e-leadership Skills for Competitiveness and Innovation Research findings developed by:

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1 e-leadership Skills for Competitiveness and Innovation Research findings developed by: Prepared for the European Commission, DG Enterprise and Industry

2 Contents ABOUT THE PROJECT...2 ACKNOWLEDGEMENTS...2 FOREWORD...3 INTRODUCTION...4 e-skills FORECASTS AND SCENARIOS...6 THE IMPORTANCE OF e-leadership...10 ESTIMATING DEMAND AND SUPPLY OF e-leaders...16 RECOMMENDED ACTIONS...20 Recommendation 1: Engage with a broader set of stakeholder groups to sharpen definition and metrics for e-leadership skills...21 Recommendation 2: Regularly monitor demand and supply of e-leadership...22 Recommendation 3: Develop and apply e-leadership curricula guidelines...23 Recommendation 4: Create new formats and partnerships for teaching e-leadership skills...24 Recommendation 5: Align actions to develop e-leadership skills with efforts to foster entrepreneurship across the EU...25 Recommendation 6: Foster e-leadership in the context of entrepreneurship and new business creation...26 Recommendation 7: Build awareness of the relevance of e-leadership skills for innovation, competitiveness, and employability...27 OVERVIEW...28 About the Study During 2012, empirica, IDC and INSEAD worked together on a study for the European Commission s Directorate General Enterprise and Industry. The objective of the study, titled e-skills for Competitiveness and Innovation: Vision, Roadmap and Foresight Scenarios, was to develop a vision for Europe s e-skills for competitiveness and innovation, and to examine ways to face current and future challenges. A particular focus of the study was on e-leadership skills. The resulting analysis, roadmap and scenarios focus on how Europe can seize opportunities in innovation, new technologies and emerging forms of organisation and production, while maintaining its priority on inclusive growth. Acknowledgements This project would not have been possible Industry Directorate, Key Enabling without the generous participation of many. We are grateful of the support and contributions of the Steering Committee, consisting of Martin Curley, Vice-President and Director INTEL Labs Europe; Annabelle Gawer, Assistant Professor in Strategy and Technologies and ICT Unit. Finally, we are very grateful to the many professionals who took time from their important efforts at enhancing e-skills to participate in the project workshops and to talk with us. Innovation at Imperial College Business School; Peter Hagedoorn, Secretary General of EuroCIO; Elmar Husmann, Senior Managing Consultant at IBM. Within the European Commission (EC) our contact point was André Richier, Enterprise and Industry Directorate-General, Services 2 E-Leadership: Skills for Competitiveness and Innovation Imprint: This brochure has been prepared by INSEAD elab on behalf of the European Commission, Enterprise and Industry Directorate General. It is a publication of the study e-skills for Competitiveness and Innovation: Vision, Roadmap and Foresight Scenarios, which was carried out by empirica, IDC and INSEAD elab. Legal Notice: Neither the European Commission nor any person acting on its behalf may be held responsible for the use to which information contained in this publication may be put, nor for any errors which may appear despite careful preparation and checking. This publication does not necessarily refl ect the view or the position of the European Commission. European Union, 2013 Reproduction is authorised, provided the source is acknowledged, save where otherwise stated. For use/reproduction of third-party copyright material specifi ed as such permission must be obtained from the copyright holder(s).

3 Foreword There is a huge opportunity for job creation and growth which Europe should not miss. antonio Tajani, Vice-President of the European Commission There are clear signs from industry and other stakeholders that the demand for ICT-related occupations (digital jobs) is going to grow even greater in the coming years. However, a drop in the number of ICT graduates leaving universities and the retirement of ICT workers over the coming years are endangering the ICT job growth potential. There is a huge opportunity for job creation which Europe should not miss. Europe, national governments and stakeholders have the possibility to create up to ICT jobs up until 2015 which the market would be ready to absorb. This would close the forecasted e-skills gap and this was the topic of the high-level conference e-skills and Education on 4-5 March 2013 at which President Barroso launched the Grand Coalition for Digital Jobs. Past developments have shown that ICT-related occupations are much more resistant to crises than most other jobs. The market absorbs more than the annual output of ICT graduates from educational institutions. Consequently, today, investing in e-skills entails even greater opportunities and fewer risks. The growing importance of ICT for both business operations and innovation is an opportunity for professionals who are e-skilled - i.e., who are both ICT-savvy and business-savvy. These competencies are critical for fostering both jobs created by existing companies through innovation and growth as well as self-created jobs by entrepreneurs (including social entrepreneurs) who leverage technology to create new products, services and business. The growing importance of e-skilled professionals - particularly e-leaders - also means that a greater number of stakeholder groups are becoming interested and involved in ensuring demand is well defined and assessed and supply is sufficient. When the Commission launched initial efforts at ensuring Europe had sufficient e-skilled professionals to be innovative and competitive, it worked primarily with those most immediately concerned - specifically, the ICT industry and the ICT services sector. Since then, as organizations are investing even more in ICT and are digitizing an even greater number of business processes, products and services, efforts have expanded and we have engaged with Chief Information Officers and their equivalents - i.e., with leaders who are responsible for ensuring their organizations (whether in the ICT sector or not, primarily in medium and large-size firms) are maximizing value creation from ICT. A greater number of stakeholder groups is becoming involved. The launch of the Grand Coalition for Digital Jobs is reflecting this evolution. The results of the study of INSEAD, empirica and IDC demonstrate that e-leaders are essential to all types of organizations and Europe already has several successful efforts at building e-skilled professionals. The next steps are to collaborate with a greater variety of stakeholder groups in the context of the Grand Coalition to implement the recommendations and rapidly scale-up existing successes. The Commission looks forward to its continued contributions to ensure Europe has the right and sufficient professionals and leaders to be innovative and competitive. e-leadership Study 3

