13.6.2024 | soilalem

Exploring the Creativity in the Leadership of Digital Transformations

How do you feel about online payments? How about seeing a doctor through the digital clinic? How about online learning? What professional skills, if any, did you upgrade by taking an online course? Alternatively, what online courses, videos or podcast episodes did you create?

We live in the age of digitalization, with consumers at one end of the phenomenon and businesses and public organizations at the other end. Depending on our existing professional roles, each one of us plays a part, directly or indirectly, in the digital transformation of economies and societies. To technophobes and techno-critics, digitalization can be threatening. To others, such as the digital natives and technophiles, digital technologies are expected to result in business, social and sustainability impacts.

What is the relationship that you yourself have with the technologies that enable you to do your work better and communicate remotely? It is wise to consider and discuss the pros and cons of a digital world. Also, it is wise to take with the grain of salt both the evidence showing the risks and the benefits. There are data privacy and security and ethical concerns, but these issues, although critical, are not the focus here. This research project (as a subproject of JATKOT-group) will focus on reaching out to the individuals responsible for digitalizing businesses and public institutions, and understanding what is required of them to lead these efforts. What are their work experiences and attitudes?

Digital transformations are the engine of digitalization

A fundamental assumption of digitalization is that it canempower us to improve the quality of our lives. A recent World Economic Forum report, for instance, estimates that digital transformation could enable $100 trillion of additional value for the world economy by 2025 (Ekholm, 2023). In the electricity sector, digital technologies, especially smarter asset planning, could reduce carbon emissions by an amount worth $867 billion by next year. Moreover, digitalization can bring societal value through the widespread use of autonomous cars and usage-based car insurance, which together could save up to 1 million lives annually by 2025.

Overall, digitalization is expected to benefit society more than businesses. Think how many hours of your life you save each time you pay your invoices online instead of going to the facilities of the service provider, one at a time. What do you do with the time saved?  

To arrive at a digitized society, companies and public institutions need to go through digital transformations (DT). DT is an organizational change process that aims at enhancing specific structures and operations by using a combination of digital technologies – AI, Internet of Things, machine learning, Big Data Analytics, etc. These technologies focus on information handling, computing, communication, and connectivity.

In here, we are interested in the phenomenon of digitalization in Finland. According to the European Commission’s annual Digital Economy and Society Index, Finland has been one of the leading countries in the European Union, at four categories of digital performance: digital skills, digital infrastructure, digitalization of businesses and digitalization of public services. For instance, a 2017 collaborative research group from Microsoft and PwC interviewed executives from 17 Finnish companies in traditional industries like energy, finance, manufacturing, and transport, and 5 public sector organizations. Of those interviewed, 86% emphasized that digital transformation holds high strategic importance. (Korczak et al., 2017). Depending on its purpose, a DT initiative can result in operational efficiency, enhanced customer experiences, new business models and employee empowerment.

In the Finnish clean-energy company, Fortum, for example, digitalization is implemented for employee empowerment, so employees can do their jobs anywhere, at any time and on any device (Korczak et al., 2017). Employees can thus experience a sense of autonomy and responsibility over their tasks and projects, which may lead to feeling more efficient and meaningful at work.

On average, empowering employees had the lowest priority in the views of the business leaders featured in the 2017 Microsoft and PwC practitioner report. Engaging customers, transforming products and services and optimizing operations were higher priorities. On the other hand, for the leaders in the public institutions that participated in the above-mentioned report, optimizing operations and empowering employees ranked at the top.

In other words, DT in business organizations is a strategic choice that can have a different priority and specific focus depending on the leaders’ awareness of their competitive landscape. Once a digital strategy is chosen, leaders must find ways to integrate the emerging digital technologies with their existing business operations and IT systems. As George Westerman, MIT pioneering researcher in digital transformation, told in a practitioner report, “If you’re an executive leading a company looking at these technologies, you need to lead the technology — don’t let it lead you. (…) You want to think about, how is your company going to be different because this is here? And then, put in a framework, so you’re not just buying technology, you’re actually pushing your company forward in a different way, because the technology is there.” (Fitzgerald et al., 2013, p. 14)

The Role of Leaders

In the academic research on digital transformations in business organizations and public institutions, there were three main questions discussed:

One of the main takeaways from the academic literature is that digital transformation initiatives can trigger a culture of continuous change and looking for opportunities of experimentation, learning and knowledge sharing both within the adopting organization and in its surrounding environment.

