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December 2015, 10 minutes

Digital transformation requires professionals to evolve – to anticipate and manage smart systems that outperform us on many tasks. As Geoff Colvin wrote [source]:

" If the prospect sounds worrying, it shouldn’t… it’s wonderful news.

Pressing reasons require leaders to understand the implications of digital advances

Digital is reshaping the factors that determine successful leadership. As author Nicholas Carr notes in ‘The Glass Cage’ [source]: “We’ll adapt our own work, behaviour, and skills to the capabilities and routines of the machines we depend on.”

Paul Daugherty, chief technology officer at Accenture, is clear too [source]: “We’re at the forefront of a major wave of cognitive automation that is disruptive and transformational, and allows clients to radically improve business processes and make better informed business decisions.”

But smart systems’ contributions are less important than how leaders respond to them.

Eric Schmidt, executive chairman of Alphabet, restates what is easily forgotten [source]:

" … we need to keep thinking first and foremost about people’s real needs.

To help put the present in context, we encourage leaders to take the opportunity to consider what preparations they are making now for smart systems. As Richard Waters writes in the FT [source]:

"… this is a moment that won’t recur.

Things are moving fast. In June 2015 the Washington Post heralded IBM’s Watson system’s magnificent advances in healthcare [source]:

"IBM’s computer brain is training alongside doctors to do what they can’t.

Just six months later, in December 2015, the Post noted that a D-Wave 2X ‘quantum computer’ used by a team including NASA, USRA and Google was [source]:

" 100 million times faster than any of today’s machines.

There is poetic licence there [source] – but are the mindsets, knowledge and skills of the leaders who you know abreast of the accelerating capabilities and broadening impacts of smart systems?

Are you asking “What can we do that smart systems cannot do? What do our professionals do uniquely well? What would we aim for next if all the systems worked perfectly?”

Boards must answer those questions to retain the confidence of stakeholders. Such people are already personally empowered by digital change to the extent that each is acquiring various AI assistants and personas, as the billion-dollar not-for-profit start-up OpenAI touches on [source]:

" We believe AI should be an extension of individual human wills …

Trust me, trust my bots. Human values are coming under intense scrutiny as engineers set about deciding whether or not to replicate them. You too can make a chatbot hooked up to IBM Watson [source]. Your chatbot can wreak havoc, as did Microsoft’s [source]. Your lawyer chatbot might need no empathy according to Richard and Daniel Susskind [source]:

" … the role and significance of empathy in the professions is often exaggerated.

However what little empathy there is might fix the human condition in its relative equilibrium, professions and all. Perhaps empathy matters. When thinking and behaviour are given as the dual strands of high performance [source], empathy is given as the superior quality of behaviour (and meta-cognition as that of thinking).

A small example of the trend towards that digital self-empowerment implied by OpenAI is the wave of instant messaging app usage surging past social media networks – and the digital dialogues of those billions of daily users, as data, are rich with indicators and insights which inform, drive, determine and enable further change, not least in users’ behaviours – yours perhaps.

In an enterprise context, such tools simplify and encourage communications (as a tour of the ‘Slack’ product [source] demonstrates). Staff messaging habits exemplify how digital-driven change impacts all areas – productivity, brand awareness, distributed leadership, knowledge management, best practice, training, change management, product development, corporate communications and more. Even conference attendance can be transformed – as Google demonstrated for I/O 2016 [source].

Those busily messaging staff are also a wide and generous gateway to the crowd in the cloud, the greatest foundry for innovation and change. Eagerly observant and inquisitive artificial intelligences intermingle there too, drones staking leadership and ownership claims to new virtual territory that no leader can afford to ignore. At Georgia Tech [source]:

" Students didn’t know their Teaching Assistant was a computer

As Patrick Forth, MD Boston Consulting Group, said in an October 2014 TED talk [source]:

" I think competitive advantage will mean the speed and the effectiveness of your organization’s ability to change.

