Five Rules for Leading in a Digital World

Editor’s note: This article is part of a new MIT SMR series about how leadership is evolving in a digital world.

For years now, everyone has been talking about VUCA, the U.S. military’s acronym for the volatile, uncertain, complex, and ambiguous world we live in. However, we now have VUCA on steroids as we try to keep up with the increasing speed of change in a business environment where the amount of data generated doubles every two years, reflecting a 50-fold growth from 2010 to 2020.1

To thrive in this landscape, organizations that have long been siloed and bureaucratic must become nimble and customer-centric, and command-and-control models must give way to distributed leadership.

However, many leaders fear letting go. They don’t want to lose power, which is integral to their identity in an organization. They also worry that chaos will ensue if they loosen the reins. And they tend to shy away from the unfamiliar — they know much more about bureaucracies than about the emerging organizational forms that will take their place.

Such fears often result in inertia. But leaders must evolve quickly or risk extinction.

In a rapidly changing world, people need to know who is leading them — that must be clearly articulated. Those leaders must possess the skills to track an ever-shifting environment and cultivate those skills in others. They need to create flexible teams that collaborate effectively with both internal and external partners. They must inspire their organizations to solve big problems. And they can’t do all this alone — they need to bring in adaptive leaders at all levels, giving them autonomy to innovate but providing guardrails to prevent chaos. In our research at the MIT Leadership Center, my colleagues and I have found that executives and managers who do these five things in particular are best equipped to navigate what lies ahead.

Let’s take a closer look at each new rule in the emerging leadership model.

1. Communicate your leadership signature. When things change, people crave leadership. They seek stability when they fear disorder. They want to feel confident about who is at the helm, steering through treacherous waters. But the romantic notion of the leader who is there to take control isn’t enough to assure them. They need to know your leadership signature: who you are as a leader and how you view and approach the job.

Most of us are “incomplete leaders” who excel at certain leadership capabilities and struggle with others.2 The key is to understand and communicate your own unique way of leading given your experience, values, strengths, and personality. For example, Steve Jobs was the quintessential inventor, pushing himself and others at Apple, Pixar, and NeXT to create innovative, sleek designs that wowed customers, even if he bruised people along the way as he strove for perfection. Eileen Fisher, founder of the clothing company by the same name, is a designer who studied the Japanese kimono to try to understand how to make comfortable, stylish women’s clothing that will withstand the test of time. She is passionate about that and about promoting sustainability for the planet, and she rallies employees behind both goals to create meaning in her organization. Jobs was a visible leader who promoted himself as well as his products, while Fisher leads more quietly, setting direction and then letting go.

How do you discover your leadership signature? First, think about what you do day to day as a leader. Do you focus more on the tasks or on the people? Are you a visioning leader, visibly out front, or a leader who stays in the background, quietly coaching and influencing? Do you encourage experimentation and innovation, or do you nurture areas of core strength? Second, ask people who work with you how they would describe your leadership, or take a 360-degree survey to collect data. Finally, consider the impact you have. Are you changing the culture? Driving results? Once your signature is clearer to you, tell stories and use images and anecdotes to communicate to others who you are.

2. Be a sensemaker. In a rapidly changing environment, sensemaking is more important than ever. A term coined by organizational theorist Karl Weick, sensemaking refers to the process of creating meaning out of the messy world around us. This activity is triggered when something in our environment seems to have changed. We then try to make sense of what has happened by collecting data, learning from others, and looking for patterns to create a new map of what is going on. From there, we experiment with new solutions to learn how the system responds.

Satya Nadella, Microsoft’s CEO, has been a sensemaker throughout his career at Microsoft. By changing jobs often, he learned about the overall processes and culture of the company. His curiosity about customers and technologies enabled him to read the changing landscape in which the company found itself. When he became CEO, he met with employees, customers, and experts to understand the issues on people’s minds and potential pathways to success. He brought leaders from acquired companies to his management retreat so that everyone could engage in sensemaking about new technologies.

Like Nadella, leaders should think about what additional sensemaking they need to do to keep up with shifting markets, technologies, business models, and workforces.

