Digital Pulse: 2017 Outlook & Perspectives from the Market

Transcription

1 Digital Pulse: 2017 Outlook & Perspectives from the Market

2 2 Digital Pulse 2017: What s Different? Every year, Russell Reynolds surveys over 1,500 senior executives to understand how digital is transforming talent and leadership needs in organizations. The questions cover setting and executing digital strategy, organizational structure, and barriers to success, and the results provide our clients insight into what s next, so they can maximize the positive impact of digital on their own organizations. The third annual Digital Pulse contains a few changes. Digitally Savvy Respondents: In order to collect the most meaningful and accurate data possible, the respondent base was limited to senior executives who work for a company with a digital strategy. Additionally, the final analysis was based only on the responses of those participants with a comprehensive grasp of the digital strategy. Expert Perspectives: In addition to the data gathered from survey respondents, we asked several Russell Reynolds consultants to weigh in on what they re hearing in their respective markets and what they expect to see in the year to come. Industry-Specific Findings: Although they are not included in this report, industry-specific findings are available. Please contact any of the authors for additional details. 74% 81% 76% 73% 77% 72% Disruption (to-date) Disruption (next 12 months) 65% 62% 63% 56% 55% 51% Technology Consumer Financial Services Healthcare Nonprofit Industrial Companies across all industries are expecting continued disruption in 2017, but financial services, healthcare, and industrial companies are bracing for the most significant change.

3 3 Respondent Demographics GEOGRAPHY COMPANY SIZE 3% 2% 26% 37% 4% 5% 2% 9% Number of employees 1% 1% 10,000+ 5% 37% 2% 4% 5,000 10,000 10% EXECUTIVE LEVEL & FUNCTIONAL AREA C-LEVEL EXECUTIVE (CEO, or other CxO reporting to CEO) SVP/ EVP 48% 13% Finance 10% IT/Technology Services Operations 9% Sales 9% 33% Human Resources 4% Public Relations/ Communications 4% ecommerce/ebusiness/ Web Sales 2% R&D 2% Stand-Alone Digital Team % 12% INDUSTRY CONSUMER 11% HEALTHCARE 18% FINANCIAL SERVICES 8% NONPROFIT 18% INDUSTRIAL 8% 16% 14% 1% Other 25% 1,000 4, % Marketing 19% VP/ DIRECTOR 24% CEO/GM/President 12% TECHNOLOGY PROFESSIONAL & BUSINESS SERVICES 1-9 4%

4 4 Strategy Despite CEO support, there is a disconnect between the creation and execution of digital strategies. Though CEOs are primarily responsible for setting digital strategies, heads of Marketing, Digital, and IT are well established as key advocates. Other key functions have yet to take on significant roles as sponsors, a reality that is a potential obstacle to successful transformation. WHO SETS THE DIGITAL VISION AND STRATEGY? 40% 14% 10% 8% 6% 5% 3% 3% 2% 9% While 60% of respondents say they have the appropriate leadership setting the digital vision, only 47% feel that the right team is in place to effectively execute the strategy. CEO Head of Marketing Head of Digital Head of IT Head of Strategy Head of Technology Chief Commercial Officer Head of Customer/Experience Head of ecommerce/online Sales Other WHO ARE DIGITAL S BIGGEST ADVOCATES? 91% of respondents say that their CEOs make a visible effort to support the company s digital vision and initiatives. CEO Head of Marketing Head of IT Head of Digital Head of Technology Head of Strategy Board of Directors Head of Customer/Experience Head of Operations Head of Commercial Head of ecommerce Head of Finance Head of HR 32% 31% 27% 26% 23% 22% 19% 14% 9% 40% 40% 54% 67%

