Digitization on Boards 4th Edition
Digital leaders are key members of executive teams. As such we can consider them jointly responsible for organizational growth. Our 4th edition of ‘Digitization on Boards’ looks into the keys to digital performance. Examining digitization through the eyes of digital leaders from High and Low Performing Organizations, we ask: What are successful digital executives (and their organizations) doing better? Where can digital executives and non-executive boards focus — and win?
Our report surfaces a ‘virtuous circle’ of confidence, competence and outcomes in digital leaders and their High Performing Organizations. But even strong performers have clear avenues to raise their digital game.
Where can digital executives and non executive boards focus to build healthy growth?
This highly targeted research compares the perspectives of a select group of C-suite or Board-level digital leaders from fast-growth organizations* with low-performing equivalents. Both groups represented multiple sectors; approximately 40% with over 5000 employees. The fast-growing group posted minimum €50m revenue. The senior digital executives of mainly European organizations were asked to rate 2 major dimensions
- Their own competencies
- Their organizational context.
Research Findings in a Nutshell
Here we present the topline findings. You can find the full story and data in the Full Report, as well as dashboards to run your own diagnosis.
1 – THE DIGITAL COMPETENCIES – our Dashboard Pinpoints Significant Gaps and Opportunities
Job Voorhoeve, Leader of Amrop's Global Digital Practice, sets the scene: “In this complex environment, our research maps clear avenues for improvement to boost business performance through digitization. We argue that digital executives are jointly responsible for transformation, so they need to be fully up to speed on their own competencies. The research provides a dashboard that captures the main dimensions and skills CIOs and their equivalents need to master. These skills need to be hired, coached and mentored; they can no longer be left to chance. Digital executives deserve support in making the business case to boards in a clear and compelling way. In turn, boards should be in no doubt of their role in igniting an organization’s ability to harness the power of digital for transformation and growth.”
About the Amrop Digital Competency Model (ADCM©). With 4 dimensions and 24 items, our model captures the core competencies for CIOs and equivalent leaders in the critical areas of Strategy, Organization, Culture and Skills. Its design is based on observations from hundreds of interviews with digital leaders and hiring organizations, as well as the academic literature on digital transformation. Our survey asked digital leaders to self-score on the indicators of our model.
Findings by Dimension
Looking at the big four dimensions of Strategy, Organization, Culture and Skills, similar numbers of leaders in the High Performing and Low Performing Organizations are confident about their technical abilities and digital DNA.
But HPO leaders are bigger-picture thinkers and better at adding business value where it counts. So if similar numbers of LPO and HPO leaders are technically confident (and we could argue these skills are core to their role), the HPO leaders do far better on the higher-order leadership dimensions: culture, strategy-setting and digital organization-building.
Examining the overall scores for our big four dimensions, (where leaders score a high 4 or 5 on their competencies) we find some significant gaps between the two groups. The largest lie in the ‘big-picture’ dimensions of strategy, organization and culture:
- STRATEGY: Setting the digital roadmap: HPO leaders emerge as more visionary, transformative, and able to create human, social and commercial value. Looking at the overall scores in this dimension we find a 14% gap between the two groups; 75% of LPO leaders score 4 or 5, vs. 89% of HPO leaders.
- ORGANIZATION: Engineering the Digital Ecosystem. HPO leaders take a more globalized outlook and they are better at connecting digitization to the needs of business stakeholders. When it comes to overall scores in this dimension we find a 12% gap between the two groups; 70% of LPO leaders score 4 or 5, versus 82% of HPO leaders.
- CULTURE: Creating the digital mindset and skillset. HPO leaders have a more a forward-looking, ‘growth’ and adaptive mindset; they are better at cultivating wise decision-making in digitization and installing talent management. The overall scores in this dimension reveal a 17% gap between the two groups; 70% of LPO leaders score 4 or 5, vs. 87% of HPO leaders.
- SKILLS: Possessing technical competencies. HPO leaders score significantly higher than LPO peers in meeting security needs across markets. They are also better at managing wide spectrum domains: big data and large scale vendors. The overall scores in this dimension show a 7% gap between the two groups; 74% of LPO leaders score 4 or 5, vs. 81% of HPO leaders.
Go to the Full Report to view the Amrop Digital Competency model and discover the specific items where leaders of high and low performing organizations post the biggest gaps. We invite you to use the model to run your own diagnosis.
2 – ORGANIZATIONAL CONTEXT – Digital Leaders Report Multiple Frustration
“Whilst digitization is named as a priority for boards in the organizations we surveyed, board literacy and understanding are only on the starting blocks. Board members must be willing and able to transform the business model, focus on the innovation that drives customer value and understand the global impact of digitization. If this understanding is absent in a board, it must be installed as a priority, even if that means taking some painful decisions,” commented Job Voorhoeve.
- Board Relationship: Both HPO and LPO leaders need better support from their boards: the step from vision to action is often missing. Digital leaders certainly get access to their boards, and board members do listen to their input. However, when it comes to implementation, board support tails off. Indeed, only a minority of digital leaders in either type of organization really believe their boards understand their challenges.
- Organizational Threats: In both groups, 4 key threats are reported as ‘high’ or ‘extreme’. Two of these threats, (digital risks and customer frustration) are less of a problem for HPOs. But both groups are equally concerned by data overload and regulatory hurdles.
- Board Attitudes: Digitization is high on the board agendas of most HPO and LPO organizations. However, we see multiple avenues for improvement at board level. Most boards still lack digital literacy and vision. The (narrow) focus is largely on digitization as a support for operations and the customer interface. Digitization is widely used to exploit the status quo. Deploying it as a driver for exploration in terms of innovation and business modelling, is a missing link for around half of organizations.
- Organizational Set-up: HPO leaders are more likely to operate in a strategically coherent environment than LPO leaders. They also face fewer questions about digital ROI. However, slightly more HPO leaders are dealing with stakeholder impatience than their LPO peers. And in both HPO and LPO organizations, there are clear avenues for improvement in all aspects we examined.
- Role, Hiring and Onboarding: HPOs and LPOs alike are generally creating inspiring and empowering role profiles. However, only around half of leaders are getting effective onboarding, and mentoring and coaching is a rarity.
The Pyramid of Digital Frustrations
We found a range of areas where the leaders of High and Low Performing areas were similarly troubled. Here is a selection.
- 70% report that their boards are unsupportive:Only 30% of digital leaders agree their board understands the challenges of the role & supports them in carrying it out
- 60% suffer from digital impatience and board-short-sightedness:Digital leaders report a lack of realism and patience for their digital initiatives and say that their board pays insufficient thought to business model transformation via digitization.
- 50% suffer from short-termism, fragmentation and a lack of dynamism: These digital leaders consider that the focus is more on current revenues than future benefits, that there is insufficient dynamism and speed within the organization to decide and deliver on digital opportunities. Organizational structures are fragmented and/or over-complex and they were not helped by their onboarding to connect with key stakeholders.
- 40% consider that their boards are unstrategic. They report that their board only sees digitization as something that supports or improves operations.
See the Full Report for the complete Pyramid of Digital Frustrations – and use it to perform your own diagnosis.
We warmly invite you to a dialogue to share the learnings for unlocking the keys to high performance. Go here to find out more about Amrop’s Global Digital Practice and to set up a call.
*Companies cited as ‘fast growing’ by reputable independent sources (e.g. FT 100 listings) and market data. 79% of respondents confirmed their company had posted 3-year growth. Of these, 82% cited a growth rate of 5%+ with 65% citing a growth rate of 10%+.