3. Build X-teams. When asked what makes for effective team performance, most executives talk about the ideas spouted in team-building courses and written up in bestselling texts: setting clear goals, defining roles, establishing trust, improving interpersonal relations, and so on. But research shows that such guidelines are only half the story. In a fast-paced world where organizations are trying to shed their bureaucratic chains, leaders should also build a new kind of team, X-teams, to foster speed, innovation, and execution.3

These flexible teams don’t just collaborate internally; they also link to knowledge, resources, and innovation partners in the outside world. You need them to do external sensemaking, to connect people within and across organizations, and to enable change beyond bureaucracy. Members of X-teams serve as organizational ambassadors to scout for talent and resources, align team activities with strategic goals, and coordinate tasks. By bringing people together for certain tasks — and switching people around from time to time — they create a dynamic structure that can respond to new problems and opportunities that arise.

Organizations have created hundreds of X-teams around the world — teams that are bringing needed medications to Africa, finding new ways to test technologies, and creating a closer connection between customers and companies developing future products and services. The next time you assemble a team, think about what kinds of bridges you can build to facilitate innovation.

4. Replace toxic tendencies with challenge-driven leadership. Toxic leaders are becoming increasingly common. You know who they are. They denigrate subordinates and have a reputation for being hypercritical. They can be aggressive, immoral, and insensitive. They hoard information, blame others, and promote themselves. Over time, other people and teams in their organizations begin adopting these same behaviors, which erode trust and reduce effectiveness.

Toxic leadership often stems from the dark triad of personality.4 Leaders who exhibit narcissism feel they are better and more deserving than others. They seek attention and are aggressive if threatened. Those who exhibit Machiavellianism do whatever it takes to hold on to power, build alliances, and keep secrets. Those who show psychopathy are callous, with no empathy or impulse control. Not all toxic leaders possess the whole triad, but I’m sure you’ve met enough to know how damaging even one or two of these qualities can be.

Toxic leadership can achieve results (higher productivity, say, or greater efficiency) in the short term. But over time, performance deteriorates as people start to realize how they have been manipulated and seek ways to cope with the negativity. Unfortunately, when things get tough, even leaders with the best intentions may slide into a more domineering or self-centered approach. The good news is that with self-awareness and some feedback, leaders can shed these tendencies and move toward challenge-driven leadership.5 Instead of saying, “I’m great; follow me,” we need leaders to bring people together around challenges to tackle.

NASA brought people together with the audacious goal of getting a man on the moon. Now, leaders are inspiring organizations to take on climate change, dementia, and social alienation, to name a few major problems. They need to think about how they can reframe their work around such challenges and leave their egos at the door.

5. Build the systems to make all this possible. Successful leaders in our changing times will need to construct, or “architect,” organizations in which the above steps can take place. This will involve hiring and developing three types of leaders — those who are entrepreneurial, enabling, or themselves architecting — and giving them room to draw on their signature strengths as they carry out these functions.6

Entrepreneurial leaders are the engine of innovation. They take on the sensemaking needed to discover new products and processes while creating the X-teams to make them a reality. Enabling leaders have a broader perspective, so they can identify similar projects within the company and opportunities for collaboration outside. They coach the entrepreneurial leaders, who may be too junior to know how to bring their ideas through the organization. Architecting leaders cultivate systems, structures, and a culture that will allow people to explore possibilities and make decisions autonomously without veering into chaos. All three types of leaders help people meld bottom-up ideas with strategic priorities before subjecting internal pitches to a tough funneling process. The whole approach leads to better ideas with greater traction. We can see it working effectively at scientific research company PARC and manufacturing company W.L. Gore & Associates;7 and we see it in many organizations that transition from bureaucracies to leadership at all levels.

This new model of leadership means decoupling authority from formal positions and having everyone take on a strategic mindset. It means just-in-time structures and resources and a belief in collective intelligence. Leaders may find it tough to embrace the five rules, but doing so will allow them to unleash the talent of many in service of strategic innovation and organizational resilience.