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 newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.
Show Comments
cmo-xs-promo

Latest Videos

More Videos

Undoubtedly, Robotic Process Automation enables marketing teams to accomplish repetitive tasks with fewer resources at a great accuracy.

Raj

What marketers need to know about robotic process automation

Read more

who wants to date me I am 9 years old and i am a boy

Jeremy Hawkins

Sink a sub gaming experience signals Subway's renewed brand push

Read more

Great read. I agree that it should be a perfect balance between interacting with your customers and knowing your brand. As a business, yo...

Caroline Scott

7 ways CMOs can improve their customer engagement game

Read more

Very true. Team development helps improve collaboration among the team members. I was able to improve my team's collaboration skills by t...

Quent Sinder

Why empowering others can help make you a great leader

Read more

CRM is a very good software that can help you succeed in your business. In my company, this system has allowed me to improve customer rel...

Anna Janicka

Sensis rebrands to Thryv and brings business software to Australian SMBs

Read more

Blog Posts

Attention marketers, it’s the small things that make a big difference

Marketers spend their careers searching for the formula that can improve the bottom line for their brands. Most new marketers also come into a role and feel like they need to put their own stamp on things.

Peter Pynta

CEO APAC, Neuro-Insight

Unboxing 101 - How savvy influencer engagement can build a brand

The humble unboxing video is a powerful tool. Correctly executed, it harnesses consumer fandom, viral authenticity and brand design magic to deliver a high-impact message to a tightly targeted cohort of consumers.

Gali Arnon

Chief marketing officer, Fiverr

​Power to the people

Purpose is the ultimate statement of intent for many organisations. Why are we here? What are we trying to achieve?

Rich Curtis

CEO, FutureBrand A/NZ

Sign in