Study: Most CEOs lack vision, leadership on new computer tech

They don't guide their companies towards transformative uses of digital technology, according to a study from MIT and Capgemini

A majority of CEOs are failing to steer their companies toward effective use of new computer technologies, which precludes their organizations from making major business improvements.

That's the conclusion of a new study released Tuesday by the MIT Sloan Management Review and Capgemini Consulting titled "Embracing Digital Technology: A New Strategic Imperative."

The study was based on a survey of more than 1,500 executives and managers worldwide and its authors sought to examine the concept of "digital transformation," which they define as the use of new digital technologies to trigger significant improvements.

Digital transformation is a required goal for companies and involves the revamping of business processes through the use of social media, mobile, analytics and embedded devices, according to the report.

"But the CEO and senior leadership must develop a vision to articulate to the staff, create a roadmap and commit to it, and then rally the organization with measurable goals and incentives to reach them," reads the study.

The authors -- Michael Fitzgerald, Nina Kruschwitz, Didier Bonnet and Michael Welch -- state that digital transformation "needs to come from the top," and they recommend appointing an executive or committee to lead the efforts.

"Companies should take small steps, via pilots and skunkworks, and invest in the ones that work," they wrote. Company leaders need to adjust the digital transformation road map, vision and strategy based on the results of these small, initial projects, according to the authors.

How important is the leadership of the CEO? It's crucial, according to the study. In companies where CEOs have outlined and communicated their vision for digital transformation, almost 95 percent of employees are on board with the plan. Unfortunately, only 36 percent of the CEOs have done this.

Having a strategic view of technology has always been a responsibility of CEOs, but the stakes in this respect are now higher than five years ago, Welch said in an interview.

CEOs must evaluate how their companies stack up against competitors in the use of new digital technologies and then craft a strategy based on a clear vision, specific goals and concrete metrics. That way they'll be able to decide where they should and should not invest.

A good starting point is for the CEO and their executive team to identify the company's strongest assets and ask themselves how they can be further enhanced and strengthened through digital tools.

A pitfall to avoid is the seductive power of shiny digital services and wares that prompt many companies to pursue technology for its own sake. "Technology can be a siren song. Without a focused approach, it's easy to be led astray," said Welch, a visiting scientist at MIT's Center for Digital Business and a Capgemini managing consultant.

The survey also found that almost 80 percent of respondents believe that it'll be critical for their companies to go through a digital transformation in the next two years. But 63 percent described the pace of technology change in their companies as "too slow," largely due to complacency.

MIT Sloan Management Review and Capgemini Consulting rated only 15 percent of the companies at which the survey respondents workedA as "Digirati," the highest level of technology sophistication. These companies' executives share "a strong vision" for the potential of new technologies, invest in and manage these digital technologies quickly, and their companies reap the most rewards.

Six percent were ranked as "Fashionista," the second tier in the rankings. These companies adopt new technologies aggressively but have trouble coordinating their efforts and fine-tuning their digital-business vision.

Next came the group ranked "Conservative," which consisted of 14 percent of companies. Those in this group are shy and reticent toward new technologies, but their executives have a vision and there's an appropriate tech governance structure in place.

Most companies -- 66 percent -- fell into the "Beginner" level. They use email and the Web, along with enterprise software, but they've kept social media, analytics and other tools at arm's length, due to skepticism and a lack of a sense of urgency.

The "Digirati" benefit from their effective use of new technologies in various ways, including by delivering better customer experiences and engagement, streamlining operations and creating new business lines and models.

Even if their companies are considered laggards in this area, CEOs need to get their act together. "The only wrong move for executives, then, would be not making any move," the authors wrote.

Juan Carlos Perez covers enterprise communication/collaboration suites, operating systems, browsers and general technology breaking news for The IDG News Service. Follow Juan on Twitter at @JuanCPerezIDG.

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