4 Introduction To be innovative and competitive in today s global digital economy, organisations have little choice but to invest in information and communication technologies (ICT). However, without the proper skills to put these technologies to effective use, firms are at significant risk of wasting their investments and missing key opportunities for growth and competitiveness. Results from a recent study conducted by INSEAD elab make this strikingly clear. They highlight that when firms have access to e-skilled professionals, such as enterprise architects, risk and security specialists, and application developers, and invest more in new technologies, the probability of becoming competitive can double. However when firms with insufficient e-skills make significant investments in new technology, do not increase the likelihood of better performance essentially they risk wasting their investments in new technology and losing any competitive edge. Figure 1 illustrates one example of many such complementarities between technology, skills and performance. In the total sample upon which these results are based, 46% of those surveyed were low investors in cloud-based services (i.e., they spent less than 10% of their total ICT budget on cloud-based services), while 30% were high investors in cloud-based services, and the remaining 24% (not shown in the diagram below) did not invest in cloud-based services. 1 1 INSEAD elab. (2013). Building Competitiveness and Business Performance with ICT: How investments in new technology can make companies more competitive. A research report developed in collaboration with AT&T. Available at Figure 1: The benefits of having sufficient access to e-skills; the risks of insufficient access Within group, % of firms that are competitively agile 72% 72% were competitively agile 42% 42% were competitively agile 36% 36% were competitively agile 46% of participants were Low Investors in Cloud 13% of participants were High Investors in Cloud with Weak Technical Talent 17% of participants were Low Investors in Cloud with Strong Technical Talent Size of Each Group Type (% of total sample) 46% 13% 17% 4 E-Leadership: Skills for Competitiveness and Innovation

5 Within the group of low investors, only 36% were competitively agile - that is, compared to the average, they respond more quickly and effectively to local opportunities or threats. The benefits of having sufficient technology-focused talent: 17% of the total survey sample consisted of high investors in cloud-based services that also had high technical skills. Of the firms in this group, 72% were competitively agile. The risks of having insufficient technology-focused talent: High investors in cloud-based services with insufficient technology-focused talent represent 13% of the total survey sample and 44% of high investors in cloud-based services. Survey findings reveal that these high investors were statistically no more likely to be highly agile than low investors in cloudbased services. In essence, firms that were investing more in cloud-based services to enhance agility yet had insufficient access to technology skills were at risk of wasting their investments on cloud-based services. Having strong e-skills is not simply beneficial to competitiveness it is necessary to avoid wasting investments in ICT. This is true for all types of organisations no matter the size or sector. This report synthesizes the key findings from the study e-skills for Competitiveness and Innovation: Vision, Roadmap and Foresight Scenarios. The key objective of this study is to help reduce innovation skills shortages, gaps and mismatches in Europe, and to provide sound, unbiased empirical evidence about supply and demand for different types of ICT-related skills in Europe under different socio-economic scenarios. A special focus of the study is on higher-level innovation skills (which we call e-leadership skills ). After providing a synthesis of the analysis of the supply and demand developments for ICT practitioner and ICT user skills, the remainder of this document will focus on e-leadership skills and seven recommendations for action. Managers, entrepreneurs, and business executives must have e-competences to grow, export and be connected to the global digital markets. In a digital economy, e-leadership skills are essential. Michel Catinat, Head of Unit Key Enabling Technologies and ICT at DG Enterprise and Industry, European Commission e-leadership Study 5

6 e-skills Forecasts and Scenarios Growing Gap: Even with the crisis, demand for ICT workers continues to outnumber the supply. This gap represents an opportunity for job creation which Europe should not miss. TThe ICT workforce in Europe in 2011 amounted to 6.67 million which is 3.1% of the overall workforce. It has been growing over the past decades and will continue to grow in the future. From 2000 to 2010 the ICT workforce grew at an average annual rate of 4.26%. Even at the times of the economic and financial crisis which Europe is undergoing since late 2008, growth remained at 2.65%. The demand appears to be significant for e-leaders. Of the approximately 255,000 vacancies for the EU-27 in 2012, we find 76,000 vacancies for ICT management and business architecture skills. Furthermore, the gap is disproportionately affecting small and medium-size enterprise: 70% of vacancies can be found in SMEs which demand ICT skills in much greater numbers than large enterprises. However, interest in pursuing ICT careers seems to be diminishing among younger generations. Since 2005, the number of computer science graduates has been in continuous decline in Europe. This decline intensifies by the growing number of ICT practitioners retiring from the workforce. The bottom line is: Europe is not producing sufficient numbers of ICT graduates to satisfy the demand. The results of a representative empirica survey of CIO s and HR managers in eight European countries in 2012 show that the number of expected vacancies in ICT-related occupations, extrapolated to the whole of Europe (EU- 27), can be estimated at around in To be competitive, innovation is critical. There are three key aspects to innovating effectively and efficiently: strategy, skills, and tools. These three are the responsibility of the most senior management team. Federico Flórez, Chief Information and Innovation Officer, Ferrovial 6 E-Leadership: Skills for Competitiveness and Innovation