5 5 Where are digital strategies focused? Front-end interactions with customers and clients continue to be the priority of digital strategies, but firms are also leaning heavily on digital to collect proprietary customer/client data. 77% 71% 70% The implementation of new consumer/client experience and engagement tools and systems. The collection of customer or operational data. The use of new marketing channels. 64% 63% 51% The development of consumer/ client insights. Back-end operational improvement. The creation of additional business units/revenue. Though more than half (57%) of respondents say that their organizations now have sufficient data to recognize the opportunities digital presents, significantly fewer (44%) feel that the data is being effectively leveraged. RRA Perspectives from the Market: Companies from retail to banking are reorienting their strategies and organizations to align with the customer life cycle and decision-making process. They re leveraging digital capabilities to find new, increasingly targeted ways to convert and engage along previously inaccessible touchpoints in the customer journey. Rhys Grossman (London) As digital strategies have matured, our interviews and psychometric assessment of some of the world s top digital executives have brought to light the emergence of a new breed of leader. These successful transformational leaders possess the classic skills one would expect around innovating, challenging the status quo, and cutting through bureaucracy. But they also demonstrate the unique capability to lead with courage, apply social intelligence, convey optimism, and possess the sheer tenacity to get things done. Ric Roi (Singapore) The most progressive healthcare providers are treating patients as customers, and thinking through the connected end-to-end patient experience. They are also beginning to think about how to leverage digital internally to lower costs, improve quality, and engage employees. It is no longer an isolated team or strategy; it should pervade every function and department (much like information security). Amy Saddington (Dallas) From a strategic point of view, every industry has had a clear understanding of digital s impact for a number of years. The challenge now lies in its implementation. Successful digital players are truly willing to face the constant evolution of digital. They re not afraid to try new ways of doing things, and when they meet with success, they are able to scale rapidly, forcefully, and across borders. These companies have not only acknowledged that technology must be a crucial part of the entire organization s DNA, but they ve also hired and assessed for strategic, transformational leadership and have made the cultural changes necessary to keep critical talent on board. Adrian Fischer (Munich)

6 6 Organizational Structure Transformation continues to be driven by centralized digital functions, but companies are increasing visibility and agile decision making by also embedding digital talent across the organization. ORGANIZATIONAL MODEL * Other = 1% 39% 16% 45% CENTRALIZED DECENTRALIZED HYBRID A single team under a single leader Responsibility dispersed, following a market, business, or regional model Both central digital team and digital in business units OWNERSHIP OF DIGITAL FUNCTIONAL AREAS Though centralized digital functions share leadership in several areas, marketing continues to drive the majority of firm-wide digital initiatives. A clear owner of data analytics has yet to emerge. MARKETING Social media Digital marketing strategy Customer insights Customer experience Digital media selection CRM Web strategy Web design Data analytics DIGITAL Digital strategy Customer mobile app development Vendor selection IT

7 RALIZED 7 In addition to the vital support provided by the executive team, marketing, IT, data analytics, and technology, partnerships with sales, operations, and the board have emerged as critical success factors. KEY PARTNERSHIPS IT Operations 87% 64% Marketing 87% 63% Sales DIGITAL Executive Team 68% 88% Platforms/ Technology 86% 86% Supply Chain/ Logistics R&D 41% 53% Legal 32% Board of Directors HR 45% Data Analytics Finance 37% Manufacturing 22% RRA Perspectives from the Market: We are at an inflection point in the life cycle of digital transformation. Companies are taking an integrated organizational approach to blend the old with the new in order to create seamless customer/ client experiences. In addition to creating centralized end-to-end tech platforms, best-in-class companies are leveraging data analytics, embedding digital talent across the organization, and reorganizing around a detailed mapping of their customers journey. Tuck Rickards (San Francisco) Digital transformation s greatest barrier is organizational ambiguity. Many companies are struggling to coordinate the roles played by core digital teams, IT, and marketing. Successful digital strategies require an integrated approach with clear delineation of governance and decision rights, and the institution of joint metrics across shared areas of oversight. Chris Davis (Toronto)

8 8 Barriers to Success Digital transformation is largely impeded by structural and talent issues, not an absence of executive support or strategic leadership. Leadership and executive support of digital are not seen as significant barriers to digital success, rather a third of respondents say that their organization s current structure does not permit it to realize all the opportunities digital presents. Nearly half say that functional silos, inertia and a lack of digital expertise distributed across the organization are holding digital back. SIGNIFICANT BARRIERS Lack of digital expertise/skills Organizational inertia Functional silos MODERATE BARRIERS Lack of budget/funding Insufficient management bandwidth Poor technology investments Absence of strategy to coordinate initiatives 50% 49% 47% 44% 42% 41% 40% LIMITED BARRIERS Weak leadership Competing departments want to own digital Our customers are not demanding digital services/products Not seen as important by leadership 24% 31% 27% 26%

