Leadership in the Digital Age

Leadership styles change over time – that is for sure. In the 1980s, the focus was on optimization through lean processes. The 1990s were dominated by CEOs with strong sales and marketing backgrounds, which was particularly evident in the telecommunications industry, which was developing strongly at that time. The focus was on growth and investment. This was followed by the need for consolidation and streamlining, so the controllers took over in 2000.

For the next generation of CEOs, I hypothesize that technical backgrounds will become relevant, especially IT managers. It’s a new IT generation that introduced methods to cope with rapidly changing environments. Agile, Rapid Prototyping, Scrum, Trial-and-Error and other iterative methods – to name just a few. This becomes apparent when you look at the CEOs of the typical “digital giants”, where the fact that IT experts become bosses is not a big surprise.

Leadership in Transition

The changes outlined above and the resulting enormous increase in complexity have resulted in established practices no longer being sufficient. The importance of speed has also increased considerably – catchword: Time2Market Accelaration. However, there are usually no standard products and no standardised procedures. Therefore, skills must be bundled into competencies, formed into a team and orchestrated into results in order to tread pioneering paths. However, these pioneering approaches often generate uncertainty, which must be tackled with trust and motivation. The challenge is not only a change of existing processes, but also a further development of the mindset and the culture. Ideally, this begins in the management.

Differentiation Between Management and Leadership

“If management means climbing a ladder as efficiently and effectively as possible, then leadership means putting the ladder on the right wall.” For me, this sentence describes the quintessence of the difference between management and leadership. I consider this differentiation to be extremely important in order to be able to deal with conflicting requirements and to resolve the tension between security and reliability and creativity, innovation and ambiguity.

Gartner also recommends this approach and describes it with two aspects:

  1. “Pace-layered Application Strategy”: Systems, applications are divided into “Systems of Records” (Finance, Security, etc.) and “Systems of Innovations” (Digital Touchpoints, Customer Services, etc.). Some are mainly developed based on Waterfall and others on Agile.
  2. “Bimodal IT and Organization”: two organizational styles operating at different speeds and in different cultures. Establishment of the CDO role and assignment of the ” Digital Transformation ” of the company.

Differentiation as Opportunity and Challenge

Differentiation represents an additional challenge for the management, since everything that is shared must be brought together again in the end – organizationally, hierarchically and often also technically. This intensifies the leadership and architectural demands placed on us. The “sandwich management” times, in which there was a clear assignment, which was then implemented by the team within a secured frame of time and budget, are increasingly disappearing. Today, the assignment from the top can be as follows: “Save the company – and please do that quickly”. The team then answers: “We don’t know whether it works this way”. That’s where leadership is needed. On the one hand, the stakeholders need to be managed and on the other hand, the team needs to be strengthened through trust and motivation.

If your team asks you all kinds of questions and you don’t know how to solve them, you have to be able to authentically say: ” We may don’t know the solution yet, but I believe in the capabilities of each of you and in the development of new skills within our team. So I know we will make it! And now we will go home, take a break and internalize this phase of uncertainty. Because as soon as we will make it, we will realize that this was the exact moment that really made this matter big for all of us. The outcome of those moments are stories that you can tell your grandchildren one day”.

Further Challenges

“War For Talents and Resources” is a catchphrase that describes today’s job market very accurately. It is no longer enough to place job advertisements listing the employer’s advantages in order to get the required employees with a high level of expertise. The increasing demand for expert knowledge and the increasing shortage of skilled workers have reduced the “influx” and given applicants and providers more selection options. By now, the personnel departments have already discovered that a roll-up and ballpoint pens in a goodie bag at the trade fair are unlikely to be enough to inspire the high quality workforce. This is where leadership is needed, as well: back in the day, managers used to take 1-3 “trusted experts” from their network with them when they got started. The leader of today succeeds in making experts want to work in his organization. He puts the spotlight on his team and makes himself visible and accessible to talents (for example via social media).

Furthermore, a generation change is taking place. This is due to the wave of retirements and, above all, to the greatly changed demands of the digital natives and the millennials. Young people no longer have the prospect of working in one and the same company for decades until retirement and are planning on working for a company for a maximum of 5-10 years. The expectation placed on the general conditions and the demand for a work-life balance force employers to become more open, diverse and individual. Shortcomings in this area can rarely be compensated by an increased salary in the form of “compensation for pain and suffering”.

Christoph Schmutz
CIO and Managing Partner of the CEYOND Group

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