7 Future Gaps: Scenario-based forecasting of ICT practitioner and professional skills in Europe The likely future development in e-skills demand and supply in Europe were estimated by emprica, based on several scenario-based forecasts. In a Cautious Growth scenario the e-skills excess demand or shortage amounts to in 2015 compared to at present. In a more optimistic Return to Confidence scenario the shortage, i.e. the theoretical number of ICT vacancies amounts to in Each scenario influences the input and output factors that make up the model of future demand and supply. Input factors consist of such factors as the number of ICT graduates expected to enter the ICT workforce as well as the number of self-trained or industry certified workers. Output factors include such factors as retirement trends and other exits patterns. These scenarios were put to the test at three workshops, and the experts there scrutinised the assumptions and contributed to honing the final model. Future e-skills demand will increasingly occur in higher level ICT jobs including the management, planning and strategy and ICT development specialist occupations and less in ICT support, delivery and operation, i.e., infrastructure type occupations. Even under the two most likely scenarios Cautious Growth and Return to Confidence gaps between demand and supply of e-skills are significant. 2 For a signifi cantly more detailed description of the methodology used, please refer to Chapter 2 of the Final Report, available at e-leadership Study 7

8 e-skills Forecasts and Scenarios Results from the scenario Cautious Growth The scenario Cautious Growth features economic growth with a slow return to historical growth trajectories. From 2010 and 2015, GDP growth across Europe is assumed to have on average a 0.92% compound annual growth rate. Moderate IT investments will be reflected in 2.1% annual growth until 2015, with an increasing trend from 2014 onwards, to a growth rate of 4.3% on average between IT investments will build upon a rapid diffusion of mobile devices, applications, cloud services and other new IT delivery models. Big data applications and services are expected to grow considerably from 2014 onwards. SME investments in IT innovation will increase only very slowly because of the slow recovery and persistence of the credit crunch. In the education domain, a slight increase in the number of ICT graduates and some labour mobility is expected. Private funding for education and training will be at a moderate level. In the social domain, data-driven commercial services on the web, also driven by mobile devices, will imply some big brother risks. Politically, a continuing incremental process of building Europe step by step is expected. Continuing negotiations between EU Member States will bring about gradual and cumulative progress in European cohesion. In the Cautious Growth scenario, the ICT workforce in Europe will grow from 6.53 million people in 2011 to 7.09 million in 2020, whereby 5.15 million people will be ICT practitioners and 1.95 million will be ICT management level employees. While a general trends towards practitioner shortages can be observed, there will even be some practitioner unemployment in some countries but only for a few years, due to little / lacking mobility across the EU. These countries are most notably Poland and Spain. Poland sees an oversupply mainly due to the steady and strong output of graduates from tertiary and vocational education, while Spain continues to suffer from a slump in demand. In the scenario Cautious Growth, the gap between demand and supply is expected to reach 372,000 in This figure can best be described as demand potential or job potential for ICT jobs. Figure 2: Forecasted demand and supply of e-skills according to two scenarios 1,000, , , , , , , , , , , , , , , , , , , , , , , Scenario: Return to Confidence Vacancies Total Practitioners Management & Architects Scenario: Cautious Growth Vacancies Total Practitioners Mangement & Architects 8 E-Leadership: Skills for Competitiveness and Innovation

9 Results from the scenario Return to Confidence The scenario Return to Confidence features a far more optimistic economic growth scenario with a recovery in Europe expected from 2014 onwards. GDP growth across Europe is assumed at an average annual growth rate of 1.3% between 2010 and Demand will be particularly high for ICT managementrelated jobs and there will be an increasing number of vacancies for practitioner jobs The economic recovery sets a favourable environment for IT investments, growing at 2.9% annually until 2015 and further increasing to a growth rate of 5.6% between We are at an inflection point where Europe can really take advantage of ICT to dramatically boost productivity provided we have the right skills and leadership. This is the only way that Europe can grow its productivity. These new technologies are as a whole creating jobs. Jan Muehlfeit, Chairman Europe, Microsoft Corporation In this scenario, there is an increase in the share and total number of application development jobs and a slight decrease in the number of more infrastructure related jobs. Return to Confidence features a robust general trend towards practitioner shortages, whereby if any rates of practitioner unemployment are observed, they will be at the natural unemployment rate of about 2%. In this scenario the demand potential for ICT workers will reach beyond 7.47 million in 2020 and amount to 8.99 million. In the scenario Return to Confidence, the gap between demand and supply is expected to be 864,000 in That the opportunities of a good crisis should not be missed seems to have been missed by some of our leaders. We are doing less with less rather than more with less. We should be focusing on how to reinvent ourselves. Constantijn van Oranje-Nassau, Head of Cabinet of Vice-President Neelie Kroes, European Commission e-leadership Study 9

