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Recall the bygone era of robber baron executives who drove the Industrial Revolution. If you’re not coughing from the endless plumbs of smoke from the chimneys of gloom that harmed many lungs, you might recall that the leaders of those 19th century corporations drove insane revenue goals at all costs. With some regulations and shifts in economic mindsets, things have improved, though the DNA of those industrial leadership styles still exist.
And then came the digital revolution.
The adoption of digital technologies and processes in manually intensive businesses has been ongoing for a while, and the COVID-19 pandemic expedited this movement as more employees had to work remotely. To enhance customer service and overall experience, businesses have been redesigning their processes using agile methods. Additionally, IT departments have been utilizing continuous Agile DevSecOps pipelines to provide cloud solutions. However, despite all of these efforts, one crucial aspect that needs to be addressed is the transformation of management practices.
Transforming management is the final frontier in achieving complete digital transformation. Although some organizations have realized this, many still have not, despite over two decades of agile thinking evolution. Failure to modernize management practices can lead to outdated practices and threaten digital transformation efforts. It’s like taking two steps forward and then taking three steps back if modernization of management practices is not adopted.
What Went Wrong with the Industrial Era Leadership Style?
The Industrial Era leadership styles were developed during a time when organizations were structured differently, and the work being done was largely manual and repetitive. The focus was on efficiency, productivity, and achieving economies of scale. The typical leadership style during this era was command and control, where managers were expected to be authoritarian and make decisions for their subordinates.
However, in the digital era, the nature of work has changed significantly. The rise of technology and automation has meant that much of the manual labor has been replaced by machines, and employees are increasingly required to think critically, collaborate, and innovate. As a result, traditional Industrial Era leadership styles don’t work in the digital era for several reasons:
- Emotional Intelligence
Digital era businesses need to be flexible and adaptable to rapidly changing market conditions. Leaders need to be able to pivot quickly and adjust strategies as needed. This requires a leadership style that is open to experimentation and willing to take risks.
The digital era workforce expects to be empowered and given the autonomy to make decisions. Leaders need to create an environment where employees feel empowered to take risks, make mistakes, and learn from them.
Digital era work often requires collaboration across teams and departments. Leaders need to be able to facilitate this collaboration by creating an environment that encourages communication and teamwork.
In the digital era, innovation is key to staying competitive. Leaders need to foster a culture of innovation by encouraging experimentation and rewarding creativity.
Emotional Intelligence (aka “Technical Empathy”)
In the digital era, leaders need to have strong emotional intelligence to effectively manage and motivate a diverse workforce. This means being empathetic, listening to feedback, and understanding the needs and motivations of their employees. In agile practices, specifically regarding sprints, the retrospective at the end of the sprint is one of the best way to help hands on investors, executives and upper management be more empathetic with sprint team workers. I am planning an entire article on the importance of technical empathy in the chain of trust from investors, to executives, all the way down to sprint team members, and vice versa.
Examples of some of the shortcomings of industrial era “robber baron” leadership styles
Industrial era “robber baron” leadership styles were characterized by a focus on maximizing profits at any cost, often at the expense of workers, consumers, and the environment. Some of the shortcomings of these leadership styles include, but not limited to:
|Exploitation of Workers||Robber baron leaders often paid workers very low wages, subjected them to dangerous working conditions, and denied them basic benefits like sick leave and health insurance|
|Monopolistic Practices||Robber baron leaders used their wealth and power to buy out competitors, creating monopolies that stifled competition and innovation. This led to higher prices for consumers and limited choices in the marketplace|
|Environmental Damage||Robber baron leaders often showed little regard for the environment, engaging in practices that caused significant damage to natural resources and ecosystems|
|Corruption||Robber baron leaders often used their wealth and power to influence government policies and regulations in their favor, engaging in corrupt practices that favored their own interests over the public good|
|Lack of Accountability||Robber baron leaders were often able to operate with little oversight or accountability, as they wielded significant power and influence over government officials, regulatory agencies, and the media|
Personifications of industrial era robber baron leaders include Andrew Carnegie, John D. Rockefeller, and J.P. Morgan. Their leadership styles were characterized by a focus on maximizing profits and accumulating wealth, often at the expense of worker safety, consumers, and even the environment. While these leaders were successful in their time, their legacy has been tarnished by the negative impact they had on society and the economy. Though many of these bad CEO shenanigans have been checked by regulation, it is undeniable that many organizations profess to do the right thing by their employees and consumers, but in practice, do the opposite. I won’t name specific companies, but you can Google recent lawsuits regarding employee wage theft, cancer causing products, etc.
How Different is Today’s Industrial Era Leadership Mindset Compared to Robber Barons?
While there may be some similarities between today’s hands-on investors and C-level executives and the industrial era “robber baron” leaders and investors, it’s important to recognize that there are also notable differences in leadership styles and business practices.
One similarity is a focus on maximizing profits and achieving rapid growth, often at the expense of other stakeholders such as workers and the environment. Some investors and executives may prioritize short-term gains over long-term sustainability, which can lead to unethical or unsustainable practices.
Another similarity is a willingness to take risks and pursue aggressive business strategies. On the one hand, this can lead to disruption and innovation in the marketplace. But on the other hand, it can also create significant social and environmental challenges. In the 19th century, it was not uncommon for workers to work up to 18 hours a day, no breaks, 6 days a week, for under $2 a day. Even in those days, that was still not enough to take care of a family.
Thankfully, there are also several key differences between today’s hands-on investors and C-level executives and the industrial era “robber barons.” For example:
Without regulatory oversight, social responsibility, and stakeholder engagement, it’s likely that some of today’s hands-on investors and C-level executives would have leadership styles similar to their counterparts in the industrial “robber baron” era. In the absence of these constraints, there would be few incentives for these leaders to prioritize the interests of workers, consumers, and the environment over their own financial gain.
Without regulatory oversight, some investors and executives would be free to engage in monopolistic practices, engage in corrupt activities, and exploit workers to maximize profits. Without social responsibility, there would be little incentive to consider the long-term impacts of their business decisions on the environment and society. Without stakeholder engagement, investors and executives would be less likely to consider the interests of workers, customers, and the broader community. All of these can in effect increase the risk of failures in digital transformation as knowledge workers would be less motivated to innovate and more incentivized to hide or even “quiet quit.”
However, keep in mind that regulatory oversight, social responsibility, and stakeholder engagement are not the only factors that influence leadership styles. There are many other factors that can shape the way leaders execute the corporate vision, including their personal values, organizational culture, and the broader social and economic context. Therefore, while these factors can help to prevent some of the worst excesses of unregulated capitalism, they are not a guarantee of ethical and responsible leadership.
To succeed in the digital era, leadership styles need to evolve beyond those of the Industrial Era. Flexibility, empowerment, collaboration, innovation, and emotional intelligence are crucial for effectively managing a rapidly changing workforce and staying competitive in the global marketplace. While there may be some similarities between today’s hands-on investors and C-level executives and the industrial-era “robber barons,” modern leaders must take into account the regulatory oversight, social responsibility, and stakeholder engagement required in today’s business landscape. Leaders must recognize the challenges of the past and work towards creating a sustainable and responsible business model for the future. Exhibiting “technical empathy” via retrospectives and analyzing product and sprint backlogs can help leaders transition from the industrial era mindset to the digital era.