In recent years more CEOs have taken responsibility over digital transformation leadership and recruited Chief Digital Officers to do so. When it boils down to the CEO and digital transformation several questions arise such as the importance of digital transformation and the role of the CEO.
What are the views and plans of CEOs regarding digital transformation and what role do they play in the digital transformation strategy of their organizations?
It obviously depends on the CEOs you ask (there tends to be a difference between those running large multinational companies and smaller regional firms as challenges are not exactly the same) and at the answers you’re seeking. Context does matter.
One of the companies that has been looking at the CEO and digital transformation is BT Global Services in a report which it released end 2017 with a focus on multinationals. To understand the importance of digital transformation for CEOs of multinational companies in general and the digital transformation attitudes and evolutions across three major areas that are important in digital transformation and for BT the company commissioned a survey, conducted by the EIU. 400 global CEOs participated. An overview of some key takeaways regarding multinational company CEOs and digital transformation.
The CEO and digital transformation as a journey
On top of the role of the CEO in DX or DT as digital transformation is also known, the survey looked deeper at the digital employee, the digital customer (and customer experience) and, obviously, the impact of DX on the needed IT platforms and technologies for digital business.
However, it is certainly not just about technologies or solutions alone, well on the contrary. As the company’s CEO Bas Burger emphasizes in his foreword digital transformation as a strategy is not (or rarely) an end in itself. As we often wrote, among others in the scope of digital transformation strategy, it is indeed not a destination but an evolving journey as Burger also states.
Moreover, the goals of digital transformation are to meet strategic business initiatives such as growth, agility (for many reasons), innovation, the acquisition of new skills and capabilities, tapping into new business models and revenue sources, customer experience excellence and all the capabilities and goals an organization can strive to achieve in order to truly transform in a strategic and connected/holistic way.
Moreover, as the report also confirms ‘Digital transformation is much broader than IT and needs to occur at pace, across the organization’. We love hearing it.
Digital transformation and the CEO boardroom agenda
So, in this article we mainly focus on the CEO and digital transformation aspect. It will probably not come as a surprise that a majority of the interviewed CEOs have digital transformation at the top of their boardroom agenda as you can read in this article on ‘CEO perspectives in the digital age‘ which summarizes some findings of the survey and contains the links to the respective reports.
Digital transformation ranks at the top of that boardroom agenda according to 39 percent of responding CEOs who run multinationals. 34 percent says it is important but not the top priority (there are other challenges and priorities as well, depending on company, industry and so on of course), 23 percent sees digital transformation as a way to support other strategic priorities and a small percentage (5 percent to be precise) sees digital transformation as a way to be more efficient in their operations. However, as per usual there are geographical differences as you’ll read below.
The high importance of digital transformation for the surveyed CEOs might come as a surprise if we compare with the often internal and immediate goals in many digital transformation projects but we need to keep in mind a few aspects of this survey on the CEO and digital transformation.
Some of the key aspects to take into account in our view:
- As said we are talking about multinationals,
- While innovation and business model transformation might belong to the more mature goals of digital transformation all in all many companies are still in earlier stages and
- The responding CEOs are active in industries of which some are especially busy with digital transformation. The survey spans manufacturing, energy and resources, financial services, travel, transport and logistics, retail, consumer goods, and automotive industries.
Different digital transformation challenges for CEOs across different industries
By way of an illustration regarding the just mentioned vertical industries a few words on how the digital transformation journey is different per industry and thus also impacts the CEO and digital transformation in these industries (albeit at different speeds and initiatives of course, each business does remain different).
The digital transformation of manufacturing is not just stepping up pace but has even led to an industrial transformation (r)evolution as such with thorough frameworks and industrial market push in phenomena such as Industry 4.0 and Industrial Internet. Moreover, if you start looking at specific technologies manufacturing by far is investing most. With regards to IoT, for example, or better, Industrial IoT, manufacturing is by far spending most as our article on IoT investments shows.
It is not a coincidence that BT Global Services recently teamed up with Hitachi, that has transformed its business to take a more important role in the Industrial Internet of Things.
BT and Hitachi subsidiary Hitachi Vantara have specifically joined forces with a focus on the development of, initially, asset intelligence and predictive maintenance with Hitachi Vantara the company’s know-how regarding the convergence of IT and OT and its IoT platform Lumada, in combination with the services and solutions of both companies in areas such as network infrastructure, cloud and cybersecurity.
Needless to say that also in, for instance financial services (newcomers, digital banking, mobile, regulatory changes, FinTech, emerging technologies such as blockchain, customer expectations, cost pressure, the need to diversify and innovate and much more) digital transformation is changing a lot, from digital transformation in retail banking to digital transformation in insurance, in financial services overall and in the money markets.
The automotive industry: even more digital transformation, also because of the increasing usage of technologies in automotive manufacturing and in vehicles as such. Moreover, for automotive companies, where technology has become a differentiator in the product as such (e.g. cars) the race is on to display technology leadership towards consumers and that includes showcasing digital innovations within the entire chain.