10 The Importance of e- Leadership a new type of leadership e-leadership is becoming essential to organisational innovation and competitiveness. To enhance their productivity and competitiveness, organisations are increasingly relying on ICT to operate their business processes, to innovate and to provision products and services. As organisations invest more in business operations and technologies, ICT leaders are expected to be more business-savvy while business leaders are expected to be more ICT-savvy. INSEAD researchers are finding that the strategic roles of CIOs and their ICT Groups have expanded considerably. Since 2009, INSEAD researchers have collaborated with CIOnet, a European CIO federation, on an annual survey of CIOs. The results consistently show that: CIOs spend a significant percentage of their time outside of managing ICT services; CIOs spend about a third of their time working with non-ict colleagues, whereas ICT Groups spend about a quarter of their time working with non-ict colleagues. In both cases, they anticipate the percentage of time working with business colleagues to grow by at least 20%; and CIOs and their ICT groups anticipate spending an increasingly smaller percentage of their time managing ICT services and a growing percentage of their time working with business colleagues; managing enterprise-wide business processes; and working with external customers and partners. E-leadership in the context of e-skills The Commission has been at the forefront of tracking the evolving demand and supply of e-skills. In 2004, the European e-skills Forum adopted the following definition for e-skills (EC, 2004): ICT user skills: the capabilities required for the effective application of ICT systems and devices by the individual. ICT users apply systems as tools in support of their own work. User skills cover the use of common software tools and of specialised tools supporting business functions within industry. E-business skills (also referred to as e-leadership): the capabilities needed to exploit opportunities provided by ICT, notably the Internet; to ensure more efficient and effective performance of different types of organisations; to explore possibilities for new ways of conducting business/administrative and organisational processes; and/or to establish new businesses. In the course of this study, a variety of stakeholder groups and experts have been consulted and the following definition of e-leadership was developed. ICT practitioner skills: the capabilities required for researching, developing, designing, strategic planning, managing, producing, consulting, marketing, selling, integrating, installing, administering, maintaining, supporting and servicing ICT systems. e-leadership is the accomplishment of a goal that relies on ICT through the direction of human resources and uses of ICT. Essentially, e-leaders are leaders who draw on technology to accomplish an ICT-enabled objective. 3 Aral, Brynjolfsson and Wu 2012; Brynjolfsson and Saunders 2010; Hunter and Westerman 2010; and Weil and Ross For recent examples, see Austin et al. 2009; Fonstad 2011, 2012; Peppard 2010, 2013; Spitze and Lee 2012; Woerner and Weill (2009). 5 Fonstad (2012). Three ways to thrive: How Chief Information Offi cers are enabling their organizations to grow and strengthen in today s challenging economy. An annual report on the expanding strategic roles of ICT professionals, developed by INSEAD elab in collaboration with CIONET 10 E-Leadership: Skills for Competitiveness and Innovation

11 In showing why the demand for e-leaders is outpacing the supply, INSEAD researchers have profiled many organisations that have become far more competitive because of their different uses of ICT. Below we discuss two of them, AkzoNobel and Coca-Cola Europe. In 2012, the CIO of AkzoNobel, Pieter Schoehuijs, earned the title of European CIO of the Year for business-process driven leadership, because of his role in building a new generation of e-leaders within and outside the company. About eight years ago, to compete more efficiently and enter new markets, senior management at AkzoNobel decided to transform the company from a financial holding firm of separate businesses into a more matrixed organisation where the business units were coordinated to improve efficiency and obtain synergies. ICT was fundamental to this transition. Today, the ICT Group at AkzoNobel has an annual operating budget of 300mn EUR and is responsible for all the company s systems, including those supporting functional organisations such as finance, supply chain, HR, and legal. About 930 people work in ICT in 43 countries around the world. This massive consolidation, coupled with a greater use of external service providers, has significantly changed the skill set needed by the ICT Group at AkzoNobel. Before, there was a greater need for technical people who knew how to perform services such as install servers, manage systems, and apply patches. Now, there is a greater demand for professionals who are more skilled at service delivery management, systems planning (e.g., enterprise architecture) and business processes. At the Coca-Cola Company, Europe CIO Sabine Everaet and her team of 45 specialists handle all non-outsourced ICT needs in Europe. For a global firm that generated revenues of more than EUR 46.5 billion in 2011, Everaet and her group are considered key business partners for identifying risks and interdependencies for complex programs, and have a scope well beyond that of the classical ICT projects. They earned their enhanced strategic roles only after improving ICT operations and enhancing key business processes. Everaet has enriched the skills of the entire ICT team by enabling them to slip easily into the role of high-level business-ict relationship managers. Explains Everaet, I am really encouraging my guys to work with the business units, work with senior management of the bottlers, work with corporate, understand what the dynamics are, see things from their perspective, learn to connect the dots, and come away with a holistic view. e-leadership Study 11

