Five years ago, Microsoft Corp. was in a tight spot.
It was unable to take the smartphone market from Apple, the cloud sector from Amazon.com or search from Google, according to Nigel Vaz, digital transformation consultant and CEO of Publicis Sapient. Microsoft seemed to be teetering right as Satya Nadella became CEO in 2014 and began transforming the company.
“Satya had this idea of changing that culture from what he called a ‘know-it-all culture’ to a ‘learn-it-all culture,’” said Peggy Johnson, Microsoft’s executive vice president of business development, in an interview during a conference.
Nadella introduced the Microsoft Hackathon to encourage teams across the company to work together. He began partnerships with other industry players and instead of attacking rivals, he negotiated deals to put Windows apps on Apple’s iOS platform and on Google’s Android, according to Vaz. Microsoft bought corporate networking site LinkedIn and software host GitHub. It has become a major competitor to Amazon in cloud services. Its $1 trillion-plus market capitalization makes it the largest tech company in the world and the largest publicly traded company.
That kind of transformation is what a lot of corporate leaders know their companies need. What Nadella did for Microsoft can be replicated at other companies if they have the right leadership. Many times, this means bringing in executives who understand the way technology is changing their industries — executives who can ask the right questions and lead the company toward total transformation.
Technology is such a pivotal part of transformation because it is increasingly at the core of what many companies do. It doesn’t matter if you’re a clothing retailer, an asset manager, a manufacturer or a member of the media: Technology changes the entire business plan. It doesn’t just provide services on the back end.
That presents special problems for leadership: The shortage of technology talent extends to the upper reaches of management.
“Generally speaking, the shortage of tech talent is all around,” says Werner Penk, president of technology for consultant Korn Ferry. “The world is changing so fast. The disruptions are everywhere. We are all impacted by it.”
To meet those disruptions head-on, the board needs to start with itself, says Jason Baumgarten, a partner with executive search firm Spencer Stuart. If you have a changing business model, who on the board understands this? Does the board need to bring in new members? Does it need to educate itself with outside speakers?
Companies can’t depend on a “digital director” who is an expert on everything, Baumgarten says. The entire board needs to educate itself on technology that impacts the company, from cybersecurity to human resources to products and distribution. After addressing the board’s technological weaknesses, the company can begin addressing changes to corporate leadership.
“Do you have the right people around the table to adapt to that changing environment?” Baumgarten says. “How is your technology team handling security? How is your chief marketing officer dealing with the acquisition of customers? How is your legal environment dealing with privacy and legal risks? How is the human resources department thinking about data sharing and connectivity where employees want more access to communication tools?”
These are all questions that could help a company identify areas where current leadership needs more training — or new leaders. Some companies seeking radical change are looking for CEOs from industries or companies that already have been disrupted by technology, Baumgarten says.
“Companies increasingly want to see transformational leaders,” he says. For example, technology companies are looking for executives who can speed up the development path for new software. Non-technology companies want to make technology the core of what they do, and are adding new job titles normally found at technology companies, such as chief product officer and chief data officer.
“What we see are many [companies] struggling with these new roles,” including deciding appropriate compensation and how to attract new leaders, Baumgarten says. Attracting the talent the company needs is often a big problem. But changing the culture from the top down, as Microsoft did, can attract the right kind of employees.
“People want to be in an environment where it’s easy to work together to be creative, to create value-add and to have a work-life balance,” Penk says.
Retaining talented employees often means training them for the leadership roles of tomorrow. Graduate schools are rolling out executive training and degrees for transformational or technology leadership, including the Massachusetts Institute of Technology, Stanford University and the University of Denver. There are other ways to educate the executive leadership team, including efforts as modest as bringing in managers from other companies for informal lunch discussions.
There are many ways to transform your company. It won’t happen overnight. But bridging the technology knowledge gap in your corporate leadership is key if your company is at risk of becoming irrelevant in the years ahead.