UK: In my opinion - Institute of Management companion and chairman of BT Sir Iain Vallance explains why new ...

UK: In my opinion - Institute of Management companion and chairman of BT Sir Iain Vallance explains why new ... - In my opinion - Institute of Management companion and chairman of BT Sir Iain Vallance explains why new models of leadership must keep pace

Last Updated: 31 Aug 2010

In my opinion - Institute of Management companion and chairman of BT Sir Iain Vallance explains why new models of leadership must keep pace with the digital economy.

The information economy, once a matter of donnish speculation, is now very obviously a fact of life. It's changing everything and it is doing so at a quite remarkable rate.

In 1996, there were about 40 million internet users around the world.

By the end of 2000 - and this is the most conservative estimate - there will be around 500 million. Basically, you need look no further than this statistic for one of the principal differences between the 20th and the 21st centuries (possibly, even one of the key distinctions between the second millennium and the third).

Everything is up for grabs. All the things we used to take for granted about our organisations - the markets we were in, who our customers were, our competitors - need to be questioned. New billion-dollar businesses are appearing out of someone's garage almost overnight, and, in cyberspace, such businesses can compete on equal terms with established multinationals.

If they are to flourish in such a world, then businesses of all kinds need to change, to grow and to learn. Most of all, they need to recognise that yesterday's business model is today's waste paper.

BT, for example, has recently experienced a major rite of passage. The announcement, towards the end of 1998, that we now carry more data than voice over our network, effectively marked the point at which we ceased to be simply a telephone company and became instead a communications company.

Not only have our investment decisions had to reflect this fundamental change in orientation, but so too has our entire organisational culture.

The information revolution is not just about doing the things you have always done, only doing them better, cheaper and faster - important though that is - it is also about doing new things in new ways.

This is as true of the way we manage, motivate and reward our own people, as it is of the way we engineer our processes and interact with our customers.

The key concept is 'virtualisation', the far-reaching shift from physical atoms to virtual bits. Anything that can be converted into bits - data, pictures, words, music - will be converted into bits and conveyed digitally.

CDs and videos, for example, are physical products that consist of atoms, but music and video delivered over the internet are virtual products.

And so it is with work and organisations. Work is increasingly becoming the things we do, rather than the physical place to which we go each day.

Organisations are less and less about these physical geographies and infrastructures, and more and more about networked affiliates, united by a common purpose.

The wide availability of information in the virtual world will lead inevitably to the devolution of power and authority, particularly from the organisation to the customer. Customers will increasingly demand to deal direct with suppliers, compare offers and customise what they buy. And this is why real added value will be so critical. Why pay the middleman when he/she can be 'disintermediated' at the touch of a button?

Developing partnership skills to deal with the ambiguity of these new relationships will also be paramount. We must learn to make partnerships work across cultures, across technologies and across industries. We must work with those who are not just partners, but also competitors, suppliers and customers. We must work, too, creatively with smaller organisations, that are the source of so much innovation and which can occupy niches that larger organisations could never have squeezed into.

Just as 'command and control' have failed as a way of running national economies, it will also fail as a way of running companies and other organisations.

In fast-moving technological industries how do you keep up with what's going on? The person who knows most about the latest developments could turn out to be a 22 year old who doesn't own a suit. Or it could be someone on the other side of the world? So, what price hierarchy, seniority, experience?

Leadership in such a world is a characteristic of the organisation rather than of the individual. Individual leaders used to be required to come up with the right answers to more or less any question, to inspire the companies they led and to lead from the front. Leadership in the new world derives from an organisation secure in its values, with the capacity to learn quickly from experience, react speedily to change, and to go on learning and reacting without intervention.

The critical challenge is to ensure that the checks and balances inherent in traditional business organisations do not simply degenerate into barriers against change and innovation.

The new goal is to establish full and open access to information throughout the organisation, so that the maximum level of initiative - both in team and individual situations - can be exercised within tolerable levels of risk.

This is a tall order for any chief executive to take on board. It's like trying to design a vehicle you can drive without having to have your hands on the wheel. But it is perhaps not surprising that the information technology revolution needs to be matched by a revolution in organisational behaviour.

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