12 The Importance of e-leadership Effective e-leaders are capable of leading teams and managing technology systems in ways that achieve both local and global demands. In 1961, W.C.H. Prentice published an article on Understanding Leadership in the Harvard Business Review (HBR), which proved so relevant that the venerable journal republished the piece in In the article, Prentice offers the following definition of leadership (Prentice 2004: 102-3): Leadership is the accomplishment of a goal through the direction of human assistants. The man who successfully marshals his human collaborators to achieve particular ends is a leader. A great leader is one who can do so day after day, and year after year, in a wide variety of circumstances. Ever since Prentice opened up this exciting field of study, a significant body of research on leadership has developed identifying critical activities and skills that constitute effective leadership and describing how leadership activities and responsibilities can be distributed across several individuals. Research on leadership consistently highlights four general activities that leaders must be able to accomplish well: Making sense of a situation (e.g., identify interdependencies); Building and aligning relationship across boundaries (e.g., build relationships within and across organizations); Developing a compelling vision for an initiative that creates value (e.g., identify risks and synergies from interdependencies); and Managing change and Inventing - access, negotiate, coordinate, and motivate a variety of resources throughout the processes of realizing the initiative and of achieving and sustaining value from it (e.g., active experimentation). In addition to listing activities, scholars have compared leadership characteristics to management traits in order to highlight the differences between the two concepts. In his 1989 book, On Becoming a Leader, Warren Bennis composed a list of these differences. What follow are some examples of his research: The manager administers; the leader innovates. The manager maintains; the leader develops. The manager focuses on systems and structure; the leader focuses on people. The manager relies on control; the leader inspires trust. The manager asks how and when; the leader asks what and why. The manager does things right; the leader does the right thing. Drawing on the work of Prentice and dozens of other scholars, INSEAD researchers have defined e-leadership as follows: e-leadership is the accomplishment of a goal that relies on ICT through the direction of human resources and uses of ICT. E-Leaders are especially salient to digital enterprises. Digital enterprises are enterprises from all sectors of the economy that can drive economic and/or social value by using digital technologies. They are characterized by a high intensity of utilisation of new digital technologies to sharpen their business intelligence, engage with their customers, improve their operations and invent new business models. 12 E-Leadership: Skills for Competitiveness and Innovation

13 Figure 3: e-leaders are leaders focused on using technology and a multitude of resources to accomplish ICT-enabled goals. e-leader Manager Leader Digital Entrepreneur Entrepreneur Leadership is the accomplishment of a goal through the direction of human resources. e-leadership is the accomplishment of a goal that relies on ICT through the direction of human resources and uses of ICT. e-leaders are leaders that draw on technology to accomplish an ICT-enabled objective. Entrepreneurship is the accomplishment of a new organisation through the direction of human resources. Entrepreneurs are leaders who create new ventures. Digital entrepreneurship is the accomplishment of a new organisation that relies on ICT for its operations and its products and services through the direction of human resources and uses of ICT. Digital entrepreneurs are leaders who create new ventures that rely on ICT for their operations, products and services. e-leadership Study 13

14 The Importance of e-leadership Effective e-leaders have a T-shaped portfolio of skills. Effective organisations expect that e-leaders should have a T-shaped portfolio of skills. Very simply, having a T-shaped portfolio of skills means that a leader is both a business-savvy and an ICT-savvy professional. More precisely, having a T-shaped portfolio of skills means that a leader has the following skills: Using ICT: A vertical set of skills that represent expertise or deep knowledge in a specific area (e.g., science; engineering; ICT; social sciences); A horizontal set of skills that represent transversal skills (e.g., negotiation; critical thinking; design and systems thinking, business and entrepreneurship, etc.) that enable collaboration across a variety of boundaries, and; BOTH vertical and horizontal sets of skills require a basic level of ICT user skills, as defined by the Commission. Although e-leaders should have a T-shaped portfolio of skills, the distribution of expertise may vary, depending on what sets of activities an e-leader is responsible for. The table below summarizes eight general goals and related sets of activities that successful organisations must be able to accomplish (whether with internal or external resources) in order to use ICT competitively. The table shows how each of the eight sets of activities demands either strategic understanding (knowing what is possible) or practical understanding (knowing how to do the possible) of a set of skills. For example, a Chief Marketing Officer is expected to have a strategic understanding of technology such as social media and analytics and a practical understanding of measuring and modelling consumer behaviour. On the other hand, an enterprise architects need to have a practical understanding of ICT systems and how to define and manage interdependencies (e.g., between ICT, business processes and data) as well as functional, product and sector expertise to ensure that the enterprise architecture supports an operating model that is best for the organisation s given its strategy. Identifying relevant technology opportunities and influencing organizational stakeholders to capitalise on those opportunities are some of the defining characteristic for modern ICT leadership. Employees especially recent graduates often benefit from having a defined structure that will help them evolve and grow as the organization evolves and grows. Intel believes that to attract and retain the best talent, it is important to provide employees with a clear and explicit development path that caters for personal, organizational and industry leadership. Jim Kenneally, principal investigator at Intel Labs, and Research Fellow at Innovation Value Institute 14 E-Leadership: Skills for Competitiveness and Innovation

