C-suite gets behind digital customer engagement: Report

New global McKinsey global survey of c-level executives finds CEOs, CMOs, and CIOs are all focused on improving digital engagement, with a third creating a CDO position to manage programs

C-level executives are bullish about digital as a business driver and are stepping up their involvement in digital strategy across their organisations this year, a new survey reports.

The latest McKinsey and Company global survey of 850 c-level executives asked respondents about adoption and focus on five digital-enterprise trends: Big data and advanced analytics; digital engagement of customers; digital engagement of employees and external partner; automation; and digital innovation.

All five trends proved to be a top 10 priority for nearly half of those surveyed, and a top three priority for 20 per cent of respondents. Digital customer engagement topped the list and is expected to provide the best income boost off the back of investment.


McKinsey charts how executives are using digital customer engagement practices in their businesses

In a sign of just how important digital has become, 31 per cent said their CEO is personally sponsoring digital initiatives, up from 23 per cent in 2012, and a further 24 per cent of CEOs were at least directly engaged in programs. The CIO and CMO were also both equally involved in sponsoring digital initiatives (26 per cent of respondents said both were sponsoring digital programs).

The majority of respondents to McKinsey’s survey also believed the success or failure of digital programs relies on organisation and leadership, rather than pure technology of data considerations.

For example, when asked about past digital initiatives that worked, executives most often attributed success to managerial factors such as senior management’s interest and attention, internal leadership, good program management and alignment between organisation structure and goals.

When asked what factors contributed to an initiative’s failure, respondents again highlighted the absence of senior-management interest. Other common factors of failure included quality data and technology infrastructure and IT systems.

Thirty per cent of respondents also reported having a chief digital officer (CDO) on their companies’ executive teams, again emphasising how important digital initiatives are becoming for businesses, the report authors stated.

“Some organisations have created the CDO role as an executive-level position with cross-cutting responsibilities for all digital initiatives. In a sign that this new role is already creating value, respondents whose organisations have a CDO also indicate significantly more progress toward their digital vision than those without one,” the report stated.

Yet what McKinsey’s report also makes evident is how far organisations still needs to come in order to embrace digital as a business driver. More than half of those surveyed said their companies are up to one-quarter of the way towards realising their end-state visions for their digital programs, and just 40 per cent reported measurable business impact from their digital efforts to date.

Only one-third of executives believe their companies are spending the right amount on digital, and many worry about under-investing in these programs.

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Despite these challenges, 65 per cent are bullish about digital business, and expect these five digital trends will increase their companies’ operating income over the next three years. CEOs proved the most positive of the bunch, with more than one in five saying they expect income from digital to increase by more than 30 per cent in three years’ time.

McKinsey’s steps for improving your digital programs

  • Find the right digital leaders: Leadership is the most decisive factor for a digital program’s success or failure.

  • Manage expectations: Set the right agenda and maintain an aspirational vision without straying into over-exuberance for digital. Leaders will have to walk this line carefully, given executives’ reports of organisational, technical and cultural challenges.

  • Prioritise talent: Functional and business skills are all critical for digital programs. McKinsey reported some companies have begun emulating the high-tech practice of ‘acqui-hiring’ (acquiring small companies largely for their employees, rather than their products). But regardless of where the talent comes from, development and retention are equally important, McKinsey said.

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