October 26, 2026
Digital leadership doesn’t mean becoming a technical expert. It’s about leading effectively in an environment where technology, data, and AI influence nearly every aspect of municipal operations.
Keep reading to learn why leadership and digital literacy emerged as two of the most critical future-ready skills in MNP’s 2026 Municipal Report and what local governments can do to build the capacity needed for what’s next.
Municipal leaders have always managed complexity. What’s different today is the pace of change.
Technology, data, and AI are changing how services are delivered, how decisions are made, and what customers expect from their local governments. As a result, municipal leaders need to understand both where technology is being used, and how it affects service delivery, risk, workforce planning, and organizational performance.
This shift is reflected in the capabilities Canadian municipalities say they will need in the years ahead. In our 2026 MNP Municipal Report, 58 percent of respondents ranked leadership and management as the top future-ready skill and competency needed over the next five to 10 years. It was followed closely by digital literacy, including AI, at 53 percent. Both ranked ahead of technical skills.
Taken together, the findings point to a clear message: digital leadership is no longer a specialized capability. It is becoming part of what effective municipal leadership looks like.
Digital leadership does not mean managing technology. It means leading an organization in an environment where technology increasingly shapes (and reshapes) services, work, data, risk, investment, and public expectations.
For leaders, that means looking at technology as part of the broader business conversation. A decision about a new enterprise resource planning system, for instance, is not simply a technology investment. It can change workflows, employee roles, financial processes, and the customer experience.
As a result, leaders cannot delegate every decision with a digital component to IT. Many of those decisions are ultimately about people, service delivery, affordability, risk, and value.
Your technology may enable the solution, but your municipal leaders remain accountable for the outcome.
That accountability doesn’t mean your CAO, CFO, or department leaders need to become technology or AI specialists.
Instead, as our report outlines, what your employees and leaders do need is enough digital understanding to ask informed questions, challenge assumptions, assess trade-offs, recognize risks, and be accountable for outcomes. It’s also important they know how the technology and its implementation may impact their team, services, and customers.
AI provides a useful example. Municipal leaders do not need to understand how an AI model is developed, but they do require a practical understanding of where AI is being used, what information it relies on, where its limitations lie, and how risks such as bias and over-reliance are being managed.
Different leaders will play different roles in shaping and supporting transformation. Understanding these responsibilities helps to make sure your technology investments are aligned with organizational objectives and delivering the desired results:
CAOs and DCAOs: Set enterprise direction, establish accountability, and determine the pace and sequence of transformation.
CFOs: Connect digital investment to affordability, capacity, risk, lifecycle cost, and measurable value.
Department leaders: Own the service, process, data, workforce, and adoption outcomes within their areas.
Technology and digital specialists: Provide the technical expertise, architecture, controls, implementation, and enablement required to support those outcomes.
Digital leadership means bringing these perspectives together rather than transferring accountability to your technology function.
According to our municipal report, the pressures local governments are trying to solve are not technology categories. Cost management was identified as a priority by 70 percent of respondents, followed by customer service (65 percent), and cybersecurity and privacy (62 percent).
At the same time, many organizations continue to face constraints including limited resources, aging systems, and organizational silos.
This context matters because it reframes the conversation. Municipalities are not looking to solve technology problems — they are looking to control costs, improve service delivery, manage risk, and make better use of limited resources. The starting point, therefore, is not the tool. It’s understanding the outcome you want to achieve and the obstacles standing in the way.
Effective digital leadership also requires an enterprise view. Many municipal services and processes cross departmental boundaries, even when organizational structures, budgets, systems, and accountabilities do not. Challenges such as customer service, permitting, and infrastructure planning often involve multiple teams and functions. Leaders who consider processes, data, technology, and service outcomes across your organization are better positioned to identify opportunities for improvement and address barriers between departments.
The importance of digital leadership is becoming more pronounced as AI becomes part of municipal operations, whether through tools employees use directly or capabilities embedded within existing software. This helps explain why respondents ranked leadership and management and digital literacy, including AI, as the two most critical future-ready capabilities over the next five to 10 years.
As its use expands, your leaders need to consider both what the technology can do and how it should be used within the organization.
