The Internet can be difficult to
grasp conceptually because it is both
a driver of change and a tool for deal-
ing with that change. The technology
is outpacing the ability of many
organizations to apply it because they
don’t have the infrastructure or
processes to integrate it with their
existing cultures and business
processes. But acquiring knowledge
of technology is not enough; leaders
must also be able to convert their
knowledge into effective strategies,
policies, and processes.
The executives and managers sur-
veyed believe that despite the atmos-
phere of pervasive change, funda-
mental leadership skills are still
important. However, those skills can-
not remain static; they must be con-
tinually adapted to the technologi-
cally mediated environment. So
leaders face layers of complexity and
intensity that did not exist before.
Good communication skills
emerged as the top priority in the
responses to the second question:
“What skills, experiences, and traits
do you think are important for being
an effective leader in the digital econ-
omy?” (See the sidebar “The Critical
Assets.”) The importance of being
able to communicate quickly with
anyone inside or outside the organi-
zation is amplified in the networked
economy. With the proliferation of e-
mail, leaders must be able to commu-
nicate effectively not just through
speaking but also through writing.
Adeptness in the medium of video-
conferencing has also entered the pic-
ture. Most important, today’s leaders
must be able to communicate effec-
tively across numerous boundaries—
organizational, functional, geographi-
cal, generational, and more.
One of the main challenges men-
tioned by leaders is communicating
with the Net generation—people born
after 1977, a demographic group
even larger than the baby boom gen-
eration. The Net generation, which is
beginning to enter the workforce,
grew up with technology and the
Internet, so its members are accus-
tomed to interactivity, collaboration,
and nonhierarchical systems of com-
munication. In addition, for most of
them learning how to use new tech-
nology is like falling off a log.
Attracting, retaining, and motivating
workers from the Net generation is
critical for organizations and requires
a clear departure from the traditional
command-and-control style of
The primary imperative of com-
munication has always been to unify
a number of diverse individuals
around a core purpose so they can
all move in the same direction. But
the leaders indicated that this has
become increasingly challenging for
two reasons. First, because of a blur-
ring of boundaries within organiza-
tions and between organizations and
customers, partners, and contractors,
leaders often find themselves in situ-
ations where they must influence
others without having the formal
authority to do so. Second, the
prevalence of mergers, acquisitions,
and alliances has created a fluid
workplace in which the composition
of a team is likely to change during
the course of a project. The leader-
ship challenge is to establish a clear
The Biggest Challenges
Following is a sampling of responses
to the question “What specific lead-
ership challenges do you face now
that employees, customers, and sup-
pliers are using Web-based tech-
Theres a sense of urgency
that says if were not on the Web,
we’re going to be out of business.
Part of the problem is that
even though we can do a lot of great
things, our systems are still very
much direct-mail focused. So were
constrained internally and have to
work with jury-rigged technology.
A lot of the infrastructure
changes take a while to get going.
Things are going so fast that they
are outpacing the formal infrastruc-
ture that historically takes care of
those things.
We are working with world-
class subcontractors, and their sys-
tems are archaic.
As a supplier, we need to hold
our distributors’ hands and pull
them into the twenty-first century.
It’s important to be on the leading
edge of technology but not on the
bleeding edge.
We used to rely on the tech-
nology guys . . . now were finding
that the internal business owners
need to understand technology.
What is the Web—its risks, its bene-
fits? What does it mean to do busi-
ness in the digital economy?
When respondents were asked to
name one or more specific chal-
lenges, these five were named most
Integrating new technologies
Changing business models
Higher customer expectations
Mastering new technologies
Keeping pace with technology
trends in your industry

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