When Shelby, the CEO of a large international clothing manufacturer, sat down at the end of 2017 to think about strategic goals for the following year, she kept coming back to one concern: how to maintain the pace of growth. The company needed more strategic development within the heart of the business that would enable the organization to prosper on more than just an incremental level.
George, the CIO, recognized an opportunity to pivot the company’s business strategy by utilizing digital technologies like artificial intelligence to reduce call wait time for customers and a cloud based business platform potential industry game-changer.
In 2018, CEOs are looking for deeper structural sources of growth, and CIOs must develop more disciplined ways to exploit digital opportunities to grow the business in meaningful ways.
“ CEOs are in a mood to work on changing the deeper engine of the business, rather than driving it harder for incremental growth.”
The Gartner 2018 CEO Survey looked at responses from 460 CEOs and C-level business executives to pinpoint goals and concerns from the C-suite. Respondents ranked growth as a top priority. However, the way CEOs view and tackle growth has shifted. Simple incremental growth has become more difficult to achieve, which means CEOs are looking to redevelop the business to sustain growth.
“CEOs are in a mood to work on changing the deeper engine of the business, rather than driving it harder for incremental growth,” says Mark Raskino, vice president and Gartner fellow.
A more action-oriented, achievement approach to growth is evident in the selection of corporate (new strategies and development), IT (technological business improvement) and workforce as other top priorities.
Within these priorities are structural development such as business strategies, partnerships and mergers and acquisitions for corporate; technology, digital transformation and information analytics and big data for IT; and training and development, retention and motivation and talent improvement in the workforce. The overarching goal is to use these to create growth.
Culture is a challenge for CEOs
However, growth in businesses is not without issues. CEOs cited laws and regulations, competition and financing as the top three external challenges. Internally, employees, talent and skills took top priority. Additionally, CEOs cite lack of appropriate talent and capability in the workforce as a top inhibitor to digital business progress.
“General business growth and digital business progress friction caused by workforce and talent issues, together with the rate at which this area of concern has escalated in CEOs’ minds, cannot be ignored,” says Raskino.
Culture is also a large challenge for CEOs looking for real growth. Thirty-seven percent of CEOs are looking to make significant or deep culture changes by 2020. When considering CEOs of companies with digital initiatives, the number rises to 42%. The majority of CEOs did note they have a management initiative or transformation program to make the business more digital.
“If the company has a digital initiative, then the need for culture change is higher,” says Raskino. “The most important types of cultural change that CEOs intend to make include making the culture more proactive, collaborative, innovative, empowered and customer-centric. They also highly rate a move to a more digital and tech-centric culture.”
However, many CEOs struggle to articulate exactly what they’re looking for in a cultural change.
Actions for CIOs
As CEOs look for structural changes to enable greater growth, CIOs have an opportunity to provide digital solutions, ensure that management is committed to a digital business strategy, and check that all executives are equipped and prepared to play their role. CIOs can help analyze the current business model, and define and measure what a switch to digital revenue might look like for the business. Persuading the CEO and executive team to set a public goal for digital revenue and transformation will help drive the change.
Given that one of the biggest challenges for general growth and digital business will be workforce, CIOs can also focus on talent development, particularly within digital roles. The top two tech-related skills needs mentioned by CEOs were data and analytics and digital, followed by technology, marketing (digital) and programming. As co-leaders of talent development, CIOs should help the business develop a school for digital talent strengthening. Given that so many enterprises are all seeking more digital talent at the same time, acquiring the right talent is a challenge across all fields. CIOs need to look for specific IT-related hires, and also people with technology skills to work across the other departments.
In general, CIOs have an opportunity to assist CEOs with the steps to increase growth in important and necessary ways. The goal should be to help CEOs and other executives prepare for “more deeply disciplined exploitation of the digital business changes ahead.”