Yet many local governments are still working to establish this direction. Consider the following: Microsoft Copilot is approved for use in 55 percent of surveyed organizations. At the same time, 34 percent provide no guidance on how and when employees should use AI, and 42 percent provide no training or resources.
This creates a challenge that extends beyond the tool. Without clear guidance and expectations, your employees may be left to make their own decisions about appropriate use, potentially exposing your organization to privacy, cybersecurity, and operational risks.
Municipal leaders need to establish clear expectations for:
Technology, legal, privacy, data, and security specialists should inform these decisions and help establish appropriate controls. Responsibility for setting organizational direction and accountability, however, remains with leadership.
Establishing a clear direction is an important step. Equally as important is ensuring your employees have the skills, resources, and support to put it into practice.
This is where digital capacity becomes a leadership priority.
Digital capacity refers to your organization’s ability to use technology and data effectively, adapt to new ways of working, and continue developing as needs and technology change.
For municipalities, building this capacity remains a challenge.
Only 25 percent of respondents reported having an actively maintained organization-wide reskilling or upskilling strategy. Another 37 percent rely on separate departmental approaches, while 22 percent have no strategy or plan. Workforce planning is also largely reactive, with only 18 percent reporting a proactive, data-driven, long-term approach.
These findings point to the need for a more intentional approach to developing digital capability. Rather than treating training as a final step in implementing a new tool, your municipality can incorporate capability development into workforce and service planning. This includes preparing your employees for changing roles, creating opportunities for ongoing learning, and distinguishing enterprise capability requirements from department-specific needs.
Your leaders also play an important role in modelling the behaviours expected across the organization. Building digital capacity extends beyond training. It requires an environment where learning, appropriate experimentation, continuous improvement, and responsible technology use are supported.
Building digital skills is only part of the equation. Local governments also need the organizational capacity to manage and sustain change. This is becoming increasingly difficult: 57 percent of respondents said change fatigue has caused moderate or significant delays and reduced engagement. At the same time, 26 percent reported having no formal change management strategy, while only 12 percent use a structured framework.
Your organization may be implementing a new financial system, introducing AI-enabled tools, and redesigning customer service processes at the same time. Each initiative may offer meaningful benefits, but together they can place significant demands on your employees, leaders, and departments.
Municipal leaders need to understand these cumulative pressures and make deliberate decisions about what your organization can realistically deliver. This includes setting the pace and sequence of initiatives, establishing and communicating priorities, involving employees early, and ensuring your teams have the capacity and support required to adopt new ways of working.
Digital leadership is not measured by the number of technology initiatives underway. It is reflected in your organization’s ability to prioritize, absorb, adopt, and sustain meaningful change.
As technology continues to reshape municipal operations, the distinction between digital leadership and organizational leadership is becoming increasingly difficult to make.
Effective digital leadership does not depend on knowing the latest technology or pursuing the most ambitious digital strategy. It depends on leaders who can make informed decisions about services, people, investment, data, risk, and change in an increasingly digital operating environment.
Your technology specialists provide essential expertise and enablement. Your municipal leaders remain responsible for connecting those capabilities to organizational priorities, measurable outcomes, and public value.
Every municipality has different priorities, capabilities, and resource constraints. Strengthening your digital leadership requires an approach that reflects your organization’s operating environment, service priorities, workforce, and existing digital capabilities.
MNP brings together expertise in Digital Advisory, People Advisory, and Enterprise Transformation to help align your people, processes, data, and technology with your organizational and service delivery priorities. Reach out today to learn more.
Explore the 2026 MNP Municipal Report for additional findings on the capabilities shaping the future of municipal work.
Katie is a member of MNP’s Digital Advisory Services team in Edmonton. She is an experienced innovation and transformation leader with more than 15 years of public sector experience supporting organizations in digital transformation, strategy, change management, and community engagement. With a strong background in community development, innovation, and change leadership, Katie excels at leading organizations through complexity and transition.
Melanie is a member of MNP’s Advisory Services team in Edmonton. She brings over 20 years experience serving clients in the public sector, specifically municipal and provincial governments, post-secondary institutions and not-for-profit organizations.
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