CEO priorities are changing to embrace digital business, says Gartner

CEO priorities are changing to embrace digital business, says Gartner

According to research and advisory firm Gartner, growth is at the top of CEO business priorities in 2018 and 2019, but as implemental growth becomes harder to achieve, CEOs are concentrating on upgrading the structure of their companies, including a deeper understanding of digital business.

The Gartner 2018 CEO and Senior Business Executive Survey of 460 CEO and senior business executives in the fourth quarter of 2017 examined their business issues, as well as some areas of technology agenda impact. In total, 460 business leaders in organisations with more than US$50 million in annual revenue were qualified and surveyed.

“Although growth remains the CEO’s biggest priority, there was a significant fall in simple mentions of it this year, from 58% in 2017 to just 40% in 2018,” said Mark Raskino, vice president and fellow at Gartner. “This does not mean CEOs are less focused on growth, instead it shows that they are shifting perspective on how to obtain it. The ‘corporate’ category, which includes actions such as new strategy, corporate partnerships and mergers and acquisitions, has risen significantly to become the second-biggest priority.”

The survey found that IT remains a priority for the majority of CEOS, coming in at the third position. Workforce has increased this year to become the fourth-biggest priority, the number of CEOs mentioning workforce in their top three priorities increased from 16% to 28%. When asked about the most significant internal constraints to growth, employee and talent issues were at the top. CEOs said a lack of talent and workforce capability is the biggest inhibitor of digital business progress.

Cultural change is a key aspect of digital transformation. The 2018 Gartner CIO Survey found CIOs agreed it was a very high-priority concern, but only 37% of CEOs said a significant or deep cultural change is needed by 2020.

“These survey results show that if a company has a digital initiative, then the recognised need for culture change is higher,” added 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.”

Survey respondents were asked whether they have a management initiative or transformation programme to make their business more digital. The majority said they did and of those organisations, 54% said that their digital business objective is transformational while 46% said the objective of the initiative is optimisation.

In the background, CEOs’ use of the word ‘digital’ has been steadily increasing. When asked to describe their top five business priorities, the number of respondents mentioning the word digital at least once has risen from 2.1% in the 2012 survey to 13.4% in 2018. This positive attitude toward digital business is demonstrated by CEOs’ continuing intent to invest in IT as 61% of respondents intend to increase spending on IT in 2018, while 32% plan to make no changes to spending.

The 2018 CEO survey showed that the percentage of respondents who think their company is an innovation pioneer has reached a high of 41%, an increase of 27% in 2013.

“IOs should leverage this bullish sentiment by encouraging their business leaders into making ‘no way back’ commitments to digital business change,” said Raskino. “However, superficial digital change can be a dangerous form of self-deceit. The CEO’s commitment must be grounded in deep fundamentals, such as genuine customer value, a real business model concept and disciplined economics.”

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