Essential Leadership Competencies in the Age of AI

Friday, 22. March 2019

A guest article by Milon Gupta

As Artificial Intelligence is used more frequently, it has changed our working environment. How these changes happen is an open, designable process characterized by high dynamics as well as opportunities and risks. The only thing that‘s clear is that no organization will be able to ignore Artificial Intelligence (AI) in the long run without detriment to itself. In order to stay competitive in the age of AI, leveraging the power of self-learning algorithms is key. However, even processes of work and leadership should be adjusted in a sensible way. Only then, a substantial rise in productivity can be achieved. To design the dynamic change enterprises need agile organizational structures and employees with a new kind of leadership competencies. For leadership structures and competencies of hierarchic matrix organizations more and more fail to match the dynamic demands of the AI age.

How Artificial Intelligence Changes Work and Leadership

DigitizationIn a report the German Federal State Bank of Baden-Wuerttemberg identified a number of macro-economic effects to be expected if AI is massively used. This includes a fundamental change to companies’ business models as well as higher productivity. The analysts of the Bank of Baden-Wuerttemberg don’t expect any global job decline, but a massive change of job profiles. According to the bank’s report, the main challenge is to prepare employees for the fundamental change of the working environment.

Productivity doesn’t grow much at the moment. This can be overcome with the help of AI. That means: Companies leveraging AI can expect a rise in productivity and competitiveness. Higher productivity as a consequence of using AI benefits especially highly qualified employees and companies using AI. This will lead to a bigger income devide.

AI will be more and more used for processes in administration and management. This means that, in particular, controlling functions executed by managers up until now will cease to exist. This is because real time analyses of data and transparent presentations of their assessment will level out the gradient of knowledge between leaders and employees. Thus, self-organized AI-supported teams will be able to know at any time where they stand, and don’t need to be controlled by a manager any more.

In the age of AI, the leaders’ scope of responsibilities will move away from administrating and controlling towards supporting and inspiring employees. These are leadership activities which cannot be assumed by learning machines within a foreseeable period.
Almost any organization will be able to use AI soon. However, companies differ in the way how effectively they do it and how well they design their work and leadership processes agile and customer-centered.

Why Dynamic Work Processes Require Dynamic Leadership

Lead a teamThanks to digital technologies and global competition innovation cycles for products and services have sped up in the recent years. Facing this kind of innovation pressure, only those companies who make their work processes leaner, more flexible and more creative will stay competitive in the long run.

Matrix organizations with departments and hierarchic leadership structures are not really apt to this. In fact, flat hierarchies and self-organized teams working in a demand-related way are needed. Static leadership structures with titles and controlling functions do not live up to this. In contrast to that, dynamic leadership structures with leadership roles varying according to the task and leaders acting supportive and inspiring instead of administrative and controlling are required.

Key Competencies for Dynamic Leadership

Those who assume variable leadership roles in dynamic work processes need a profile of competencies that differs strongly from the competencies of a classical leader with controlling and instructive functions.

According to the onion model developed by myself, there are three areas of competencies for dynamic leadership. They consist of inner competencies, interpersonal competencies and systemic competencies.

The Onion Model of Leadership Competencies

The Onion Model of Leadership CompetenciesJust as with an onion, the quality of the whole depends on the core: Interpersonal and systemic competencies are based on the inner competencies. For personal as well as professional growth, it’s not very sustainable to develop just one or other competencies in the outer layers of the onion. Only a holistic development from the inside out can lead to a sustainable development of people in leadership roles.

Altogether eight key competencies can be mapped on the three competency areas. For the inner competencies, these are 1. self-regulation, 2. Openness, and 3. uncertainty tolerance. The interpersonal competencies consist of communication competency, enabling competency and participative action. The systemic competencies in the outer onion ring comprise holistic thinking and strategic action. Within the three competency areas there are many other leadership competencies.

According to my experience and based on scientific literature on the topic, the eight competencies mentioned above are apparently the key to leadership success in dynamic work processes. A high level in all eight key competencies is essential for the success of leaders and their organizations in the age of AI. Competencies can be further developed by training, coaching and, first of all, deliberate learning in the working practice.

What Enterprises Can Do to Promote Leadership Competencies

No one is born a leader, but is made one. Therefore, there’s a lot organizations can do to promote the eight mentioned leadership competencies of their leaders in order to be successful in the AI age.

There are three levels companies can act on in order to develop leadership competencies apt to dynamic work processes in agile organizations.

  • Level 1 is the corporate culture. It is the basis for any learning experience and development opportunities of any employee, including the ones in leading roles. The corporate culture comprises common values, standards and attitudes coining thinking and acting of the workforce. As it has evolved over years and decades it cannot be changed just by pushing a button. But it can be designed in the medium term by leaders putting the desired culture into practice through their actions, for example when dealing with employees’ mistakes or ideas.
  • Level 2 is the everyday life in work and leadership. By reflecting their own leadership behavior, leaders can develop their competencies in a sustainable way. However, this requires the will and the skill to practice this over and over. The management board can change everyday life at work sustainably by changing processes, for instance by scheduling working hour more freely and by creating free spaces for innovative ideas and reflection. In medium terms, this can cause a change to the corporate culture.
  • Level 3 is the organized development of leaders. Thereby, it’s important to go beyond classical training programs and punctual coaching measurements, but to develop a holistic concept that integrates well into practice and is supported by CEOs. Unfortunately, a lot of well-meaning single measures have no effect as they are either not embedded in an overall concept or too far away from work practice.


Digital LeadershipMany enterprises need to take action when it comes to making leadership structures and leadership competencies future-proof. Those who understand this and take action in time, can win sustainable competitive advantage.

You would like to know how you can make the leadership structures and leadership competencies in your organization fit for the AI age? I offer you a free leadership check including 20 minutes of evaluation discussion. Take the opportunity before your competitors do, and get in touch via the DYNAMIC LEADERSHIP contact form to get the free leadership check and arrange for an evaluation meeting. I look forward to your feedback.

Read appropriate to the topic also our article
Manager vs Machine: Essential Skills In Times of AI.

About the Author

Milon GuptaMilon Gupta is an independent strategy coach and leadership consultant. He helps enterprises with developing business strategies and leaders in a sustainable way. The certified coach specializes in supporting leaders in strategic decision-making and developing leadership competencies. Under the brand name DYNAMIC LEADERSHIP he offers comprehensive services in the field of leadership development together with a cooperation partner – from individual coaching and practical leadership consulting to the measurably effective leadership program.

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