9 9 The majority of organizations have recognized that company culture, as it impacts decision making and strategic integration, is a major driver of successful transformation. % ORGANIZATIONAL CULTURE CHANGE (TO-DATE) TO ENABLE TRANSFORMATION NOT AT ALL 5% TO A SMALL EXTENT TO SOME EXTENT TO A GREAT EXTENT 20% 49% 26% RRA Perspectives from the Market: Old-world merchants are being held back by siloed/hierarchical thinking and an out-of-date focus on the sale as the main objective. Forward-thinking companies are organizing around the customer journey and taking an agile, real-time approach to decision making (riskier, but with greater odds of innovation). Libby Naumes (New York) As consumer attention and loyalty becomes increasingly fragmented, lack of continuous innovation in products and services is a major inhibitor to future success, even among the original disruptors. In every industry, companies embracing transformation are relying on real-time customer data to aid in decision making and are dramatically changing the pace of operations, from idea generation to commercialization. Grace Gu (Shanghai) One of the key barriers to driving digital transformation across functions in a large (industrial) multinational is that the organization structure is not fit for purpose. There is a risk of creating ivory towers if you build a separate digital acceleration function on the top, and most organizations are not yet ready to instill digital in all parts of the organization. From a leadership perspective, top executives show insights and understand the overall challenges, but middle management does not have the skills and support to drive the transformation. Jonas Augustson (Stockholm)

10 10 CONTRIBUTORS JONAS AUGUSTSON works across industries with transformational digital leaders in bridging the gap between technology and business. He works with entrepreneurial scale-ups, as well as larger, global corporations undergoing transformation and change. Location: Stockholm CHRIS DAVIS conducts C-suite level executive and board assignments for clients in the Financial Services, FinTech, and Private Equity sectors. Based in Toronto and New York, Chris is a member of Russell Reynolds Associates Digital Transformation Practice. Location: Toronto chris.davis@russellreynolds.com ADRIAN FISCHER is a member of the Technology sector as well as the Digital Transformation Practice. In addition to his work with technology oriented companies, Adrian leverages his background as a TMT consultant to partner with Big 4 strategy and management consulting companies. Location: Munich adrian.fischer@russellreynolds.com RHYS GROSSMAN is the co-leader of both the Digital Transformation and Consumer Digital and Media practices. Rhys provides leadership and assessment services to entrepreneurial and corporate clients across Europe. Location: London rhys.grossman@russellreynolds.com GRACE GU advises both leading local companies and multinational enterprises on how to innovate and transform within the context of China s unique digital pace and ecosystem. Location: Shanghai grace.gu@russellreynolds.com LIBBY NAUMES is a member of the firm s Consumer Digital Practice. Libby is the leading consultant working on Chief Digital Officer and Customer Experience searches for the firm. She specializes on partnering with clients to find the right leader to transform the customer journey from offline to online. Location: New York libby.naumes@russellreynolds.com RIC ROI serves as the lead for the Leadership and Succession Practice for Asia Pacific. He has 22 years of experience advising international Boards and CEOs on matters related to executive succession, selection and development. Location: Singapore ric.roi@russellreynolds.com TUCK RICKARDS is the co-leader of the Digital Transformation Practice and is a member of the CEO/ Board Services practice. He advises Fortune 500 organizations on talent and innovation, with a particular emphasis on recruiting high-impact transformational leaders. Location: San Francisco tuck.rickards@russellreynolds.com AMY SADDINGTON is a member of Russell Reynolds Associates Healthcare Services Practice, specializing in CEO and other senior-level executive searches for integrated delivery systems, payer organizations, and private equity portfolio companies. Location: Dallas amy.saddington@russellreynolds.com

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