Today’s C-Suite Must Have the Digital Skills to Lead a Modern Business

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As the entire business landscape becomes increasingly digital and data-driven, organisations that once appeared destined for success now appear to be structured for failure. The less-than-optimal results of digital transformation projects are indicative of this. As per recent Boston Consulting research, more than 80% of organisations increased the number of digital transformation projects in 2020. However, about 75% of these organisations failed to meet the objectives of their digital transformation projects.

Digital transformation projects can prove to be quite challenging because they change every process and alter every function. Right from the strategy through the execution phase and until the results are analysed, digital transformation projects can be cumbersome and complicated. For organisations to succeed with digital transformation projects and for them to realise a return on their investment, the C-Suite must be personally involved, with the CEO as one of the key executive sponsors for all projects. They must also be digitally literate to ensure they understand the projects deeply from a professional perspective. This essentially means that the C-Suite must grapple with and deeply understand the distinctions of the digital world so that they can help shape product/service design and, consequently, the technology direction. If the C-Suite is not digitally savvy and they don’t have the skills necessary to understand digital transformation at a deeper level, the chances of them steering the projects towards success are low.

If you are to analyse digital transformation projects at the global scale, they are generally propelled and steered by the CEO, with the rest of the C-Suite closely involved. Visionary C-Suites of global corporations have served to be agents of immense change. If you are a CEO of a large organisation, an MD of a mid-sized firm, or a GM of a smaller organisation, the responsibility to lead digital transformation projects rests with you. You will need to initiate and propel forward the journey of digital change. For this, you will need the digital skills necessary to lead these projects.

Australian CEOs, their members of the C-Suite, and top management teams require the digital skills to lead and steer digital transformation projects. In the absence of digital skills, these projects may be headed for failure or at least not deliver the desired return on investment. Digitally savvy CEOs and leadership teams have a higher chance of leading successful digital transformation projects. As per a research study published in the Sloan Management Review in March 2022, from 2,006 organisations studied, merely 7% were led by digitally competent C-Suite teams. About 93% of the 2,006 firms did not have a C-Suite at the helm that deeply understood how technology could shape their company’s success. Predictably, the 7% of the 2,006 firms led by digitally competent leadership outperformed the rest in terms of revenue growth, profitability, and market valuation.

I am not surprised that less than 25% of the CEOs and less than 13% of CFOs in the sample of 2,006 organisations studied could be considered proficient when it came to digital skills. Even among those overseeing the technology department, just 47% of CTOs and 45% of CIOs made the cut; the rest are more concerned with IT infrastructure and back-office operations than with capturing value from digital technologies. Clearly, businesses everywhere must reconsider the composition of their executive teams. One would think that the technology leaders would have the digital proficiency required. Merely 45% of the CIOs and 47% of the CTOs had the required digital proficiency to lead successful digital transformation projects. More than half of the CIOs and CTOs were adept at maintaining IT Infrastructure and managing back-office operations. However, they were not skilled at extracting value from digital technologies and leading the charge for digital transformation projects. It is evident that organisations must rethink the composition of their C-Suites and must re-evaluate how they will develop the digital skills of their leadership.

The other aspect that must be investigated with diligence, is that of boards. Organisational boards also require digital skills, or they must at least have a deep appreciation of the skills to preside over organisations that are undertaking digital transformation journeys. An MIT study of about 3,000 organisations with $1 billion+ annual revenues showed that nearly 75% of the boards lacked the digital skills and the digital savvy needed to captain the firms through digital transformation waters. The boards lacked skills and savvy in terms of the backgrounds of directors, their experience of leading firms undertaking digital transformation journeys, or the way in which boards engaged with an organisation’s C-Suite when it came to technology-related issues. Interesting to note that organisations with three or more digitally savvy board directors reported 38% greater revenue and 17% higher profit margin than those with two or fewer directors who were digitally savvy. Where organisations do have boards, they exercise significant control over the firms. If the board directors are not digitally savvy, they don’t hold the CEO and the leadership to account for digital transformation, and the organisations keep operating with a legacy approach to technology. The situation in Australia is rather different to the USA. The board of a Silicon Valley firm would be comprised of tech founders, VCs who invest in tech firms, and executives from digital firms. They understand technology as well as the odds of success. This is not necessarily the case in Sydney. We have many organisations in the SME sector that don’t believe in the value of having a board. We also have many mid-sized firms that have boards that are not digitally competent. 

Jeff Bezos’ philosophy has been one of making bold investment decisions rather than timid ones. Some have paid off. Some have not. His motto has been, “We will have learned another valuable lesson in either case.” Unfortunately, this is not the approach that CEOs of legacy firms tell their boards.

