These days, we take it for granted that most people in major decision-making roles understand the need to step up their digital accelerations. However, even with a “C” in front of their titles, many simply don’t have the skills and know-how to put digital technology to work for their enterprises. Even chief information officers are not as knowledgeable as they should be.
That’s the surprising finding from a study published in MIT Sloan Management Review, which also finds that companies with digitally savvy executives outperform their less-savvy counterparts in revenues and markets. “Unfortunately, the demand for digital savviness in the upper echelons of leadership has grown far more quickly than the supply,” the study’s authors, Peter Weill, Stephanie Woerner, and Aman Shah, report. They estimate that only seven percent of the 1,984 large global companies they studied have digitally savvy executive teams.
Significantly, those companies taking the leads in their markets are more likely to have digital talent in their top ranks. Companies with half or more of executives exhibiting digital prowess have 48% higher revenue growth and higher valuations (share price to sales ratio) and 15% higher net margins than the rest, Weill and his co-authors find. “Digitally savvy top teams are pursuing breakthrough performance via innovation, cross-selling, and business transformation. For example, the companies in the top quartile generate a whopping 59% of revenue from innovations introduced within three years – compared with only 18% in the bottom quartile of companies.”
Weill and his co-authors found that slightly fewer than one in four CEOs (23%), and only about one in eight CFOs (12%) are digitally savvy. Technology-oriented leaders fare better, but still are not in the majority: only 47% of CTOs and 45% of CIOs can be considered digitally savvy. “Often, the attention of top technology executives is focused more on IT infrastructure and back-office operations than on the more strategic quest to create business value from digital technologies,” the researchers surmise.
Percentages of “Digitally Savvy” Executives
- CTO 47%
- CIO 45%
- Unit President 35%
- COO 24%
- President 24%
- CEO 23%
- CMO 23%
- Head of Corporate Development 23%
- Human Resources 21%
- Head of Sales 15%
- CFO 12%
- Corporate Communications Head 11%
- Chief Legal Officer 8%
The team also found large variations in the digital savviness of executives across industries. Executives in media, software, and telecom companies led the way, with close to one-third considered to be digitally savvy. Only 12% of top team members are digitally savvy in the finance and insurance industries.
Companies in construction; arts, entertainment, and recreation; and agriculture, forestry, fishing, and hunting had the fewest digitally savvy management team members, with fewer than one percent of executives with this expertise.
What’s the key to instilling digital savvy in corporate leadership? “Executives must be curious and willing to learn to become digitally savvy,” Weill and his co-authors state. “Companies often use peer networking to start spreading digital savviness, so consider creating projects that connect less-savvy organizations and executives and more savvy ones such as startups, technology accelerators, CIOs, and CTOs. There’s nothing like leading or being part of a team that builds an API to enable new revenue-generating partnerships or that uses real-time data as the basis for a new customer offering to increase executive digital savviness.”
The bottom line: those technology professionals and executives who understand the power of digital and how to make it work within their businesses have their work cut out for them. Selling, educating and evangelizing. Don’t assume the people in the C-suite are ready to embrace digital approaches.