McKinsey says CEOs are bullish on technology
I use the word ‘technology, but McKinsey prefers ‘digital’. No matter, the consulting firm’s Global Survey indicates that not only can new technology enable increased revenue, customer satisfaction, and improved processes, but CEOs are stepping up to lead such efforts.
Why? McKinsey found that 65 percent of the C-level executives they surveyed expect new technology will increase their companies’ operating income over the next three years, and are among their top ten priorities.
Here are some key points:
- Companies are using digital technology more and more to engage with customers and reach them through new channels. What’s more, growing shares [i.e., a growing number of respondents – ndm] report that their companies are making digital marketing and customer engagement a high strategic priority. Nevertheless, there is more work to do: most executives estimate that at best, their companies are one-quarter of the way toward realizing the end-state vision for their digital programs.
- Executives say each of the five digital trends we asked about [big data and advanced analytics, digital engagement of customers, digital engagement of employees and external partners, automation, and digital innovation – ndm] is a strategic priority for their companies. Of these, the trend that ranks highest is customer engagement: 56 percent say digital engagement of customers is at least a top-ten company priority, and on the whole respondents report notable progress since 2012 in deploying practices related to this trend. Companies have made particularly big gains in their use of digital to position material consistently across channels and to make personalized or targeted offers available online.
- By comparison, companies have been slower to adopt digital approaches to engaging their own employees, suppliers, and external partners. Here, executives say their companies most often use online tools for employee evaluations and feedback or knowledge management; smaller shares report more advanced uses, such as collaborative product design or knowledge sharing across the supply chain.
- Responses also indicate growth in the company-wide use of big data and advanced analytics, matching our experience with companies of all stripes, where we are seeing executives consider analytics a critical priority and dedicate increasing attention to the deployment of new analytic tools. Notably, respondents report increased use of data to improve decision making, R&D processes, and budgeting and forecasting. What’s more, executives say their companies are using analytics to grow: the largest shares report focusing their analytics efforts on either increasing revenue or improving process quality; reducing costs tends to rank as a lower-level priority.
- When asked about the next wave of business-process automation, respondents say their companies are automating a wide range of functions to improve the overall quality of processes.
- When asked about innovation practices, more than 40 percent of respondents say their companies are either incorporating digital technology into existing products or improving their technology operating models (for instance, using cloud computing). Just 23 percent say they are creating digital-only products.
- Across most of the C-suite, larger shares of respondents report that their companies’ senior executives are now supporting and getting involved in digital initiatives. This year, 31 percent say their CEOs personally sponsor these initiatives, up from 23 percent who said so in 2012. This growth illustrates the importance of these new digital programs to corporate performance, as well as the conundrum that many organizations face: often, the CEO is the only executive who has the mandate and ability to drive such a cross-cutting program.
- Despite the host of technical challenges in implementing digital, respondents say the success (or failure) of these programs ultimately relies on organization and leadership, rather than technology considerations.
McKinsey identifies three key factors in organization’s success using technology effectively:
- Finding the right digital leaders. They point to C-level involvement and the appointment of a chief digital officer
- Managing expectations
- Prioritizing talent
I would add to that:
- A willingness to take intelligent risks with technology. While it can be dangerous to be on the bleeding edge, it can be equally dangerous to be left behind by the competition
- Agility. There is no point trying to layer new technology on the top of a legacy infrastructure that is old and immobile, or on an organization that has equally stale and stubborn attitudes towards change
- Reliable processes for identifying and adopting new technologies
I welcome your views