Not every CEO comes from a technology background – most don’t. Not every CEO has experience with digital transformation. Every member of the C-Suite starts their experience of digital transformation with their first project. Most successful executive leaders get experience with technology and understand technology on the job. Plenty of non-technical entrepreneurs have successfully set up digital behemoths. 

Companies that do well with digital transformation projects usually have a point guard (a leadership executive) leading the digital projects and reporting directly to the CEO. The C-Suite must support the leader of digital transformation from all perspectives; be it the CHRO supporting the digital transformation lead from a talent acquisition perspective, a COO ensuring that business as usual is disrupted through digital transformation projects, the CFO supporting digital transformation projects, or the CIO providing supporting for a technology perspective. The CEO and the C-Suite must be digitally savvy enough to understand the digital transformation projects on a deeper level so that they can support the projects through to completion. When the C-Suite is digitally savvy, digital transformation projects get the funding, the support, the resources and the cadence. But, in organisations stuck in archaic ways of being, people are stuck in legacy ways of thinking. In these organisations, digitally savvy roles have either not been created or are vacant. Even if professionals have occupied the roles, they either don’t have the right skills or are not supported by the C-Suite. In legacy organisations, the digital roles are often buried deep in the corporate structure, with no access to executive leadership. 

Not only must CEOs and the C-Suite be digitally savvy, but they must also assume the vital role of change agents. The C-Suite must form the leadership group that drives digital transformation initiatives. Digital transformation encompasses far more than the adoption of new technologies and procedures. It is fundamentally about overcoming resistance and inertia to change the way people think and work. CEOs must lead by example, instil trust in their vision, and mobilise the organisation around what may appear to be a faraway goal.

CEOs and C-Suite executives who are dated in their thinking often assume that they need not be hands-on when it comes to digital transformation. They think that all they need to do is hire the right executive and hand over the responsibility of digital transformation to that individual. They think that hiring exceptional employees from a tech background will ensure that their digital transformation projects will be in safe and capable hands. However, this is not the correct lens for boards, CEOs and C-Suite members to look through. 

Boards, CEOs and C-Suite members that lead businesses through digital transformation successfully are focussed on digital products and digital services. They are focussed on innovation and digital disruption. They want to transform legacy applications, systems, processes, and technologies and modernise long-standing ways of working. They bother to grapple with the detail. Regardless of whether the organisation is in the tech industry or not, the C-Suite needs to apply digital skills to modernise the organisation from every dimension and perspective possible. They are aware and cognisant that focusing on modernising legacy systems, change management, and excellent services and products is the future.

Legacy CEOs and C-Suites from traditional firms tend not to develop the digital skills needed to lead digital transformation. They don’t want to be hands-on from a digital perspective because they believe it is someone else’s responsibility. That is a rather old way to look at digital transformation. Today, market-leading organisations appreciate the value of digital skills. Not just in the front line and just at the operative layer. Industry leaders build digital skills end-to-end, at all levels of the organisation, across all functions, including at the C-Suite layer. 

I have the fortune of working with many CEOs from technology firms and non-technology sectors too. One thing I find in common across both tech and non-tech landscapes is the appreciation for digital skills and digital transformation. They focus on modernising all elements of their business; their Client Relationship Management application, the Enterprise Resource Planning applications, the Audio/Visual setup, the endpoint devices their hybrid workforce needs, the accounting application, the HR application, the analytics, reporting and visualisation tech stack, etc. You get my gist. CEOs and C-Suite members of market-leading firms lead from the front when it comes to digital skills. When you ask them about the importance of digital technologies to their business and to their role, they are confident in their response. They say with resolve that no other priority comes close to the priority of transforming their business. When leaders of legacy thinking firms are asked about how much time, resources, effort and focus they have on technology and digital innovation, the response is “not enough”.

If the boards, CEOs and C-Suites of the world’s most successful and valuable companies think it is extremely important to invest resources into digital innovation, and they focus on building their own digital skills and that of the C-Suite, then why are we not doing the same? We must not play catch-up with digital skills. It must be a top priority. With each industry sector being transformed by the digital revolution, it is time for each organisation to become a digital business powered by data. Each organisation must invest in developing a board with apt digital skills. Every CEO must lead their company’s digital transformation personally. Each and every C-Suite member should firstly develop their digital skills within the context of their role and then assure that their functional unit or the components of the business that they oversee are digitally transformed within the umbrella of the organisation’s digital transformation. Organisations are headed for pain and failure if their boards, CEO and C-Suite members believe that ‘digital’ is not their problem and that ‘digital skills’ is not something they need to develop for themselves.

RK is the CEO & Co-Founder of Resonate.

RK is Resonate’s chief strategist, thought leader, and IT industry veteran. Our clients depend on RK to advise on their business strategy, channel strategy, and sales strategy. 

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