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The digital emperor has no clothes

As digital technologies expose organizations to more scrutiny, leadership strategy must include managing radical transparency.

Overview

Few executives would disagree that digital transformation is a source of innovation and growth—new markets, creative business models, a future workforce and groundbreaking products and services. But digital transformation brings its own complexities—from savvy customers with a global voice to the complexities of data rights and management.

For business leaders, the stakes could not be higher as their individual and institutional conduct is exposed to unparalleled levels of transparency. With 83 percent of surveyed executives saying trust is the cornerstone of the digital economy, business leaders need to demonstrate a dynamic, ethical approach toward their employees, their customers and society at large.

By revitalizing their organizations’ ethical culture—reinventing governance, employee buy-in and overall accountability—leaders can embed a more progressive approach to ethics and trust in their workforce of the future. In this way, they can grow through digital opportunities, and achieve sustained competitive advantage, while being better prepared for the scrutiny of a digital world.

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83% of executives say trust is the cornerstone of the digital economy.

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Survey Findings

Key Findings

Without trust, businesses lose their license to innovate through digital technologies. Leadership strategy needs to address three fundamental challenges:

  • Leaders are ill-prepared for radical transparency: Many leaders have yet to grow the qualities necessary to encourage collective ownership and reinforce an organization’s ethical standards.

  • Leaders must push the boundaries of existing regulations: Given the pace of change, leaders can no longer rely on regulators to establish clear ethical guidelines.

  • Leaders must adopt strong digital ethics to sustain digital innovation: Digital technologies test ethical boundaries—from how businesses apply data insights to the use of algorithms to make ethical decisions.

Digital is dramatically changing leaders’ approach to trust and ethics—placing urgent demands on them for higher levels of ethical conduct. Technology systems can help, but it is leaders’ new capabilities and approaches that will play a pivotal role in managing radical transparency and driving sustainable business.

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Leading in the Spotlight

Recommendations

Today’s leaders can take three steps to manage radical transparency and achieve sustained competitive advantage:


Use digital to break down barriers: Leaders at all levels must champion the digital capabilities and tools needed to share information quickly, facilitate networking and help break down organizational siloes.

Create inside-out transparency: Leaders can use approaches such as ethical hackathons, micro-action crowdsourcing and 30-day challenges to generate dynamic standards of conduct from the inside out. Tested approaches can be shared with regulators and legislators and opened up to external scrutiny in ways that build trust with consumers and stakeholders.

Build “ethical muscle”: Many leaders are tapping into a range of talent to become more resilient in a digital ecosystem. Ethical behaviors can be reinforced through the use of collaboration tools and other digital technologies. For example, leaders can encourage ethical judgment by employing online coaching, game-based simulations or peer networks outside the organization.

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