7 Critical Leadership Capabilities for Digital Transformations

A business meeting discussing leadership capabilities for digital transformations

We’re on the precipice of a modern technological revolution with AI. Over a quarter of workers already use generative AI at least occasionally for their job, Deloitte reports, and that’s only the beginning. According to the Boston Consulting Group (BCG), 80% of organizations plan to accelerate their digital transformations. An organization’s leadership bench will heavily influence whether or not these transformation initiatives succeed; research from groups like BCG, McKinsey, and Harvard Business Review indicates that leaders can make or break digital transformations. 

Here are 7 must-have capabilities leaders need to drive successful digital transformations:

Strategic thinking

Transformations are more than bold visions for a company’s future; they’re complete revisions of how an organization operates. Their scope inherently brings complexity and unforeseen challenges. Leaders who are able to think strategically can help determine the tradeoffs, risks, and unintended consequences of digital transformation and apply critical thinking to reduce or mitigate these.

Further, strategically-minded leaders have greater capacity to adapt, essential for transformation and its potential for unpredictable challenges. When leaders adapt and “deal with individual challenges without losing sight of the broader goals” they are more likely to lead transformation initiatives to fruition, according to BCG.

Self-Awareness

Leaders with high self-awareness have a greater understanding of their internal motivations, behavior patterns, strengths, and weaknesses. In turn, they’re able to comprehend how their actions impact those around them.

Research conducted by EY suggests that “to help their workforce navigate a transformation,” leaders must have the self-awareness to “look inward first and examine their own relationship with change.” Once this relationship is examined, leaders are better equipped to recognize when their behavior impedes transformation and adjust accordingly. Crucial, given that McKinsey found that organizations with leaders who role-modeled the changes required for transformation were 1.6 times more likely to outperform their peers.

Interpersonal skills

Digital transformations that focus solely on technology and not the people charged with implementing it will most likely fail. “Change management is people management,” Debbie Wong, senior vice president of leadership development at Bank of New York Mellon, said in a recent Leadership Live. Organizations looking to accelerate their digital transformations must have leaders who can connect with workers and manage their fears, concerns, and resistance to change.

Leaders must acknowledge the emotional burden transformations pose for employees. In an article published in Harvard Business Review, researchers found that digital transformations were more likely to succeed when leaders provided a culture of trust, psychological safety, and emotional support. Without developing interpersonal skills and emotional intelligence, leaders risk further alienating workers who may already be resistant to change affecting their personal livelihoods.

Influencing others

Tied closely to interpersonal skills, leaders must flex their ability to influence others throughout digital transformations. Not every employee will have the same communication style or reasons for opposing change. Leaders must be able to adjust their approach and style to each in order to ease reluctance to change and earn stakeholder buy-in. 

This willingness to meet others where they are instills trust, a key but often missing component in transformational initiatives. As reported by MIT Sloan, less than half of managers and executives believe in their company’s purpose, indicating that “senior leaders lack credibility when it comes to aligning their organizations around a shared vision.” When employees question their organization’s values and intentions, strategic decisions — especially those that require change — are met with skepticism. Leaders must establish trust by flexing their social and communication styles to effectively influence others into sharing their vision of transformation.

Developing others

According to the World Economic Forum, 40% of the workforce may need to reskill within the next three years. While technical development will be needed, Deloitte argues that developing human capabilities such as imagination and curiosity should be the priority. Either way, companies will not be able to simply recruit their way through the AI revolution; they must develop their existing workforce to remain competitive.

Leaders will play a pivotal role in identifying the employees who can drive the most value with development, as well as strategies to address their development needs. The most successful leaders will align developmental opportunities of employees to the strategic needs and plans of the organization while providing timely, specific, and constructive feedback to team members.

Organizational collaboration

By nature, digital transformations are pervasive, affecting the entire organization. As such, leaders must enable organizational collaboration to derive the greatest value. This requires leaders to open communication between teams and functions to both share their team’s needs and expectations and understand those of other departments. Collaborative leaders look for opportunities to partner with others across the organization and have an invested interest in other teams.

Managing change

Strategic thinking, self-awareness, interpersonal skills, influencing others, developing others, and organizational collaboration all interconnect into change management. Leaders who are adept at managing change openly communicate the strategic vision of transformations and help influence team members by connecting the initiative to the company’s values. They establish trust by empowering employees to contribute to the change process and work to remove barriers that hinder the process.

Create agents of change through leadership coaching

“Leaders in AI-first organizations also must be change agents,” McKinsey asserts in its The State of Organizations 2023 report. The report finds that companies with the “biggest bottom-line returns from applied AI are more likely than others to have well-defined capability-building programs.” The consultancy firm recommends capability-building programs that are “tailored to specific institutional or individual skill gaps” with the ability to directly link development outcomes to business impact. 

Sounding Board leadership coaching relies on contextualized vertical development, enabling leaders to expand their capabilities intune with their organizations’ overall strategy and values. Coaches partner with leaders to shift their mindsets and behaviors to support and drive overall business objectives. Progress is tracked and linked to business outcomes using our Leadership Roadmap feature, ensuring that development is measurable and supports organizational goals.

Request a demo of our Dynamic Leader Development Suite and learn how Sounding Board can transform your leaders into effective change agents.

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