In 1925, Hollywood released the first “talkies,” films with dialogue and sound that quickly upended the silent film industry and altered the entertainment business forever. Nearly 100 years later, according to MIT Sloan Professor Michael Schrage, corporate leadership has undergone a revolution of similar proportion, resulting from the acceleration of technology and innovation incited by the pandemic.
“Digital transformation has been as disruptive to traditional legacy notions of leadership as sound was to popular entertainment in the silence film era. Everything has to change,” Schrage observed in a webinar focused on a 2021 report he co-authored, “Leadership’s Digital Transformation: Leading Purposefully in an Era of Context Collapse.”
Based on anonymous interviews with 4,300 business executives, the report analyzes the challenges and upsides of modern leadership at work. As a result of this research, Schrage advocates for the use of a so-called “net purpose score” to assess the effectiveness of leaders and their enterprises.
"What we discovered is that digital transformation transformed leaders as much as it had to transform the organization. You couldn’t oversee that digital transformation and simply be who you are. You had to transform, too."
A net purpose score is modeled after a net promoter score, used to assess whether employees would recommend their company to a potential new hire. As Schrage told Fast Company, a net purpose score encourages organizations to:
Acknowledge employee dimensions. As the divisions between professional and personal spheres erode and employees continue leaving the workforce at high rates, leaders are being forced to acknowledge and honor the full spectrum of employee identity and experience. “During the beginning of the pandemic, organizations saw a burst of productivity, but more than a year later, that productivity is turning into attrition. We had to think about people’s emotional, mental, and purposeful well-being,” Schrage says.
Prioritize purpose over productivity. The value a company can offer extends well beyond its profits and outputs—at all levels, team members want their work to be meaningful. As Schrage notes, “People want more than a fair day’s pay for a fair day’s work; they want to find alignment with purpose.” Whether or not employees feel their employer actually stands for something will directly influence how likely they are to recommend someone new join the team.
Hold leadership accountable. Digital transformation has led to a reckoning for leadership in relationship to purpose. As Schrage observes, “The pandemic forced certain kinds of leaders to step up or step away. Legacy leadership championed digital agility and productivity at the expense of enterprise values and purpose.” Turns out, employees value affective traits at high levels—even higher than a pursuit of what’s most effective. “People needed something more than creating more profitability or more efficiencies. They need to feel good about who they are and what they’re doing.”
Walk the talk. Leaders are under increasing scrutiny to ensure alignment between what they say and what they do. “Too often there’s a disconnect between words and actions,” Schrage says. He advises leadership to prioritize listening, be thoughtful in communications, and maintain professionalism during video calls. Schrage acknowledges the added challenge of “context collapse,” in which separating public personas and audiences (especially on social media) is nearly impossible. Not to mention the danger of poorly-received content going viral.
Embrace personal evolution. Just as we contribute to the digital transformation, the digital transformation can remake who we are. According to Schrage, “The classic model of overseeing digital transformation is foolish and flawed.” In fact, he has come to believe, leaders aren’t exclusively in the driver’s seat. “What we discovered is that digital transformation transformed leaders as much as it had to transform the organization. You couldn’t oversee that digital transformation and simply be who you are. You had to transform, too.”
And it’s remarkable to see how quickly these changes have come about. In just a few years, it’s no longer uncommon for a boss to know what the inside of an employees’ house looks like or who a team member is a caregiver for.
As Schrage says, “It used to be people would be annoyed with you if they could hear your kids in the background. Somebody was ‘unprofessional’ if they couldn’t segment their personal or professional lives. Now we have no choice. So how do leaders provide 360 degrees of support in that regard? People want more meaning in their lives, and that brings us to the net purpose.”
Schrage teaches in the short Executive Education courses Digital Strategies for Transforming Your Business and Reimagining Leadership: A Playbook for the Digital Economy.