Digital technologies and strategy per se do not enable opportunities to create value unless the actors involved in digital projects see the possibilities of leveraging technology in their workplace (Orlikowski, 2000). Digital transformation is an emergent phenomenon resulting from micro-decisions – at individual level – to use the digital tools within a specific context  (Markus and Robey, 1988). Leaders have a significant role in supporting the meaningful interaction between digital technologies and their key designers and users to unlock the transformative opportunities of such technologies. Yet, what leaders are best equipped to lead digital transformations?

The Emerging Digital Leaders

To better understand what kind of benefits digital transformations can have for organizations, it is important to examine the daily work experiences of those involved, with a particular focus on the capabilities needed by leaders and employees to manage themselves and their tasks. This will enable insights into the set of competencies that organizations need for ongoing digital transformations.

New digital technologies require different mindsets and skill sets than previous waves of information systems adoptions. For instance, in a 2021 MIT Sloan Management Report on the leadership of ongoing digital transformations, effective leadership must be combined with affective leadership that enables transparency and authenticity between leaders and their experts. Chief Information Officers (CIOs) who traditionally oversee the strategic deployment of the IT infrastructure, may need to learn new skills to lead digital transformations. Whereas a CIO is a strategic IT specialist, a leader of digital transformations specializes in listening to customers’ needs, formulating the vision, planning, and promoting the digital transformation across different business functions (Singh and Hess, 2020).

In this research project, we will focus on the experiences of Chief Digital Officers (CDO). Both in academic and practitioner literature, it has been argued that some organizations respond to DT calls by appointing CDOs – though sometimes temporarily – to lead and promote the transformation (Scuotto et al., 2022; Korczak et al., 2017). Based on six case studies from various industries, Singh and Hess (2020) identified three main types of roles that CDOs play – the Entrepreneur, the Digital Evangelist, and the Coordinator. However, considering that CDOs are relatively new positions created in some organizations, there is the need to further explore how CDOs see their roles and their skill sets for leading different scopes of digital transformations.

The Creative Self-Beliefs of Digital Leaders – Enablers or Inhibitors?

Organizational creativity studies investigated the role of leaders in influencing a culture of creativity and innovation and found that there are three core areas of creative leadership: leading the project work, leading the group and leading the firm (Mumford et al., 2019). Leading the work involves scanning and collecting information that is significant for the leadership role. To this view, Mumford et al. (2000) found that over one’s career, leaders developed creative thinking skills, problem-finding and definition in particular.

Leading the group is about team formation, climate creation and interactions with group members. Here, the leaders’ behaviors are central for team’s perceptions of the work environment of intellectual stimulation, psychological safety and positive challenges.

Finally, leading the firm is about the ability to provide adequate resources so that the team can achieve what they set out to accomplish. To acquire the necessary resources, leaders need to be able to sell the ideas to others and establish support for the project from other stakeholders. 

In sum, each of these three functions of creative leadership requires a complex set of creative thinking skills and behaviors from leaders.

To our knowledge, Scuotto et al., (2022) is the first paper to take a micro approach to the emerging role of CDOs and explore how their dynamic capabilities trigger digital transformation and organizational creativity in small and medium enterprises (SMEs) in 39 European countries and a total of 2124 CDOs. The paper distinguishes between three types of capabilities: substantive – being skilled at problem-solving; adaptation – promptly adapting behaviour to adjust to changes; and change capabilities – the ability to set goals and steer the company through the milestones of the DT journey.

They found that being a problem solver and able to adjust to changes promptly had a positive relationship with using new digital technologies, digital skills and virtualized individual work. Moreover, the substantive and adaptation capabilities, but not the change capabilities, mediated organizational creativity measured as doing things better, peer group projects and supportive supervision.

The multifaceted nature of creativity has been studied from the neuroscience and psychological perspectives as cognitive capacity, emotional states, personality traits, motivation, beliefs, process, and performance (Reiter-Palmon and Hunter, 2023; Jung and Vartanian, 2018). Here, we study creativity as a system of beliefs in DT contexts (Beghetto and Karwowski, 2017).

Whereas Scuotto et al., (2022) look at organizational creativity as an outcome which can be mediated by the Chief Digital Officers’ problem-solving and adaptation capabilities, in this research project, the underlying assumption is that creative thinking and behaviors are key abilities for solving leadership challenges and tasks in DT settings. Moreover, creative thinking and abilities are influenced by leaders’ views on their personal creativity. The more leaders see creativity – take initiative, anticipate potential changes and opportunities – at core of who they are, the more willing to enact their creativity in their roles and become role models for their team members.

