October 08, 2013, 4:26 AM — A majority of CEOs are failing to steer their companies towards 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 roadmap, 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.
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 worked 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.