By the year 2020, executives anticipate that half of their revenues are expected to come from digital channels. So it’s no surprise that CEOs are taking charge of digital transformation. Looking even further out, the World Economic Forum predicts that digital transformation will create more than $100 trillion in economic value by the year 2025.
Digital transformation is difficult, as many enterprises can attest. The larger and more antiquated the company, the more challenges experienced during the transformation. With the exception of some “laggards”, pretty much every company has begun adopting digital practices.
One of the trends that has emerged in the past couple of years is the role of leadership for digital transformation. In the past, CIOs were tasked with ownership. However, the importance of digital initiatives to business outcomes has shifted the responsibility to the CEO. According to MIT Sloan Management Review, companies who are maturing in their digital acumen have 41% of their CEOs lead the effort, while 16% of CIOs are in charge. For companies developing their digital acumen, it is 31% and 20%, while companies who are early in their digital journey, it is 22% and 23% respectively.
The companies who have matured in their digital journey have realized that it is about the management of organizational change as much as it is about the technology. This is where CEO’s strengths can make a big difference. Their responsibility for the entire organization affords them a different perspective than the CIO, who is more focused on the technology. If they’re not proactively collaborative, they can deliver best in class solutions, that don’t garner full support or adoption by the company, resulting in under utilized transformation initiatives. To this end, MIT’s George Westerman cautions, “There’s never been a better time to be a great CIO, and there’s never been a worse time to be an average one.”
Another benefit of CEO leadership is strong, consistent, and visible support from the top. When the rest of the company sees the CEO’s involvement, they know the transformation is a top priority and part of the overall business strategy. This ensures that the transformation is not prioritized in one department and ignored in another. One effective method to support this is for the CEO to delegate and enable decision making further down the ranks. By championing the effort and creating accountability throughout the management team, you can drive more involvement and creativity through diversity of thought.
Gartner recently asked CEOs to define what their top priorities are for the next 24 months, and found that digital matters to CEOs. Almost two-thirds (62%) have embarked on digital transformation. For their digital business ambition, 54% said transformation, while 46% said optimization. According to the research, “CEOs believe that new technologies can have a material impact, but the issue is identifying how. There is no method or cookbook for doing this, and it will eventually be invented by experimentation, trial and error, and by a new generation of business leaders: “the people in this room.”
A final thought on why CEOs are taking charge of digital transformation is the human element. As technology redefines the workplace, people are tasked with implementing the transformation. Unfortunately, many of them don’t have the skills, training, or cultural desire to successfully carry out the initiatives. In fact, it’s one of the top five reasons digital transformations fail. With CEOs at the helm, they can more easily implement upskilling and retraining programs to help employees succeed in a new environment.
For more information on the changing nature of CEO responsibilities, send us a note. At Sheer Velocity, our executive recruiters work with you to find the best fit for your needs and support your executive team for continued skills development.