Tech-Ready Leaders: A Non-Negotiable for Organizational Success

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November 14, 2022
13 min read
Technology and InnovationTransformation InnovationConsumerEducationFinancial ServicesGovernmentHealthcareIndustrialNonprofitPrivate CapitalProfessional ServicesSocial ImpactTechnologyVenture Capital and GrowthBoard and CEO AdvisoryTechnology, Data, and DigitalExecutive SearchC-Suite SuccessionAssessment and Benchmarking
Executive summary
Unlocking technology advantage requires leadership to view business priorities and challenges through a technology lens.
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Business objectives can no longer be achieved without technology. As organizations and leaders continue to navigate evolving uncertainties across the business landscape, those who have successfully integrated technology into their DNA and implemented tech-enabled growth strategies have risen to the top.

  •  Carrefour has successfully completed its first iteration of digital transformation, tripling its food e-commerce activity in the past four years. The organization is now moving into the next phase, building its business around a “data-centric, digital first” approach, focusing on accelerating e-commerce, ramping up data and retail media, digitizing financial services, and digitally transforming traditional retail operations.1
  • Novartis is transforming its identity to become “the leading medicines company powered by data science and digital technologies.” To fully leverage new cloud technology, machine learning, and data integration processes, it partnered frontline business employees with data scientists and encouraged teams to adopt agile methods to drive a range of innovation initiatives.2

Establishing competitive advantage through technology is not a milestone or a stand-alone, static event; it is an ongoing effort that impacts all functions and processes across the business value chain. As competitive forces evolve and advantages from technology scale the business, organizations need to keep moving through an upward spiral of growth and innovation: rapidly innovating, embedding innovation to achieve the necessary scale and maturity in service/product lines or markets, and repeating this cycle with the next innovations. This concept comes naturally for “tech-first businesses,” but for organizations transforming to become a “tech-enabled business,” such as Carrefour and Novartis, it is important to invest in technological tools and platforms, enhance cultures to generate innovation, and develop technology readiness amongst leadership.

In short, the foundation for “technology advantage” is built on the premise that business priorities and challenges need to be viewed through a technology lens. To understand what differentiates organizations that are well prepared to face and capitalize on technological change, Russell Reynolds Associates used data from our 2022 Global Leadership Monitor, a survey of over 1,500 executives across the globe and across industries, to measure technology readiness in leadership.

There are two components to technology readiness in leadership: technology mindset and technology capabilities. Technology mindset refers to the attitude and behaviors that leaders operate under for success and is measured by looking at whether leaders believe their organization engages constructively with the failure of digital technologies, how it pivots to test new solutions, and whether leaders productively disrupt the status-quo and are motivated to take risks with digital technologies to stay competitive. Technology capability is defined as whether the organization has the right talent and/or the ability to attract the right talent for its digital journey, and whether the executive team has a strong understanding of digital technologies and business transformation.

 

For additional details on technology mindset and technology capabilities, please refer to the methodology section.

Technology readiness in leadership is a non-negotiable for successful business transformation and market competition

Technology readiness directly impacts organizational and leadership preparedness to face technology disruption. Over half of leaders at organizations with low technology readiness felt they were behind in terms of adopting digital technology, whereas less than a third of leaders at organizations with high technology readiness felt this market pressure. Having a high level of technology readiness will enable organizations to adopt new technology quickly, positioning them to be on pace with, if not ahead of, market forces.

Similarly, of the leaders identifying their organizations as tech-first businesses, over half report high technology readiness. In this era when organizations are striving to operate under the paradigm of “every company is a technology company,” it is even more important to recognize that only those organizations with technology-ready leaders are able to redefine their identify. In order to become truly tech-enabled, organizations need to pivot, ensuring their business models, growth strategies, and most importantly leaders leverage technology.

Figure 1. Technology readiness in leadership is critical for transformation

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Harnessing the advantages of technology is an ongoing process

Leaders at organizations who believe they are ready for technological change grasp the importance of operating with a technology mindset. It is perhaps unsurprising that leaders at technologically prepared organizations are approximately twice as likely to disrupt the status quo and take risks with digital technologies to stay ahead of competitors, and nearly three times as likely to engage constructively with the failure of digital technologies and pivot quickly to test new solutions, than leaders at unprepared organizations. However, the majority of leaders – both prepared (60%) and unprepared (86%) – do not feel confident about redirecting perceived failures and pursuing new possibilities. To further build out this mindset, leaders need to challenge themselves by not only embracing ‘trial and error’ processes as new technologies are implemented, but also anticipating the reality of unexpected consequences.