Or take the digital transformation of logistics and transport: smart supply chains and the enormous impact of the real-time economy on Supply Chain Management 4.0 or Logistics 4.0 as it’s also called, along with the impact of industrial transformation and the need for a data-rich end-to-end supply chain from factory to retail store is essential. It’s not a coincidence that transportation and logistics are also among the highest spenders on IoT, advanced analytics, collaborative robots and much more.
We can continue with the other industries but it’s clear that many of them (energy and resources and the overall evolutions with regards to, among others energy efficient technologies, to name a last one) are challenged on multiple fronts and that digital transformation does matter a lot for most of them which translates in a significant importance of digital transformation for the CEOs of companies in these sectors who on top are working in a multinational context.
A final aspect when looking at this survey on digital transformation and the CEO: respondents came from Australia, Brazil, France, Germany, India, the Netherlands, Singapore, South Africa, Spain, Switzerland, the UK, Ireland and the USA. In other words: not exactly the least important countries and including those nations where digital transformation initiatives do tend to be more advanced.
Digital transformation and the CEO: on leadership and who is in charge
This brings us back to digital transformation and the CEO. As you probably know one of the important factors to succeed in digital transformation as it’s known since many years is leadership. And it’s not just about leadership but also about the mandate and the building of teams to make sure there is a strategic and holistic business perspective.
Digital transformation as a strategy is rarely an end in itself, but rather, a way to meet other strategic objectives – business growth and innovation; a more agile operating model; a great customer experience; and connected and collaborative employees (Bas Burger)
One does immediately think the CEO. However, although digital transformation ranks high on the CEO agenda, the survey found that only about a quarter of CEOs leads digital transformation initiatives personally.
This might be partially explained by the fact that, although digital transformation isn’t new, we do still see many companies in earlier stages or ad hoc indicatives where perhaps the CEO is less involved. Obviously it could also point to the many priorities the CEO has in this day and age and, let’s not forget, the fact that other C-level executives such as the CIO increasingly got a seat in the boardroom or, at the very last, are charged with business goals more than ever, which in turn shows in the changing role of IT and the technologies that get increasingly adopted to enable the CIO and IT to focus on the business instead of IT operations (alone). It is one of the core reasons of the growing adoption of cloud computing, for example. Let’s say it’s probably a bit a mix of all this and more as you’ll see below.
While, according to the report the CEO drives digital transformation in 22 percent of the case and the CIO by far leads in this regard with 47 percent, we also can’t overlook the new roles that have been created over the past few years. The Chief Digital Officer is probably the best known and according to the survey he/she is indeed responsible for driving digital transformation according to 26 percent of respondents. This means that, combined, the CEO and the CDO more or less drive digital transformation in as many cases as the CIO, adding further to the explanation why the CEO leads digital transformation less than one might imagine.
Obviously one of the tasks of the CEO is to prioritize and that goes for digital transformation as well as for their business priorities overall. And although there are those who say that a CEO is not the best person to lead digital transformation that is absolutely not correct, or better, certainly not a universally valid statement. Priorities do matter and phenomena such as the advent of the Chief Digital Officer (and similar roles) and the increasing business role of ‘the digital CIO‘ did happen for a reason and were driven by CEOs who need to prioritize to begin with.
The trust of the CEO in digital transformation efficiency – and more CEO and digital transformation takeaways
Again we must mention some aspects regarding the CEO and digital transformation though. The reason that BT calls the CEO the ‘Chief Everything Officer’ of course has everything to do with the fact that the CEO can decide on the way to go, decides on priorities and thus investments and has an overseeing and more holistic view with regards to digital transformation strategy because, well, he/she is the CEO.
When gauging the confidence CEOs have with regards to the strategic efficiency of their digital transformation programs, more CEOs feel these programs are on track to deliver the strategic goals when a CDO is responsible than when a CIO is responsible and the difference is pretty big.
Moreover, there are regional/cultural differences: when it boils down to the CEO and digital transformation from the boardroom agenda perspective: in the US over half of CEOs put digital transformation at the top of the boardroom agenda while in the Asia Pacific countries where the survey was conducted it is more seen as way to support other strategic priorities.
It is very likely that there are also differences with regards to aspects such as the CEO and digital transformation leadership and the exact goals that CEOs aim to achieve with their digital transformation goals. However, that is for another article.
For those who like digital transformation technology trends: as you can see in the infographic below this article the key digital technology trends according to the responding CEOs for the next 2-3 years will be:
- The Internet of Things (41 percent)
- Cloud computing (35 percent)
- Mobile computing (31 percent)
That’s not what you’ll see in many other digital transformation technology trends lists but it does reflect a reality that is often not that of the futurists among us.
Disclaimer: BT Global Services is a former i-SCOOP client. This article is not written in the scope of that collaboration. All images, except the top one are courtesy and property of BT Global Services and used to illustrate this article – top image: Shutterstock – Copyright: Gajus