively, especially in terms of new processes and business models. Because it’s up to you to make sure the company stays one step ahead of the competition.

As a good example, you lead the way with dynamism and a desire for change. This is especially important as you will need to work with your team to test different options and respond dynamically to change so that you can drive innovation. You must therefore by no means cling to old structures that hinder digital transformation.

Difference between digital leadership and traditional leadership

Digital Leadership Traditional leadership

Integrative & temporary: Digital leaders network the competencies of employees and, depending on the situation, also take on tasks themselves.

Hierarchy-oriented & permanent: Managers define permanent hierarchy, responsibilities and authorities.

Principles & process: Digital leaders operate within binding principles and processes that can be reviewed.

Position & Hierarchy: Managers have formal power and can make final decisions.

Position & Hierarchy: Managers have formal power and can make final decisions.

Delegation & Control: Managers control assignments, delegate tasks and evaluate results. Focus on the "how."

Real-time & complete: Leadership creates high transparency and availability of information. Employees should be responsible for keeping up to date with the latest developments.

In stages & selective: Information is regularly distributed across the hierarchy levels. Relevance and bring responsibility lies with the executives in the hierarchy.

Collective & continuous: Cooperation, behavior of the person as well as quality of results count. Feedback is provided collectively within the team.

Individual: Individual performance and individual goals count. Supervision and feedback is provided by the direct supervisor in one-on-one meetings.

Learning progress & support: Digital leaders ensure binding processes for learning from mistakes and for productive clarification of conflicts.

Rules & Consequences: Rules are designed to avoid mistakes and conflicts. Compliance is monitored and consequences follow for violations.

Innovation & growth: A high level of willingness and ability to embrace ongoing change promotes independent action - and vice versa.

Efficiency & optimization: Processes are to be optimized quickly with minimized risk. Scope for creativity is scarce, change is avoided.

Digital evolution instead of revolution

Strategy, communication and dynamism – these are all aspects that were already known as important leadership qualities twenty years ago. So you might think that this “new” style of leadership isn’t actually all that new. Nevertheless, with the new ways of working and market developments, the old familiar points are more important than ever. There are also isolated aspects that were probably not on the radar screen at the time (keyword “Big Data” or “New Work“).

Both digital transformation and the way we manage teams are not about doing everything differently overnight. It is not a finite process that can be completed – not a digital revolution, but rather a digital evolution: a step-by-step development, a constant questioning and gathering of feedback. But what then develops in the long term is revolutionary. Old ways of thinking and processes are questioned, partly replaced by completely different ones and in the end a completely different working world emerges.


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