The concepts of leadership and management are quite broad, which might result in confusion and misunderstanding. This presentation utilizes the definition of leadership formulated by Yukl (2013), in which it is perceived as a process of influencing others. As such, leadership implies interaction with subordinates to make them understand the goals and reach an agreement on how to achieve them. On the other hand, management incorporates organizational activities: budgeting, coordinating, and monitoring (Kotter, 2011, as cited in Algahtani, 2014, p. 74). Therefore, leadership and management might overlap; however, leadership goes beyond organizational routine and revolves primarily around motivation and strategic visioning.
Industry 4.0: The New Era
The modern world is moving towards a so-called Industry 4.0 era: a highly connected and automated business environment. According to Bodrožić and Adler (2018), this shift started in the 1990s with the development of computer and telecommunication technologies. Under this influence, business processes became more complex and less hierarchical. As a result, leadership and management in the Industry 4.0 era require the collaborative actions of multiple agents (Guzman et al., 2020). In this regard, Industry 4.0 created a new set of competencies and skills for leaders and managers. The charismatic, scientific, and even transformational approaches that worked in previous eras have become insufficient.
Pre-Industry 4.0: Leadership
Pre-Industry 4.0 leadership and management theory already included some of the contemporary elements. For example, the contingency approach considered the behavioral aspect and situational environment (King, 1990, as cited in Hunt & Fedynich, 2019, p. 23). However, leadership and management were still clearly delineated, as the leader’s responsibilities were limited to guidance. Meanwhile, subordinates were restricted to following directions set by the leader. Additional complexity and horizontal linkages that emerged with the Industry 4.0 era required adapting the old practices to modern reality. As a result, leaders and managers had to master new competencies to remain relevant in the contemporary world.
Industry 4.0: Critical Competencies
Competencies and skills critical for leaders and managers during the shift towards Industry 4.0 can be divided into four major categories. First, the cognitive category requires advanced skills in active learning and listening. Second, leaders and managers must be well-trained in negotiation and persuasion, as the top-down approach of the past becomes less effective. Third, capable leaders must provide a strategic vision and identify key causes behind the events. Surprisingly enough, entrepreneurial competency, the fourth category, was considered relatively insignificant (Guzman et al., 2020). Overall, organizational leadership under Industry 4.0 leaves the business aspect to managers, while leaders concentrate on interpersonal communications and general visioning.
Way 1: Cross-Culturalism
Given the globalized and multicultural nature of business in the Industry 4.0 era, modern-day leaders and managers have to incorporate cross-culturalism in their working styles. According to Bonsu and Twum-Danso (2018), cross-cultural leadership includes the following elements: cultural sensitivity, knowledge, and open-mindedness. Cultural sensitivity implies accepting practices originating from other people’s national, cultural, and religious backgrounds. Knowledge requires a capacity to use other people’s backgrounds for maximizing their productivity. Finally, open-mindedness is crucial for creating strong and healthy linkages with people and organizations from various parts of the world (Bonsu & Twum-Danso, 2018). Overall, cross-culturalism is necessary for modern-day leaders and managers working in international organizations.
Way 2: Authenticity
Authenticity in leadership and management corresponds with the increasing importance of active listening, negotiation, and persuasion as professional competencies. According to Duignan (2014), authentic style is defined by respect, reliability, and consistency in words and actions (as cited in Hunt & Fedynich, 2019, p. 24). Respectful leadership also brings benefits in the form of subordinates’ willingness to accept the leader’s guidance (van Quaquebeke & Eckhoff, 2010). In this regard, it is possible to claim that authenticity in leadership and management facilitates intra-organizational collaboration, crucial for success in Industry 4.0. Therefore, authenticity becomes a critical addition to previous eras’ hierarchical, goal-oriented approaches.
Way 3: Focus on Learning
Finally, the changes and challenges associated with the Industry 4.0 era led to the increased importance of continuous learning in leadership and management. Most importantly, leaders and managers must constantly learn to recognize and avoid mistakes, such as the lack of discipline or underestimation of cultural aspects (Anderson & Anderson, 2009). Furthermore, leaders and managers must learn to continuously develop and introduce best business practices (Carter & Carmichael, 2009). Perkins (2009) provided a practical example of how leaders undergo executive coaching to improve the meeting experience. In summary, Industry 4.0 does not tolerate complacency, and those who do not understand that will likely struggle.
In conclusion, it is possible to claim that the Industry 4.0 technological revolution caused significant changes in leadership and management theory. The popular top-down and path-goal approaches of previous eras have become lackluster in modern reality. As a result, the growing importance of horizontal organizational linkages led to the incorporation of cross-cultural and authentic approaches into existing practices. Modern managers, and especially leaders, must be competent in interpersonal communication and psychology; one can even claim that these aspects have become more important than entrepreneurial skills. Finally, Industry 4.0 created a demand for constant learning and improvement. Otherwise, the organization may lose to competitors whose leaders and managers meet the requirements of the new era.
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