For instance, Reiter-Palmon et al. (2019) recommend that to increase the positive attitudes towards creativity in the workplace, organizations should consider how to increase the motivation of individuals who do not necessarily see themselves as creative individuals and at the same time, how to provide opportunities for creative individuals to enhance their creative abilities. So, this project will examine digital leaders’ creativity beliefs as potential sources of self-empowerment for navigating diverse DT challenges:

  • “How do digital leaders’ view their creativity?”
  • “What are the leadership styles that digital leaders find beneficial for navigating digital transformation projects?”
  • “When and why do digital leaders see opportunities for acting creatively?”
  • “How are leaders’ creative self-beliefs manifested in their leadership styles?”
  • “What kind of a feedback culture influence the leaders’ creative self-beliefs?”

Blog written by:

Oana Velcu-Laitinen, postdoctoral researcher, JATKOT-research group

Are you a digital leader (CDO)? Kindly contact Oana if you are interested in taking part in this research project!

References:

Beghetto, R. A., & Karwowski, M. (2017). Chapter 1 – Toward untangling creative self-beliefs. In M. Karwowski & R.A. Beghetto (Eds.), The Creative Self (pp. 3-22). Academic Press.

Ekholm. B., (2023). 5 ways digitalization can help build global resilience in 2023. World Economic Forum. Online article: https://www.weforum.org/agenda/2023/01/5-ways-digitalization-can-help-build-global-resilience-davos2023/.

Fitzgerald, M., Kruschwitz, N., Bonnet, D., and Welch, M. (2013). Embracing Digital Technology. MIT Sloan Management Review. Online article: https://www.capgemini.com/fi-en/wpcontent/uploads/sites/27/2017/07/embracing_digital_technology_a_new_strategic_imperative.pdf

Irani, Z., Abril, R. M., Weerakkody, V., Omar, A., & Sivarajah, U. (2023). The impact of legacy systems on digital transformation in European public administration: Lesson learned from a multi case analysis. Government Information Quarterly, 40(1), 101784.

Korczak, A., Eskola, M., Salo, P., Saarinen, A.J., and Lukander, J., (2017). How Finland is Embracing Digital Transformation. Online article: https://info.microsoft.com/rs/157-GQE-382/images/How%20Finland%20is%20embracing%20digital%20transformation2.pdf

Kraus, S., Jones, P., Kailer, N., Weinmann, A., Chaparro-Banegas, N., & Roig-Tierno, N. (2021). Digital transformation: An overview of the current state of the art of research. Sage Open, 11(3), 21582440211047576.

Jung, R. E., & Vartanian, O. (Eds.). (2018). The Cambridge handbook of the neuroscience of creativity. Cambridge University Press.

Mumford, M. D., Martin, R. W., Elliott, S., & McIntosh, T. (2019). 25 Leading for Creativity: A Tripartite Model. In J.C. Kaufman & R.J. Sternberg (Eds.), The Cambridge Handbook of Creativity (2nd edition, pp. 546-566). Cambridge University Press.

Mumford, M. D., Marks, M. A., Connelly, M. S., Zaccaro, S. J., & Reiter-Palmon, R. (2000). Development of leadership skills: Experience and timing. The Leadership Quarterly, 11(1), 87-114.

Orlikowski, W. J. (2000). Using technology and constituting structures: A practice lens for studying technology in organizations. Organization science, 11(4), 404-428.

Reiter-Palmon, R., & Hunter, S. (Eds.). (2023). Handbook of Organizational Creativity: Leadership, Interventions, and Macro Level Issues. Elsevier.

Reiter-Palmon, R., Mitchell, K. S., & Royston, R. (2019). Improving creativity in organizational settings: Applying research on creativity to organizations. In J. C. Kaufman & R. J. Sternberg (Eds.), The Cambridge handbook of creativity (2nd edition, pp. 515–545). Cambridge University Press.

Scuotto, V., Magni, D., Theofilos, T. and Giudice, M. D., (2022). “Chief Digital Officer and Organizational Creativity Toward Digitalization”. IEEE Transactions on Engineering Management, doi: 10.1109/TEM.2022.3153395.

Singh, A. and Hess, T., (2022). Chapter 9 – How Chief Digital Officers Promote the Digital Transformation of Their Companies. In R.D. Galliers, D. E. Leidner, & B. Simeonova, (Eds.), Strategic Information Management (5th edition, pp. 202-220). Routledge.

Schrage, M., Pring, B., Kiron, D., and Dickerson, D., (2021). Leadership’s Digital Transformation: Leading Purposefully in an Era of Context Collapse. MIT Sloan Management Review. Online article: https://sloanreview.mit.edu/projects/leaderships-digital-transformation/.

Vial, G. (2021). Understanding digital transformation: A review and a research agenda. Managing digital transformation, 13-66.