Unlocking leadership capabilities in the digital transformation journey

• Specific leadership capabilities needed across four digital transformation phases
• Leadership needs to be aligned toward data-driven decisions in mature stage

The launch of the Malaysia Digital Economic Blueprint, or MyDigital, on 19th February 2021 upheld the digital economy's role as a key driver in pushing forward Malaysia’s economic recovery. By 2025, Malaysia expects the digital economy to contribute 22.6% to its GDP by creating 500,000 new jobs while expecting 100% of households to enjoy Internet access which in turn will enable all youth to have complete access to an online learning environment.

Malaysia is also keen to attract the business sector to invest RM70 billion into its national digitalization agenda, which is expected to foster e-Commerce adoption by an expected 875,000 micro, small, and medium-sized enterprises. The MyDigital agenda aims to facilitate the creation of high-value jobs, innovative and productive firms, and narrowing the digital divide in the country.

We see this as yet another milestone in Malaysia's digital transformation evolution. 

Digital transformation integrates digital technology into core aspects of a business; so much so, it changes the way a company operates and delivers value to its customers. Digital transformation also puts an existing ecosystem (i.e., society, industry, market) out of balance, thus facilitating a new paradigm. Our contention here is that a new level of talent requirement, competitiveness, market dynamics, and financial trajectory happens during such a transformation. The value of digital transformation becomes evident when, through leadership support, the transformation achieves a given target. This perspective of the digital transformation journey is characterized by unique and sequential phases, with their distinctive characteristics and structure.

Through research we conducted across 645 Malaysian corporations, with 314 private limited and 331 being of the micro (21%), small (30%), medium (24%), and large-sized corporations (25%), we have uncovered the significance of specific leadership capabilities across four digital transformation phases.

Starting with Start, in this phase, firms strategise about digital transformation as per the needs of the company’s. The thinking and decision processes related to the transformation objective, resources, benchmarks, and readiness for the transformation journey occur.  

Next we have Seek: in this phase, there will be a culmination of intelligence toward a better prospect, with a continuous review of decisions, establishing the required roles and functionalities, and top management's sustained commitment. 

Integrate: This phase represents the expansion of the digital talent base and customers' inflow through digital platforms. The firm also makes data-driven business decisions and fosters widespread empowerment of decisions. The C-suite executives will also be significantly involved. 

The 4th phase, Mature involves the migration of business processes comprehensively to a digital platform across functionalities. Here, technology has permeated into core business processes, creating data ecosystems that enable collaboration with stakeholders.

Our research led us to discover a nexus between leadership capabilities and the four digital transformation phases outlined.

Leadership capabilities in the Start phase

Three specific leadership capabilities are required at the Start phase of a digital transformation journey:

1. A leader would need to seek and deploy resources through many channels, as a unilateral resourcing approach could be risky. Sluggish leadership decisions on resourcing may not augur well, implying the need for swift decisions toward resources management. For instance, market data should be obtained from both internal and external sources, leading to dynamic and personalised product development.
2. A leader needs to have a holistic view of the talent supply funnel across the transformation journey, which could cause delays and complications.
3. A leader's personal digital maturity needs to be high as it helps a leader comprehend the nexus between technologies and business functionalities.

It is worth implying that digital maturity is innate within personalities. For example, a business leader with curiosity to learn and enhance their skills should not have trouble reaching higher digital maturity and developing evolving skills needed as the transformation happens. Higher-order digital maturity also happens through lessons gleaned from failure since past failure becomes a good learning ground on technologies and their dynamics.  

Leadership capabilities in the Seek phase

In the Seek phase, two leadership capabilities are pivotal: having an architectural view of digital threats, opportunities, and digital entrepreneurship traits that empower others. The Seek phase would have established the underlying structures and processes for transformation. In this phase, a leader needs to design the transformational structure by understanding the threats and opportunities presented within the digital environment, which would assist in the transformation journey.

Further, digital transformation leadership is also about displaying some level of digital entrepreneurship attributes, exclusively the practice of empowerment (i.e., a delegation of responsibility and authority across functionalities for entrepreneurship growth).

In a general sense, digital entrepreneurship capability is more prevalent today since most leaders tend to hail from a younger age group and display a more transparent and trusting attitude for others to carry out entrepreneurial opportunities. The behavior of trusting and empowering with responsibility is both an inherent attitude and a capability to shape through leadership concentration. 

Leadership capabilities in the Integrate phase

Digital leadership capabilities at this phase are about having a digital-savvy business nuance, hybrid people-centric skills, and having an architectural view of talents (which is about having a holistic understanding of the evolving nature of the skills required to sustain the transformation journey).

The Integrate phase would be quite critical, as the execution of core transformation planning happens. Leadership practices at this phase must be supported with digital business-centric nuances that promote sustained transformation. For example, widespread digital forms and documents should be in place to promote efficient information processing. Besides, a leader must communicate and manage teams and other stakeholders through suitable digital tools and applications that promote a balanced work-life environment and the welfare of employees.

Such capability needs to be supported by having an overarching view of the required talent and skills across business functionalities to asses if the needed skills are available in-house or have to be acquired externally. For example, the digital skills matrix needs to be mapped to determine training and development needs and talent resourcing approaches.  

Leadership capabilities in the Mature phase

The leadership capabilities of value protection and value creation are required in the Mature phase. As the organization is maturing in its digital transformation and outputs are experienced, leadership needs to be aligned toward data-driven decisions, thus creating an efficient funnel to protect business value.

For example, a systematic monitoring process, driven by data, would help to maintain quality product/service offering to the targeted market. This should be complemented with a hybrid talent management process and system.

Finally, digital leadership in the Mature phase requires the ability to create value through digital platforms, where, in this phase, the platforms are no longer just an application or a tool but rather a digitally connected system that brings value to both organizations and customers. Therefore, leadership here must be about producing and enhancing values, such as a digitally connected feedback mechanism to enhance product/service values. 

Leadership key to the digital transformation journey

While digital transformation is a buzzword today, our research clearly shows that leaders must acknowledge and practice unique and dynamic leadership attributes that can contribute to completing a digital transformation journey across its four phases.  

Professor Ir. Ts. Dr. Vinesh Thiruchelvam is the Deputy Vice Chancellor of Asia Pacific University (APU) and Chief Innovation Officer (APIIT Education Group). He is a scholar specialising in power electronics & drives, AI in reliability engineering, sustainable development via IOT applications and data analytics for business operation optimizations. 

Murugappan Subramaniam is a Ph.D. candidate (final year) with Asia Pacific University (APU), specialising in digital leadership. He leads the Human Capital Division at Malaysian Communication Multimedia Commission (MCMC).