CEOs taking up digital strategy role but organisational challenges remain

New McKinsey and Company report finds CEOs, CMOs and CIOs are all getting involved in digital strategy yet talent, legacy processes and lack of focus hinder progress

CEOs are becoming more actively involved in digital strategy than ever before yet many companies have not made the organisational-level changes necessary to embrace digitisation successfully, a new report claims.

The annual McKinsey and Company report, based on a survey of 850 c-level executives globally in April and released earlier this month, found 61 per cent of CEOs are either supporting, sponsoring or are directly engaged in digital business initiatives this year, up from 55 per cent in 2013 and 46 per cent in 2012. This compares to 61 per cent of CMOs, and 69 per cent of CIOs this year, increases of 7 per cent and 6 per cent, respectively.

In addition, 41 per cent of this year’s respondents said their CEO was responsible for their organisation’s overall digital agendas.

The report also makes plain the rising influence of the chief digital officer role. The 2014 survey found 30 per cent of respondents had a CDO directly engaged in or supporting digital business initiatives, up from 24 per cent last year.

The top three strategic priorities for digital this year are digital engagement of customers (69 per cent), digital innovation of products, operating or business models (64 per cent), and big data and advanced analytics (45 per cent). The top three digital trends as a share of overall digital budget spending are digital engagement of customers (62 per cent), digital innovation of products, operating or business models (60 per cent) and automation (44 per cent).

“It’s evident that digitisation has become a critical asset in many companies’ quest for growth,” the McKinsey and Company report authors stated. “More than three-quarters of executives say the strategic intent behind their digital programs is either to build competitive advantage in an existing business or to create new business and tap new profit pools.”

Related: Digital disruption about to impact health, education sectors

Despite the growing realisation of digital’s core role, only 40 per cent of respondents said they have adequate accountability measures in place, such as targets, performance incentives or an executive ‘owner’ of digital programs. Just 7 per cent believed their organisations knew the exact value at stake from digital.

Only 4 per cent of respondents report high returns on their company’s current digital investments, McKinsey and Company stated.

The top hurdle listed to meeting priorities for digital programs is talent, both in terms of functional and technical skill sets, followed by inadequate organisational structure and inflexible business processes. Not surprisingly, it was larger companies of more than US$1 billion in annual revenue that were finding legacy processes to be a significant issue.

McKinsey and Co's Josh Goff tells you how to avoid an epic digital fail

Only one-third of executives said at least one in 10 of their employees are spending any time working on digital projects, and 44 per cent said analytics and data science skills were the biggest gap expected over the next 12 months.

Respondents were also asked for their growth expectations over the next three years. These were highest at organisations actively pursuing digital to create new business, McKinsey and Company stated, at 54 per cent. Across the board, one third of those surveyed see at least 15 per cent of their total growth in the next three years coming from digital investments.

Follow CMO on Twitter: @CMOAustralia, take part in the CMO Australia conversation on LinkedIn: CMO Australia, or join us on Facebook: https://www.facebook.com/CMOAustralia, or check us out on Google+: google.com/+CmoAu

Signup to CMO’s email newsletter to receive your weekly dose of targeted content for the modern marketing chief.

Join the CMO newsletter!

Error: Please check your email address.
Show Comments

Supporting Association

Blog Posts

4 key findings on the state of B2B marketing

The ​2016 B2B Marketing Outlook Report​ was recently published by Green Hat in conjunction with ADMA for the sixth consecutive year. It highlights the most significant trends from 2015 and shows B2B marketers what’s in store for the year ahead.

Andrew Haussegger

Co-founder and CEO, Green Hat

Why app engagement must be personalised

Research from Nielsen late last year reported Australian smartphone users over the age of 18 spend 33 hours per month in apps, and a mere four hours per month in browsers. But what does it take to actually maintain an app customers will engage with?

Rob Marston

Head of Airwave, A/NZ

Customer experience investments more vital than ever

The global commodity slump has hit Australia in the last few months. Companies that obsess over these developments might be tempted to cut spending on customer experience (CX) programs. Here's why that's a a terrible idea.

Harley Manning and Thomas McCann

Research leaders, Forrester

I hope this trickles down to job opportunities and more analytics based careers on the government.

Ale Xandra

Australian Open details data analytics improvements driving digital fan engagement

Read more

what does this article means when it refers to "elocker technologies" ? Thank you. I am not sure what this is,M

Martin W. Jordan

Adelaide Zoo deploys iBeacon technology to enhance visitor experience

Read more

Now you make creative Facebook ads

Mike Smith

Why AAMI turned to Facebook mobile and segmentation to drive brand favourability

Read more

Rob - great article. Here at Pure Oxygen Labs we could not agree more. When considering retail mobile apps deep linking is woefully unde...

Scott

Why app engagement must be personalised - Mobile strategy - CMO Australia

Read more

Project Leader?? Kim Portrate is one of the most ineffective leaders I have ever had the displeasure of meeting. She single-handedly cost...

Anonymous

Helloworld scraps CMO role

Read more

Latest Podcast

More podcasts

Sign in