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Perspectives

New Leadership Needed in the Second Machine Age

2017-06-20


Our recent research reveals three key roles leaders must play to derive business advantage from data, AI, algorithms and the science of “meaning making” — today and for the foreseeable future.

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Amid today’s digital-driven economic shift, we believe the next wave of value will come from established companies in traditional industries that can seize the opportunities ahead. Entirely new market sectors are emerging that blend talent, disciplines and technologies in a super-charged wave of innovation: connected cars, social insurance, smart homes, digital health — the list goes on.

But what does it take to lead an established company through these uncertain, challenging and potentially thrilling times? Results from our Work Ahead study point toward a generation of leaders finding the digital shift difficult (see Figure 1).

Figure 1

To better understand the new leadership mandate, Cognizant’s Center for the Future of Work teamed up with Oxford Economics to conduct in-depth, qualitative interviews with 26 of Europe’s top business leaders. Three insights from these discussions provide clear direction on how leaders can marshal their organizations into the future.

Accelerate the Platform Mindset 

The starting point for business model innovation is a platform: layers of software that gather and synthesise data to link assets, products and partners together with customer demand. These plat­forms can take many forms — a car, a home, a policy or an R&D process — but at their core, they use data and algorithms to make meaning. 

Established companies can work their big-company advantages to build and organize knowledge work around platforms, and adapt their leadership styles to stay in synch. Cases in point are Bosch, GE and DHL, whose leaders have pivoted their research and development, produc­tion, marketing, sales and competitive futures around the rich flow of platform data generated across their processes.

New Leadership Behaviors  

  • Take a stake in a well-established digital platform by partnering or investing. Or build an open platform where third-parties can plug and play and add value to an ecosys­tem they control, taking a slice of the action and mining a rich seam of interaction data for mean­ing. 

  • Establish “squads,” “chapters” and “guilds” (as Spotify does) to promote teamwork, collaboration and ownership around the insights derived from the platform-generated data.

  • Build the mecha­nisms that drive a platform mindset across the enterprise, remaining sensitive to the cultural constraints of shifting to a data- and algorithm-driven mindset. 

  • Encourage co-creation ecosystems by developing an application programming interface (API) fac­tory. This will shift the cultural focus as it extends the reach of existing services and assets, opens new revenue streams, and empowers teams to iterate and experiment with data. 

Hyper-scale Innovation

Traditional companies need to boost their metabolism for generating and absorbing new ideas and innovations. Power and decision-making dynamics found in many companies today simply won’t work in an era that demands speed, agility, collaboration and innovation. 

Organizations need to be flatter and more open, with dynamic team structures that rewire power to improve coordination and speed. Tools that help stakeholders align, iterate and innovate are critical. 

New Leadership Behaviors  

  • Tear down internal silos to improve the flow of concepts and ideas. Reconfigure busi­ness units into smaller multidimensional teams, with co-located cross-function staff focusing on a single customer segment or functional need.

  • Locate innovation teams away from the moth­ership for a period of time; one idea is to join a co-working space like a WeWork for a couple of quarters and connect with others that share and work in the same space.

  • Build an internal company accelerator around a specific problem or challenge, such as how to make a process more intelli­gent, or how to innovate with AI to improve customer interactions. The accelerator concept could help foster cooperation, and rapidly develop and scale innovative ideas and concepts. Consider giving the accelerator a mandate and funds to exper­iment with virtual reality, IoT, AI or another digi­tal technology.

Extend Customer Value 

Most companies have poured kings’ ransoms of investment into the front-end customer experi­ence, but leaders can’t stop there. As competi­tors replicate your customers’ experiences, your existing investments begin to lose their value.

The rapid pace of business change calls on leaders to continuously reinvent cus­tomer experiences and even their products — wait until drones reach critical mass or when virtual reality moves mainstream or IoT comes to full fruition and instruments our homes and our spaces. 

Tools that increase empathy with customer issues are also hypercritical. Leaders need to use both data and human insights to reveal heightened sensitivity to customer needs, wants and desires. New skills are needed to visualize and explain what a customer experience is or to narrate the meaning of rich streams of product data.

New Leadership Behaviors  

  • Leaders need to marry rich human insights with key emerging technologies like artificial intelligence or process automation toolsets, and then experiment, iterate and work on extending value. For example, addressing the stress a patient faces when self-medicating led one pharma company to experiment with smart tags to enable remote monitoring of a self-injected medication device. The company then gamified compliance through a reward system, and it’s now licensing the solu­tion and generating a new stream of revenue.

  • Seek fresh approaches and frameworks that drive deeper insights about why customers transact in the way that they do. An emerging approach is to map out behaviors and journeys with anthropological and ethnographic techniques or human design-based principles to uncover what really drives customer behavior and use those insights to frame strategic product and service development.

  • New job roles and skills need to be created, with capabilities such as data visualization and inter­face-building to delight a customer or tell the story of what product data means for a business and translate it into meaningful strategy. Finan­cial and business modelling skills are needed to predict how cost and revenue flows could poten­tially shift. Leaders will need catalysts (or mobil­isers) in their orbit who can build consensus on a customer-obsessed culture.

For the full report, read our paper “Relearning Leadership in the Second Machine Age” or visit us at the Cognizant Center for the Future of Work

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New Leadership Needed in the Second Machine Age