15 In large and medium size organisations, e-leadership is distributed across multiple individuals. In many large organisations, one head e-leader, such as the CIO, is responsible for the overall development and management of ICT systems, while other deputy e-leaders are accountable for leading a more specific set of activities, such as one of the eight listed in the table. In addition to the CIO, many organisations for example now employ a Chief Enterprise Architect who is responsible for ensuring that ICT systems, business processes and data are all coordinated and aligned to the organisation s operating model. In several organisations, there are also high-level business-it relationship managers who must lead teams of business managers and ICT developers to ensure the demands of a particular business unit are prioritized, aligned and met. Table 1: To be accomplished well, each of the following key set of activities requires a different mix of strategic and practical understanding of vertical and horizontal expertise. Literacy & Basic Skills Using ICT (Vertical Expertise) Developing organisations (Horizontal/Transversal Expertise) Global Knowledge Economy Talents Key Sets of activities digital literacy, etc. Reading, writing, math, ICT expertise Function expertise Product expertise Customer & Sector expertise Managing change & inventing Developing a compelling vision Building and aligning relationships across boundaries Making sense of a situation Business development, sales and marketing Business process management Program & project management Global sourcing management Enterprise architecture Solution development and implementation Information management & security IT services management & delivery = strategic understanding (knowing what is possible) = practical understanding (knowing how to do the possible) 6 For general research on the importance of distributed leadership see Ancona and Bresman (2007), Ancona et al. (2007), and Ancona et al. (2009). e-leadership Study 15

16 Estimating Demand and Supply of e-leaders Do European organisations have enough e-leaders to use technology to enhance their competitiveness through better operations and innovation? The simple answer is no, but the reality is far more nuanced. To estimate the demand of e-leaders, the research team assumed that some organisations need more e-leaders than others, depending on two dimensions. 1. The size of organisation: In terms of number of full-time equivalents (FTEs), large ( FTEs) or very large firm (1000+ FTEs) will have a greater need and capacity to distribute key responsibilities across more individuals than a micro firm (1-9 FTEs) or a small firm (10-49 FTEs). 2. The ICT-Intensity of a sector: This is the degree to which organisations rely on technology for their business operations, innovations and the provisioning of their services and products. The demand for e-leaders is greater for organisations in the ICT sector than for organisations in non-ict sectors, because the ICT sector needs e-leaders for internal operations, innovation and for external provision of services. Within non-ict, there are high ICT intensity sectors and low ICT intensity sectors. Based on these factors, organisations were assigned into one of three different groups, differentiated by different colour in the table below. Within each of the three groups, demand was estimated. The overall number of demand for e-leadership in Europe is estimated at 680,000 persons. Table 2: Summary of estimated e-leadership demand. Type of Firm & Sector Size of firm Estimated demand of e-leaders per enterprise Number of enterprises Estimated total demand for e-leaders by firm type high growth SMEs 1 15,000 15,000 ICT sector medium 4 6,500 26,000 large & very large 8 1,400 11,000 High ICT intensity sectors high growth SMEs medium large & very large ,000 30,000 60, ,000 29, ,000 Low ICT intensity sectors high growth SMEs medium large & very large ,000 25, , ,000 42,000 84,000 TOTAL ESTIMATED DEMAND OF e-leaders 436, , E-Leadership: Skills for Competitiveness and Innovation

17 Estimates of the supply of e-leadership skills The research team made scholarly use of the valuable data collected by the National Association of Colleges and Employers (NACE), which is a highly regarded source of information on the employment of the college educated worldwide. Nonetheless, more research needs to be done in this area especially with regards to metrics (e.g., see first recommendation) In a larger study of the European management population, NACE created eight management categories ranging from top executives in the c-suite all the way down to assistant managers of product lines. To estimate the supply of e-leaders within each of these eight categories, researchers multiplied the population within each group by its e-leadership quota the estimated number of people within a NACE category who have a sufficient T-shaped portfolio of ICT and business skills to serve as e-leaders. The total supply consists simply of adding up the e-leaders within each NACE professional group. As a result of these assumptions, the overall supply of e-leaders at management level in Europe is estimated at around 661,000. Ensuring we have sufficient e-leaders is a business issue. We need leaders who understand how the business operates, what new and relevant information and communication technologies are emerging, and how can we best take advantage of opportunities enabled by the new technologies to help the business thrive. Daniel Dubreuil, CIO, SAFRAN Table 3: Summary of estimated e-leadership supply. Occupation Group Population of Each Occupation Group Times (x) e-leadership quota Equals (=) ICT Population Entrepreneur Gazelles ICT service managers (ISCO 1330) 12, % 12, , % 260,697 Other Managers (ISCO 112, 121, 123, 131, 1332, 134, 141, 142, 143) (selection of examples, below) 12,553,845 varied (average is about 3%) 389,182 Managing directors and chief executives 1,495,180 3% 44,855 Business services and administrative managers 2,283,360 5% 114,168 Sales and marketing managers 1,094,997 5% 54,750 Research & development managers 129,445 50% 64,723 Managers in agriculture, forestry and fisheries 109,833.5% 549 Professional services managers (other) 135,759.5% 679 TOTAL ESTIMATED SUPPLY OF e-leaders 661,000 e-leadership Study 17