This presents an opportunity to reframe perceived failure. Most organizational failures occur due to the inherent uncertainty of work and complexity of new digital systems. Leaders need to feel empowered to create and reinforce a culture that moves away from the blame game, and instead, “encourages intelligent failures at the frontier.” These types of failures can be positive, with the potential to “provide valuable new knowledge that can help organizations leap ahead of the competition and ensure its future growth.”3

Once leaders have strengthened their technology mindset, they will have a better understanding of their organization’s technology maturity, how it compares to peer organizations in the market, and how to further invest into technology capabilities. Prepared organizations are focused on elevating their formal technology governance frameworks, revising as new market demands and customer needs arise. The majority of prepared organizations have senior leaders – not just the designated technology executive – who equally own these new adaptations, continuously identifying how to integrate technology into customer interactions, growth and strategy plans, and operations.

However, whether they feel prepared or not for technological change, organizations feel least confident in strategies to identify and retain top technology talent. While there’s no one correct answer across companies, developing these strategies need to be prioritized; attracting and retaining the right technology talent is the backbone of unlocking its advantages.

Figure 2. Harnessing technology advantage is a work in progress

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Executive team health and technology readiness can cyclically impact each other

In today’s evolving world of work, where leaders and employees alike are seeking new responsibilities and a different leadership style, it is important for senior leadership to cultivate new ways of working, strategically investing in innovative initiatives, processes, and capabilities. In doing so, senior leadership can demonstrate that they recognize the changing landscape and are evolving to address new employee and business demands, laying the groundwork for the ability to pivot and experiment through technology.

Executive team health is measured by confidence in leadership behavior and confidence in leadership capabilities. Leadership behavior is defined as whether the leadership team effectively works together, embraces change, and role models the right culture and behaviors. Leadership capability is defined as whether the leadership team has the right capabilities to lead successfully, a strong grasp of competitive industry dynamics, and access to the right information to support strong decision making.

 

The high correlation between leadership capability and technology capability is not surprising, but still may not be highlighted often enough. Leaders with low confidence in their leadership team’s capabilities are almost three times more likely to believe their organizations have a low technology mindset (Figure 3a) and 5.5 times more likely to believe their organizations have low technology capabilities (Figure 3b). Leaders who do not see their leadership team as having a strong grasp of competitive dynamics or access to the right information are right to question whether technology is being leveraged to lead the organization, as harnessing data and synthesizing large quantities of information are non-negotiables for strategic decision-making. As machine learning and cloud computing quickly become the standard, leadership teams cannot afford to make decisions based on poor data or inadequate tools.

In order to implement innovative and continuous changes—particularly across large technology investments—the executive team needs to embrace positive and healthy behaviors, including cultivating growth mindsets, trust in one’s peers, cross-collaboration, engagement, learning, inspiration, and curiosity. These behaviors are key to building confidence, as leaders who lack said confidence in their team’s behavior are almost four times more likely to believe their organizations have low technology readiness, both in technology mindset and technology capability (Figure 3c). If these foundational “executive team health” elements are not clearly felt throughout the organization, leaders are more likely to believe that investments in technology transformation are not being made.

Figure 3. Low executive team health affects technology readiness

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Executive teams that operate with priorities such as having access to the right information for strong decision-making, having a strong grasp of market dynamics, working effectively as a team, and effectively embracing change are better positioned to increase technology readiness.

Similarly, leaders at organizations with high technology readiness are more likely to have high confidence in their executive team. As organizations improve executive team health, technology readiness can be expected to steadily increase, and in turn, continue to advance leadership capability and behavior.

 

How to develop technology readiness in leadership

For leaders to continuously improve technology mindset and culture, deepen understanding in the technology talent market, and build innovative technology capabilities, we highlight the following:

1. Stay connected to the technology ecosystem

Given the rapid evolution and fluidity of technology transformation, it is important for organizations to stay connected across the growth curve. Early stage, high growth companies provide valuable case studies for organizations seeking to become tech-enabled businesses, bringing lessons learned around establishing a forward-thinking, growth mindset and culture that is critical for strategic risk-taking and building new products/services. In turn, mature, large cap organizations can demonstrate how to scale the business, evolving the business model and leadership team at important inflection points across the growth and transformation journey.

