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

10 ways of changing your culture through self-awareness

Did you hear about the manager who always shot the messenger whenever they brought bad news? He eventually stopped hearing bad news. Unfortunately for him, this wasn’t because there was none to report.

Steve Glaveski

Co-founder, Collective Campus

How to create a compelling customer experience vision

Organisations are seeking new ways to engage customers, drive new sales and increase customer satisfaction by providing engaging customer experiences. A customer experience initiative that lacks a strong, clear vision often fails to achieve its intended result.

Olive Huang

Research director, Gartner

Marketers are driving our innovation ecosystem

The Government's newly released National Innovation and Science Agenda shows that for economic growth to continue within Australia, an 'innovation ecosystem' must be fostered, where new businesses with new ideas are encouraged to grow and flourish. With every company wanting to increase, retain or improve their customers’ experiences, this makes marketing vital to fuelling Australia's ideas boom.

Lee Tonitto

CEO, Australian Marketing Institute

Agreed. I see the opposite problem quite often where people are tasked in an organisation just with "be creative" - thus offering no boun...

Dr Fiona Kerr

The great debate: Is data killing creativity?

Read more

By far, this is the best article I've come across so far that has a relevant information regarding the future of marketing. Although the ...

Jayden Chu

​Six ways to prepare for the future of digital marketing

Read more

These are some good ideas. You didn't touch on the overarching goals and results of brand loyalty. This article does a good job at provid...

hgsupport

Four ways to use social media to boost customer loyalty

Read more

This read like a PR PLUG for the agency. Very flowery language for the agency and very little details about the deal or the project.

Digital_Marketer

Why Tourism Victoria decided to go agile

Read more

This is a rather useful article! This prediction made in the digital marketing trend is very important to improve the service that the ag...

Adam Way

Digital marketing predictions – Part 2: Getting the strategy right

Read more

Latest Podcast

More podcasts

Sign in