We encourage professional leaders to consider change a benefit, underpinned by confidence in robust principles, policies and practices, and also to have the mindset and knowledge to live with its uncertainties and surprises – which is why we call this page Agility. Larry Page, CEO, wrote when introducing Alphabet Inc. [source]:

"… you need to be a bit uncomfortable to stay relevant.

We suggest that in 2016 discomfort of that kind goes hand in hand with agile, well-distributed, attentive and knowledge-seeking leadership that grasps the pressing business reasons for thinking through the implications of digital advances. 

Leaders doing this thinking require special skills

The German government aspires to smart factories in its ‘Industry 4.0′ project. By analogy our current dialogues with computers hint at what ‘Services 4.0′ might mean.

Will ‘Leadership 4.0’ be about machines or people? We suggest people, particularly in their collaborations and relationships with clients, artificial intelligences and leadership.

People making strategic decisions have a closing window of opportunity to prepare for and influence what advanced smart systems will do, how they will be deployed, and where people fit. There is a tipping point. Subject specialists who do not integrate the technologies might see technology specialists integrate their subjects.

We suggest that leaders who respond now will be admired for their foresight and willingness to refine a digital mindset. The early ‘Manifesto for Agile Software Development’ might be referenced, and trusted leaders will deploy agility as defined there. Not surprisingly experts at the Center for Information Systems Research at MIT Sloan find that [source]:

"… there is a growing demand for digital leaders … [and] digital leadership is … up to the entire senior management team.

That “entire senior management team” might well have been written as “everyone” just a year later. Everyone has leadership roles now. Forrester Research adds [source]:

"Only 26% of other executives believe their CEO actually owns digital strategy.

Digital transformation is by no means a quick fix. PwC reported in 2014 that 62% of US CEOs had data as a top priority, but in January 2016 still noted that [source]:

"… many of these same CEO’s realize their organizational capabilities to manage the risks around data use are not keeping pace.

In some fields financial outcomes are increasingly moderated by concerns for end-user perceptions. Digital per se has radically changed the role of the individual, the end user, the customer. Startling new digital mechanisms enable the grand broad-based cooperative initiatives that serve and inform this focus on end-user benefits and transparency. The intellectual contributions of all those who take a lead stand out. The vision comes from leaders at all levels – including those who just take the step up to collaborate.

All professionals have a CEO within them and ‘THE CEO REPORT’ from Heidrick & Struggles describes important new leadership qualities [source]:

"… tomorrow’s CEOs (or at least its most successful practitioners) will embody this spirit of growth, learning, and renewal.

Those are not the traditional traits of leadership, as Norman F. Dixon wrote of another field where change and uncertainty suddenly became the norm, in his book ‘On the Psychology of Military Incompetence’ [source]:

"At the top, however, those features of their psychological make-up which assured their ascent may prove sadly incapacitating. Over-control, rigidity, having a ‘closed-mind’, do not lend themselves to the task of fathoming, let alone dealing with, the great uncertainties of war.

Leadership, motivation and behaviour in times of great uncertainty are unusually complex and fluid. Modelling that in software is hard as Grossi, Royakkers and Dignum detail in ‘Organizational structure and responsibility’ [source]. The process highlights how clarity in respect of responsibility is at odds with the typical human behavioural dynamics of professional organisations, but those best organised have the advantage:

" In a nutshell, the less a group of agents is organized, the more blurred becomes the assessment of responsibilities within the group.

We encourage you to consider now whether your organisation is prepared for such changes and whether your selection processes, professional development commitments and organisational structure are advancing people-oriented leadership skills.

Professionals using smart systems require skills not previously prioritised

Leadership aside, new professional skills are prioritised in this new setting – mostly core human skills. Smarter millennial professionals are agile by nature and used to smart systems and artificial intelligences. They expect involvement in decision-making too, and ask a lot from leaders.