Talent also moves fluidly throughout the technology ecosystem and beyond – in 2021, almost half (49%) were interested in making a move to a different industry. Depending on the short-term needs and long-term technology strategy, organizations may need to attract talent from different parts of the technology spectrum (see ‘The spectrum of talent considerations’ section from our recent research, Aligning Technology and Customer Functions in the Post-Pandemic Paradigm) across various maturity stages. Staying close to the technology ecosystem will allow organizations to understand what is top of mind for various technology roles, and how new responsibilities and capabilities are evolving.

2. Operate with a technology mindset

Investing into technology readiness begins by having a senior leadership team that fully understands the evolution of the business landscape through a technology perspective: that only strategies that effectively leverage technologies can enhance customer experience, implement data-based insights, increase profitable growth, and build an agile, cross-functional, and innovative culture. The senior leadership team needs to naturally operate with a technology mindset, understand how to respond well to failures, reinforce risk-taking, model experimentation and active learning, and integrate past lessons into future planning.

As senior leadership builds upon their technology mindset, the organization can cultivate an agile and innovative culture that engages constructively with failure, pivots quickly to test new solutions, and encourages learning at the cutting-edge of technology. Organizations will then be well positioned to invest into technology talent and capabilities, continuously improving on evolving responsibilities, organizational culture, and leadership style to attract and retain the right technology talent—all critical for successfully transforming into a tech-enabled business.

 

Methodology

Russell Reynolds Associate’s 2022 Global Leadership Monitor (GLM) surveyed 1,590 global executives and board directors on key threats to organizational health and leadership preparedness to face them, confidence in leadership, and leaders’ career attitudes and engagement. This year’s survey contained a specific set of questions aimed at measuring technology readiness, answered by 954 CEOs, C-suite leaders, and next generation leaders. From survey questions on executive team health (which used a 5 point agreement scale), we created two composite measures of confidence in leadership (leadership behavior and leadership capability). From survey questions on technology readiness (which used a 5 point agreement scale), we created composite measures of technology mindset and technology capability. Scores of 3.67 or above are categorized as “high” since they indicate agreement (i.e. positive sentiment) on average across the items making up the measure.

  • The technology mindset variable was created from the following survey questions:
  • My organization engages constructively with the failure of digital technologies, and pivots quickly to test new solutions
  • Leaders are not afraid to disrupt the status-quo
  • Leaders are motivated to take risks with digital technologies to stay ahead of our competitors
  • The technology capability variable was created from the following survey questions:
  • We have the right talent currently to drive our digital journey
  • We are able to attract the right talent to drive our digital journey
  • The executive team has a strong understanding of digital technologies and how our business must transform
  • The confidence in leadership behavior variable was created from the following survey questions:
  • My organization’s executive leadership team works together effectively as a team
  • My organization’s executive leadership team effectively embraces change
  • My organization’s executive leadership team role models the right culture and behaviors
  • The confidence in leadership capability variable was created from the following survey questions:
  • My organization’s executive leadership team has the right capabilities to lead the organization successfully
  • My organization’s executive leadership team has a strong grasp of the competitive dynamics in my industry
  • My organization’s executive leadership team has access to the right information to support strong decision making

 


 

Authors

Joy Tan and Tom Handcock of RRA’s Center for Leadership Insight conducted the analysis and authored this report.

Learn more about the authors and The Center for Leadership Insight

The authors wish to thank the 1,500+ leaders from RRA’s global network who completed the 2022 Global Leadership Monitor. Their responses to the survey have contributed greatly to our understanding of harnessing the technology advantage and accelerating technology readiness in leadership.

The authors would also like to thank several colleagues whose perspective helped shape the findings:

Jean-Philippe Daoust is a member of Russell Reynolds Associates’ Technology Officers capabilities. He is based in Montreal.
Agnes Greaves co-leads Russell Reynolds Associates’ Core & Growth Technology capabilities. She is based in London.
Tristan Jervis leads Russell Reynolds Associates’ Technology Officers capabilities. He is based in London.
Dana Landis leads Russell Reynolds Associates’ Technology Assessment capabilities. She is based in San Francisco.

 

External References

1 Carrefour Aims to be a Global Leader in Digital Retail. Business Wire, November 9, 2021.
2 Democratizing Transformation. Iansiti, Marco, Satya Nadella. Harvard Business Review, June 2022.
3 Strategies for Learning from Failure.Edmondson, Amy C. Harvard Business Review, April 2011.