18 Estimating Demand and Supply of e-leaders Changing the assumptions reveals an even greater gap between demand and supply of e-leaders. The estimates of demand and supply of e-leaders cited in this report are quite conservative. When the estimates were presented to experts from academia, industry and public policy institutes, most agreed that the real demand for e-leaders is probably higher; the real supply even lower; and consequently, the actual gap between demand and supply is even greater. To develop a better understanding of how sensitive the estimates are to each key assumption and in the process, develop a better understanding of why demand and supply fluctuate, readers are encouraged to examine, challenge and change each assumption to see how it affects the demand or supply. Table 3 describes how changing a few key assumptions add or take away from the original estimates of demand and supply. Change in key assumptions related to estimating SUPPLY of e-leaders Assumption: 100% of the 260,687 ICT service managers qualify as e-leaders. However organisations that have consolidated and centralized their ICT functions into a shared services organisation have had to dismiss some managers while at the same time have had to hire new managers. Resulting change If this assumption is relaxed from 100% to 80%, then there are 52,000 fewer e-leaders in Europe. Assumption: 50% of the Research & Development managers qualify as e-leaders. It could be argued that this too is a generous assumption, as many scientists working in R&D labs do not necessarily have the ability to inspire and guide teams of people to create ICT-based solutions. If this assumption is relaxed by half, from 50% to 25%, then there are 32,000 fewer e-leaders in Europe. Assumption: 5% of Business services and administration managers (NACE 1210) qualify as e-leaders. Some assumptions could be argued as being too limiting. For example, it could be assumed that twice as many business services and administrative managers are sufficiently ICT-savvy to be e-leaders. If this assumption is changed from 5% to 10% then there are 114,000 more e-leaders in Europe. We joined forces with European Commission and some business schools to develop curricula for 2-years programs to earn an IT-MBA and a Masters in Business Enterprises Architecture. Christian Pagel, Vice-President of Corporate Business Systems and CIO, SGLCarbon SE, Board Member for HR & Education, EuroCIO 18 E-Leadership: Skills for Competitiveness and Innovation

19 Change in key assumptions related to estimating DEMAND of e-leaders Assumption: In the ICT services sector, medium-size firms need only four e-leaders and large-size firms need eight e-leaders to be productive. It could be easily argued that this assumption is well off the mark, as firms in the ICT services sector need e-leaders to build bridges with internal clients and to engage with external customers. Resulting change If this assumption is changed to ICT services sector firms need twice as many e-leaders, then demand for e-leaders increases by 37,000. Assumption: Gazelles need only one e-leader to succeed. It could be argued that in today s digital economy, any start-up that has succeeded in achieving 20% growth per annum for its first five years relies heavily on technology for its operations and its new products and services. As a result, most Gazelles would need at least two e-leaders, one to lead projects related to operations and another to lead projects related to new products and services. If all Gazelles need two e-leaders, then demand for e-leaders in Europe increases by an additional 70,000. Assumption: medium-size firms in high ICT intensity sectors only need two e-leaders. It could be argued that because they are in high ICT intensive sectors, these firms need at least four e-leaders, where each could be responsible for two of the eight sets of activities described earlier. If medium-size firms in high ICT intensity sectors each demand four e-leaders, rather than two, then demand increases by 120,000 e-leaders. When all these assumptions are taken into account, then demand rises by 227,000 e-leaders to a total of 915,000. The assumptions used to develop the estimates of demand and supply of e-leaders provide important insights into how academic institutions, policy makers, and businesses can work together to forecast demand more accurately and ensure a sufficient supply. The recommendations section includes more specific actions that can be taken to eliminate the gap. We understand from our employees and customers that there is a gap. We have developed curricula materials to help build the CIOs of the future. Jeannette Weisschuh, Director of Sustainability and Social Innovation, Hewlett-Packard GmbH e-leadership Study 19

