CEOs Keep Digital Business Transformation on Track

May 10, 2016

Contributor: Christy Pettey

2016 is the year of digital tenacity for CEOs.

In spite of the prevailing economic headwinds, CEOs are standing resolutely behind their plans for growth and digital business transformation, according to Gartner’s recent survey of CEOs and business leaders.

“While business conditions are challenging, CEOs remain confident enough to sanction strategic investments, particularly when it comes to digital business transformation,” said Mark Raskino, vice president and Gartner Fellow. “2016 should be the year for digital tenacity for CEOs and their CIO co-pilots.”

Mr. Raskino said that CEOs and CIOs should actively, and visibly, protect digital business change initiatives. “Try to use any economic slowdown like a race car driver uses a curve - head into it a bit more aggressively and accelerate out of it faster than your competitors,” he said. “Overtake them by seeking and applying genuinely new sources of productivity improvement in your digital business transformation.”

“ It is no longer hard to imagine how every industry will be digitally remastered”

Most companies have come to an understanding that digital change is a macro factor that impacts strategy in their industry. Most have decided to improve their capability, and they have understood that requires a new kind of leadership. To ensure that they stick to their digital business transformation plans, more CEOs are choosing to head up digital change in the business. The survey found that CEOs now understand that digital business is substantial enough to warrant them leading it personally. If they delegate primary responsibility, then the next most likely leader is the CIO.

The rise in the number of CEOs heading up digital change makes sense given that half of the CEOs surveyed expect to see substantial digital transformation in their industries, or for their industries to be almost unrecognizable within five years.

“It is no longer hard to imagine how every industry will be digitally remastered,” said Mr. Raskino. “There are numerous examples — such as self-driving cars, the rise of blockchain in banking, the e-cigarette revolution in tobacco and the potential impact of Internet of Things fueled data science in insurance. CEOs in other industries that have not yet seen the crest of their own digital tsunami are scanning the horizon for it.”

A glass half-full

One of the most surprising findings in this year's survey is that CEOs appear to see digitalization as a positive force, not a destructive one. They place a glass-half-full view on its "disruption" when measured in the most important currency of business: profits.

“It would be naive to believe that every company can disintermediate every other as digital methods simultaneously redefine how markets and ecosystems operate. Digitally mature industries do not feel inherently more profitable for the majority of market participants even if a few platform owners do very well from the change,” said Mr. Raskino.

“On the other hand, digital business does not have to be a zero-sum game. When we take digital to the core of every product and service, there is the possibility of moving many more industries toward Moore's Law pace of advancement and increasing the total of value created,” Mr. Raskino said. “Simply put, the pie should get bigger.”

“We believe many CEOs still fail to discriminate between e-business (electronic sales channels and marketing) and true digital business — which blurs the boundaries between the physical and digital worlds, resulting in the transformation of products and services.”  

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