Gartner: "Digital Dithering," Globalization, and Economic Concerns Top CEO Concerns
CIOs must help CEOs address their top concerns, Gartner says, As part of this, we need to realize that many digital efforts have yet to show a return on investment.
CEOs are concerned about globalization and economic issues, according to a recent Gartner study, but I was most interested that many of them are also concerned that their digital initiatives have yet to show value. Gartner Fellow Mark Raskino referred to this as "digital dithering," a mid-course realization that we have only taken a superficial role in going digital.
"It is time for us collectively to show digital value," Raskino said, saying CEOs started investing in digital in 2011 to 2013, so now they expect to see a return on that investment, as they think about how to position their organizations to protect the future.
He talked about how some CEOs are able to point to gains from digital and said that it doesn't matter how an organization defines digital, as long as it is clearly defined and measurable.
But he noted that in a survey of boards of directors, many only reported middling satisfaction with the enterprise's digital efforts, and Raskino said that even probably overstates their satisfaction, because of the way people respond to surveys. On the face of it, the graph looks mediocre, but in reality, "that's not much better than 'meh'."
Discussing the firm's annual CEO survey, Raskino said that CEOs see the impact of the "digital dragons" (the big technology firms) and how more and more of them are now making "digital" a priority.
Indeed, 82 percent of CEOs say they have a digital initiative or transformation program, but only 23 percent think their organizations are very effective at harvesting the results of digital, and according to the CIO survey, even fewer CIOs would say they are very strong at this.
Raskino attributed this to "digital dithering," where organizations say they want digital but don't really commit to it. He urged the CIOs to lead their organizations through a redefinition exercise, where they reappraise where they are, and start again.
He noted that digital is a "long game," citing how travel sites have been online for more than 20 years, yet British travel agency Thomas Cook only went out of business suddenly this year. Instead of looking at digital as one big project, companies should look at three or four steps of three or four years each.
To do this, he talked about a "three-horizon" digital strategy, where you think about multiple steps ahead, but focus your efforts on the current phase and a bit on the next one. For instance, for a car company, you may think about connectivity now, autonomous vehicles for the next phase, and transforming the business model into mobility services as a long-term goal.
This "digital dithering" was one the three top concerns that Raskino said CIOs should help their CEOs address, along with dealing with "reglobalization" and the possibility of an economic slowdown.
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CEOs are concerned about global issues, and "trade wars" are only a part of it. There has been a reaction against the idea of globalization, and while Raskino said it was possible it will be rolled back, it's more likely we will instead see a realignment of global trade. He noted that some of the attitude toward globalization are based on impact of technology, because it lets more people see the world, including poor people seeing how rich people live, which can cause anger and politicians to react accordingly.
He said the impact of such a realignment with new trade controls was viewed as likely to impact business, all over the world, not just in America. Already 23 percent of CEOs said they were seeing a significant impact from trade controls. As a result, CIOs need to help with "geo-flexibility," with digital processes helping. This includes using data science to identify the best geographic business locations and flows; deploying cloud to be geographically agile and to exploit data sovereignty rules; looking at greenfield opportunities in new markets; and building relationships in locations with key digital skills pools. Make it a fact-based journey," Raskino said.
The impact of an economic slowdown is clear in what CEOs listed as their top strategic business priorities for 2019 and 2020. Raskino said technology was still in second place (much better than 11th place a decade or so ago), but most of the other areas of increasing concern since last year's study are about profitability and margin pressure. The focus on the workforce has gone down notably.
Raskino said we're already seeing a slowdown in large parts of the world, even if America isn't feeling it yet. Whatever happens will not be the same as the last two recessions, where the recessions started suddenly in the United States. He said people have been talking about a potential slowdown for about two years, so every boardroom has plans.
If a slowdown is coming, he said now is the time to focus on productivity and efficiency. According to the survey, technology is the first tool CEOs think of for improving productivity. CIOs should start a conversation about productivity and efficiency now. He talked about how Bank of America has eliminated 80,000 jobs with the use of new technology and said CIOs should make "big goals" including improving sales productivity, and then apply technology to help make that happen.
In conclusion, Raskino said your company needs to become more geo-flexible, and if a downturn is coming, a switch to deep productivity reengineering will be necessary. He said CIOs must help sort out long-range, midrange, and short-range wording for the digital strategy, commenting that if you stop doing digital in a downturn, you are committing corporate suicide. Finally, he reiterated the long-term advices that CIOs shouldn't limit themselves to "being the tech guy," but instead they need to be a "thinking partner" with CEOs.