As Barry Salzberg, Global CEO, Deloitte, notes from recent research [source]: “They place less value on traditional leadership attributes such as well-networked (17 percent), visible (19 percent) and technically-skilled (17 percent). Instead, their ideal leaders are strategic thinkers (39 percent), inspirational (37 percent), personable (34 percent) and visionary (31 percent).”

Luckily those smart professionals are often at ease with ambiguity. Smart systems raise difficult issues, such as ‘manual override’ or human intervention in a crisis. Should a ‘driver’ be able to take control of a ‘driverless’ car in the final moments of an accident? What oversight should patients and providers retain as healthcare is automated? Where do subjects, owners and users stand in the face of big data? On that last point Craig Mundie, Microsoft’s former chief research and strategy officer, is quoted in the Financial Times [source]:

" Controlling the data is a hopeless quest.

McKinsey & Company highlighted this problem in ‘Artificial intelligence meets the C-suite’ asking the pertinent question “Technology is getting smarter, faster. Are you?” and going on to discuss the need for leadership skills training [source]:

" In some activities, particularly when it comes to finding answers to problems, software already surpasses even the best managers. Knowing whether to assert your own expertise or to step out of the way is fast becoming a critical executive skill.

Integrating machine intelligence with new working practices and new skills is hard – even using an iterative, agile approach. Tim Payne at KPMG notes [source]:

" Failure to do so may create conflict in the workplace with some people feeling empowered and others left behind.

Mai Chen at Chen Palmer goes further in respect of professional services [source]:

" The rapid development of artificial intelligence … will have a devastating impact on the traditional professional services firms such as lawyers, accountants, consultants and financial services providers.

We believe that smarter professionals will work most expertly with smart systems, and that they will also excel in interpersonal arts and skills such as adaptability, inquisitiveness, common sense, intuition, and creativity. They might think better too, as the brilliant Nick Bostrom wrote in his seminal ‘Superintelligence’ [source]:

" With luck, we could see a general uplift of epistemic standards in both individual and collective cognition.

‘Collective cognition’ in modern digital dialogues might be stronger than it has even been in any setting – especially given smart systems’ live analysis and feedback. However cognition is not at all the first human skill impacted by AI-based smart systems. Lex Machina notes an example of the fundamental change unfolding in legal practice as human experience teams with big data [source]:

" … revealing insights never before available about judges, lawyers, parties, and patents … provides lawyers with facts on which to base opinions – the core element of good lawyering. Objective data replaces subjective “anec-data.”

Changes of that kind, where digital joins up dots and tips the balance, are rewiring all professions and most enterprises. We encourage you to consider which skills matter most. Workplace technology has traditionally mimicked human tasks, but smart systems demonstrate new routes to outcomes. We suggest that ‘Professionals 4.0’ require skills that may not have been previously prioritised.

Markets increasingly judge organisations by their use of smart systems

Although a digital solution may not always be best, consider the impact of a perception that competitors have better access to smart systems, or simply a better grasp of the full implications of digital and AI.

As Eric Horvitz wrote for Stanford University, we are making systems that [source]: “… can make inferences about the goals, intentions, identity, location, health, beliefs, preferences, habits, weaknesses, and future actions and activities of people.”

The market will be unkind to those who choose not to keep up with perceived advances – or choose to move too far too soon. It will notice both recklessness and missed opportunites; and react swiftly to core changes such as those noted by C Dowling and S A Leech in ‘A big 4 firm’s use of information technology to control the audit process’ [source]:

" … a new audit support system, is changing auditor behavior and audit team interaction.

What do people see when they look at your organisation – from within or without?

The digital era demands interdisciplinary collaboration, which demands transparency, and that takes some explaining. If you want to explain successfully you’ll need to establish a basis of trust, which is underpinned and enabled by integrity. We believe that integrity is the human characteristic of greatest value to professionals in this phase of digital infancy.

Agility Business Benefits

A range of potential business benefits arises from these opportunities. We look forward to the opportunity to work with you, to learn from you and to help your business to grow. Christopher Marsh and John Bale will be waiting to hear from you.

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