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The rise of the Phygital Leader
IN the past five decades, there have been a multitude of technologies - which have been claimed by their marketing departments as "transformational". However, a technology is truly transformative only when it becomes a "lifestyle" of the masses. By such standards, the Internet is one such technology, having changed almost everything people do. There is another at our doorstep, silent but potent.
The Internet not only reshaped businesses, it changed societies. The resultant change oversaw the demise of many traditional norms - both in society as well as businesses - while creating new ones. The changes were massive, beyond what anyone ever imagined.
A major change occurred when traditional community and business leadership methods failed in the Internet era, while new ones emerged. Leaders across communities and businesses who took note, learned and adapted survived, but others perished. A similar, if not a more potent, change is at our doorstep: the acceleration of "digital".
While the origins of the Internet can be traced to war, the acceleration of digital could owe itself to a pandemic. Calamities are behaviour shapers, and technologies can accelerate them.
The Covid-19 pandemic is ushering in a new of digital-oriented way of life. It has given rise to a truly "phygital world" in which technology and traditional physical experiences blend so seamlessly that they create new and better ways of accomplishing even everyday tasks. Covid-19 has made phygital into a "lifestyle". "Phygital leadership" is not an option, but an imperative. If leaders do not take notice, they will no doubt fail.
Beyond physical or digital - Phygital
Phygital leaders are what we call "dual leaders": they are neither physical nor digital, they are both physical and digital. This calls for a different set of leadership skills for effective management and collaboration in a phygital space with both clients and staff.
Leaders in a "phygital" universe do much more than just merging physical and digital or finding that balance between physical and digital. It is about re-imagining and redefining how businesses and organisations are led and managed. A customer's journey could be fundamentally reshaped in a "phygital" universe.
Business and operating processes could be transformed to create new bespoke customer experiences. Companies need to rethink how they will be operating in a "phygital" universe.
The need of a new mindset in the phygital space
A business' operation is most easily understood and depicted by its value chain. A value chain is one that starts from the raw materials to the consumption and advocacy of its product or service by its consumers. The whole configuration of this value chain has named actors and roles earmarked, especially in conventional businesses and business models.
The focus of leadership has mostly been making this configuration as efficient and optimised as possible. The drive towards finding supplies from cheaper destinations, finding alternate markets, tapping into free trade and automation are all based on this. The digital transformation opens a massive opportunity to rethink the fundamental premise of this value chain.
For example, one of the most significant afflictions that a #5 software business in the mature markets would have is its difficulty in selling to the Fortune 1,000, who are the largest tech spenders. Large businesses tend to prefer buying from the top 3-5 players when it comes to technology. The reasons stated include brand-pull, lobbying, exchange businesses, etc.
In a typical scenario like this, the options for the business to look at emerging markets generally come with two challenges. First, the price sensitivity of the emerging markets; the second is the high cost of physical expansion to the new markets. In short, businesses need to drop their prices on one hand and increase expenses on the other - which is an untenable option for most.
However, the augmented mindset to this challenge has a solution which many software businesses have leveraged, by focusing their selling and consumption process into going digital.
By shifting the marketing and selling of software products from "human sellers to human buyers" to "marketing and selling by the business' digital twins to the buyer's digital twins", they can find access to alternate markets at a very small cost. These interactions are purely through digital channels - the likes of LinkedIn, Google Ads, and programmatic ads that drive demand. Even conversations with customers were handled by conversational AI bots.
As the deployment of the software is no longer physical and is done through the Internet (cloud platforms), the cost of sale and consumption has been reduced to a fraction. This benefit in turn is passed on to clients, which can expand a business' market reach globally. This shift has generated some unexpected leaders and "rags to riches" stories from the emerging world.
This shift is not only applicable to businesses, but also applies to communities. A leader of a nation who cannot understand and appreciate issues like cyber warfare, or a parent who cannot understand the potential threats of cyber bullying, are as incapable in their ability to exercise their duties as a CEO who is not able to understand digital transformation.
Engaging employees in a phygital space
Change agents are often individuals who are assumed to have a high level of connectedness, and hence an ability to influence the opinions of their fellow employees or community. The identification of these change agents is often done by leaders through gut instinct or their perception of the impact that individuals have on the organisation's employee or social networks. But quite often, this approach to identifying change agents fail.
By putting on the lens of "phygital" leadership, leaders can change the way they identify change agents. By looking at the digital twins of employees such as their e-mail IDs or social media handles) and seeing who has the maximum conversations with other employees in the organisation, leaders can identify employees with strong social capital and network impact. This can be done by using tools that can analyse e-mail conversation networks and map the e-mail IDs which are the centre of communication networks.
As the "phygital" world may seem to have less structure and rhythm of a traditional environment, "phygital" leaders will need to be highly agile in the way they manage their time, business processes and interaction with their teams. Agility remains a critical capability of "phygital" leadership: self-leadership agility, context-setting agility, and stakeholder agility.
"Phygital" leaders must be able radically rethink the physical and digital touchpoints. They also need to re-imagine touchpoints for collaboration and engagement in the "phygital" space - to engage clients, employees, and key stakeholders in new ways that combine the strengths of the physical and the digital ways of working, where online and face-to-face interactions complement each other.
- Dr Joo-Seng Tan is an associate professor of management at Nanyang Business School, Nanyang Technological University, Singapore.
Arun Sundar is global business leader in digital technology and founder of The Social Capital Institute.