20 Recommended Actions The good news is that Europe has several examples of successful multi-stakeholder efforts that are helping to build a larger supply of e-leaders. The challenge going forward is one of rapid scaling. This section presents recommendations from the study Vision, Roadmap and Foresight Scenarios for Europe for ensuring Europe has sufficient e-leadership skills. The intention of these recommendations is to provide valuable input for the development of a comprehensive roadmap for actions at EU and national levels. The recommendations are intended for a variety of stakeholder groups. The project developed the following seven recommendations, along with a proposed timeline for key actions. Recommendation Engage with a broader set of stakeholder groups to sharpen metrics for e-leadership Preparation Implementation skills First Results 2 Regularly monitor demand and supply of e-leadership Preparation Implementation First Results 3 Develop and apply e-leadership curricula guidelines and quality labels Preparation Implementation First Results 4 Create new formats and partnerships for teaching e-leadership skills Preparation Implementation First Results 5 Align actions to develop e-leadership skills with efforts to foster entrepreneurship across Preparation Implementation the EU First Results 6 Foster e-leadership in the context of entrepreneurship and self-employment Preparation Implementation First Results 7 Build awareness of the relevance of e-leadership skills for innovation, competitiveness, and employability Preparation Implementation First Results 20 E-Leadership: Skills for Competitiveness and Innovation

21 Recommendation 1Engage with a broader set of stakeholder groups to sharpen definitions and metrics for e-leadership skills Background: There is a need for more precise and shared definitions and metrics of e-leadership skills and competencies to demonstrate what kinds of e-leaders are associated with specific kinds of business and social value creation; ensure curricula and e-leadership development efforts are relevant; improve monitoring of demand and supply of e-leadership skills; and increase the effectiveness of policy decision making. Until now, CIOs have played an important and active role, in large part because they are part of well-organized European CIO networks and they have expressed clear needs and requirements. Now there is a need to complement their contributions by involving business line managers, CxOs, entrepreneurs, and freelancers. However this will be more challenging as these groups are less organized and aware of their e-skills needs. actions: To accelerate the development of e-leadership, it is important to engage with non-it business leaders, such as Chief Executive Officers, Chief Financial Officers and Chief Marketing Officers, as well as with digital entrepreneurs. During this project considerable insight and input has been provided by Chief information Officers. Senior management teams can identify new critical skills required by their strategy and create a detailed inventory of how to access them. The same information will be necessary form entrepreneurs and freelancers communities. A trusted neutral party can collect and synthesize lessons from applications of e-leadership to ensure the definitions are broad enough to cover all relevant cases of ICT-informed leadership in today s enterprises and precise enough to be practical and insightful. Further attention needs to be paid to using these results for the development of an e-leadership skills framework as an extension of the European e-competence Framework (e-cf) for ICT practitioners. This would be used by organizations in the public and private sector to identify and inventory key skills for accomplishing their strategic objectives. The Commission is best placed to lead on the further development and sharpening of metrics for e-leadership skills. Essential to the success of such an initiative is regular engagement with a broad set of stakeholder groups, such as C-level business executives and digital entrepreneurs. The Commission may want to initiate such an activity as an integral part of on-going studies in which all relevant stakeholders need to be involved in dialogue. Stakeholders include industry, education, training and certification institutions, academia, the CEN Workshop on ICT skills, Eurostat, the national statistical institutes, national employment agencies and staffing industry representatives at national and European levels. of a stakeholder dialogue. Initially it could be funded by the European Commission for instance though the CEN mechanism. 8 See Dewhurst, M., Hancock, B. and Ellsworth, D. (2013). Redesigning Knowledge Work: How to free up high-end experts to do what they do best. Harvard Business Review. Pp e-leadership Study 21

22 Recommendation 2 Regularly monitor demand and supply of e-leadership Background: There is still insufficient quantitative data and relevant statistics to define and anticipate shortages, gaps and mismatches. Existing data sets from other sources are scarce and have limited relevance. The lack of data significantly restricts the actions of a broad set of stakeholder groups. New and better data would help defining priorities and measuring progress. Actions: Building on the first recommendation (i.e., engage broader set of stakeholders and sharpen metrics for e-leadership skills), the following initiative would help establish regular monitoring of demand and supply of e-leadership skills. 1. Specify data requirements for establishing meaningful measurements for use in a monitoring system consisting of data collected from two types of surveys: those of demand side actors (e.g. HR managers, CIOs in organisations) and those of suppliers (e.g. universities and business schools); 2. Identify and analyse secondary data sources for suitable data (mainly from Eurostat to ensure homogenous data across all EU Member States) to extract information on demand and supply of e-leadership skills required by policy makers as a basis for decision making. 3. Monitor key performance indicators and scenarios on the supply side and demand side of e-leadership skills and benchmark these KPIs against national policy initiatives and multi-stakeholder partnerships in all Member States. These actions should be started as a coordinated Europe-wide activity and carried out by the Commission in close cooperation with Eurostat and national statistical institutes. The results, especially data on expected demand, should be made available to universities and business schools in order to initiate appropriate course development on the supply side. European industry could then be made aware of new e-leadership courses at universities. Benchmarking will also provide a robust basis for understanding the impact of the policies, initiatives and actions launched at the EU and national level. Such insights would enable policy makers to propose and coordinate better ways and more efficient means to reduce e-leadership skills shortages, gaps and mismatches through multi-stakeholder partnerships. 22 E-Leadership: Skills for Competitiveness and Innovation