Digitally Savvy Leadership
Successfully transforming a company is a massive undertaking that often includes changing decision rights, relentlessly communicating the vision, creating new ways of working, changing the leadership, restructuring the organization, and developing a different approach to partnerships. One of the most important issues companies face today in considering a transformation is the role of digital technology as both an opportunity and a threat to the future success of the company. The company best equipped to meet these challenges has leadership, at multiple levels, that is digitally savvy. We define digitally savviness as an understanding, developed through experience and education, of the impact that emerging technologies will have on businesses’ success over the next decade.
All boards are having conversations about how emerging technologies, such as AI, could both threaten their company’s status quo and create new opportunities. Understanding, at an enterprise level, how these emerging technologies enable new business models, more efficient operations, and improved customer experience is a feature of a digitally savvy director. Our research found that companies with three or more digitally savvy directors exhibited statistically significantly better financial performance.
Top Management Team Leadership
A digitally savvy top management team (TMT) helps lead the company to new ways of doing business, especially around changing the culture and reorganizing to take advantage of the new technologies. And a digitally savvy TMT makes a difference. We found that as the percentage of TMT members with digital savviness increases, performance increases for net margin, revenue growth, and valuation.
In a digital world where everybody in the enterprise works and thinks digitally, technical leadership must be less important—right? Not so. Digitally savvy technical leaders, like the CIO, CTO, or CDO, sit on (or regularly advise) the executive committee, providing insight on how digital is changing firm competitiveness. They help create a vision on how to use digital to transform the enterprise via both efficiencies and growth. And the IT/digital unit as a whole helps companies build digital discipline by developing shared capabilities, integrating core processes, and facilitating experimentation.
Digitally Savvy Leaders' Time
Digitally savvy leaders spend their time in four ways:
- Working with external customers or channel partners
- Collaborating with business colleagues
- Managing enterprise business capability
- Running the tech function
Source: Initial framework based on MIT CISR interviews with fifteen global CIOs in 2009. Current version, above, has been revised with the addition of research focused on the role of digital in the enterprise.