Perspectives

5 Reasons for the CEO to Lead Digital!

Leading digitally will be the way to create business capabilities and thrive in the future. Now a day, a lot is being written and talked about various digital initiatives enterprises are adopting, but much of it falls short of creating a holistic design of a digital enterprise. A digital enterprise is a much broader and deeper concept than the piecemeal approach digital initiatives are based upon.

Of course, it may take a little time for designing and building a true digital enterprise but the journey has to begin with a broader vision as compared to the tactical adoption of various digital initiatives. When a vision is there, the tactical digital initiatives shall cohere around it and build a digital enterprise in the long run.

An important question is can the CIO alone create a digital enterprise? Well, our recent research suggests that it may not be so.

We found a clear distinction in the role of the CEO and other CXOs when a comparison was drawn between high and low digital score enterprises. A holistic definition of a digital enterprise was created and it was operationalized in terms of an instrument to measure the digital score of an enterprise. The definition included 7 dimensions – digital market place, digital leadership, digital strategy, digital boundary, digital capability, digital culture and digital infrastructure. Based on the composite digital score, enterprises were labelled as low and high digital score enterprises. This is a relative distinction and not absolute. Even the high digital score enterprises may have lot more to do and achieve. There is no absolute ‘digital enterprise’ as it is relative to the digital market place and competitive force and gradual evolution of supporting technologies.

CEO plays a very important role in any enterprise wide initiative, be it transforming the business, defining the strategy or implementing ERP. The decision to become digital is no exception. CEO’s role in such big initiatives is important as it requires a broader vision to guide, supervision to resolve teething problems, definition of the roles and responsibilities, allocation of budgets and regular monitoring.  In the absence of any of these directional, structural or resource inputs, no enterprise wide initiative can be successful.

CEO-Digital

Source – Coeus Age Consulting, 2016

The data from a survey of 116 large and medium enterprises validated the importance of the CEO’s role in leading a digital enterprise. 61% of high digital score enterprises have the CEO who ‘sees a strategic role of IT and participate regularly in the defining, planning and monitoring activities’. There may be specific persons to drive the operations, but the CEO is in control.

This makes utmost sense.  I have the following five arguments in support of this-

1. Becoming digital is a slow and steady process and happens through individual digital initiatives. A vision is required to guide these individual initiatives in terms of their contribution to a bigger dream. Without the bigger dream and the vision defined and communicated, the efforts remain scattered, inefficient and at times counter-productive. I know of many organizations where digital initiatives by the SBU heads and the CIO are not only duplication of efforts and wastage of resources, they also create confusion in the minds of those they are intended for.

2. The question ‘what capabilities the business require to compete? is the pole star for driving digital initiatives. It should not be just a fad to adopt tablets and mobile apps but must be underscored by some business need. Capabilities often run across businesses, functions and departments. Hence, the various digital initiatives need to be integrated at some level for converting them into capabilities, something that only the CEO can drive.

3. Digital initiatives are adding new roles and activities, which very often are fluid in nature. They are emergent in nature. For example, creating a digital marketing initiative has role of both the IT and the marketing functions. In such situation ‘who will drive the initiative and how?’ becomes a moot question. CEOs need to take note of the emerging role fluidity and intervene before it creates anxiety, struggle and dysfunctionality.

4. Creating a digital enterprise, for the reasons cited above, may require structural mechanisms to undertake the operational aspects of the CEOs’ vision like identifying the digital initiatives, integrating them together, resolving role fluidity and related ambiguities and measuring the impact. Such mechanisms by nature cut across businesses, functions and departments. Again who else can do it? The CEO and who else.

5. Last bust never the least, digital initiatives and related efforts require budgets at the organizational level and CEOs have the power to decide on such resource allocation for such strategic aspects.

The data clearly suggests that CEOs in high digital score organizations are more active, not only in giving a vision and broad directions but also in participating regularly. They are part of many structural mechanisms themselves.

CXO-Digital-1024x730

Source – Coeus Age Consulting, 2016

The similar logic holds true for the other CXOs in the CEO’s team – leaders of the businesses, functions and departments, for undertaking the digital drive in their respective areas. The study also revealed that in 53% of high digital score enterprises, most of the CXOs see strategic role of IT and participate regularly in various related activities. In sharp contrast to this, 61% of low digital score enterprises, either the CXOs rarely participate or have given broad set of expectation and left it to the CIO. I have seen issues of vision, defensive behavior in the CXOs and a turf war. All of this is counterproductive to the idea of creating a digital enterprise.

The research data clearly provides evidence to the fact that digital initiatives can be undertaken at any level, but those aimed at building a true digital enterprise need the attention and participation from the CEO and other CXOs, a CIO alone cannot build a digital enterprise.

A CIO has an important responsibility, that of creating a functional enterprise digital platform. But for creating a digital enterprise, that is not enough. A digital enterprise needs information leadership, a collaborative and shared leadership paradigm, which is different from the IT leadership we normally associate with a CIO.

(Enterprises interested in knowing their Digital Enterprise Score may get in touch with us at kds@coeusage.com).

 

CEO – Chief Executive Officer, CIO – Chief Information Officer, CXO – other C roles like Chief Marketing Officer, Chief Financial Officer etc.

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LEADDDING is a Coeus Age initiative to start a meaningful conversation around Digital and its relevance to business strategy and growth. The conversation shall not be just about technology but also about leadership, strategy and business performance.

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