As digital transformation efforts take hold in many enterprises, CEOs must step up and provide a vision for how the company will use technology to stay competitive in the digital economy. However, as many CEOs rise to the position from operations or finance roles, the question arises: Just how tech savvy does the CEO need to be?
"CEOs should be very tech savvy, or if they are not, they should have at least part of their team by very tech savvy," said Stephanie L. Woerner, a research scientist at the MIT Sloan School of Management Center for Information Systems Research. "Companies that are getting themselves set up for a successful digital transformation have to be really good at both operational excellence and customer experience. Both of those in this age of digitization require technology."
Executive committees of top performing firms spend about half of their time focused on digitally enabled threats and opportunities, while bottom performers spend just 18% of their time on digital efforts, Woerner's research found. Top performing firms also got significantly more of their revenue from new products and services introduced in the last three years than bottom performing firms.
"It does not mean that the CEO has to program [code], but it means they know what's possible," Woerner said. "If they themselves can't do it, they should surround themselves with people who can give guidance and advice, and set the direction for the entire organization."
The proliferation of software means "every company, whether it sells fruit or SaaS products, is a tech company to a greater or lesser degree," said Venkatesh Rao, an independent consultant at Ribbonfarm Consulting.
The difference is not in the degree of CEO tech savviness, but in the type, Rao said. Companies can be categorized into four areas: Product-driven versus customer-driven, and business-to-business versus consumer-facing. "Depending on which quadrant you fall in, different aspects of tech are of strategic importance at different stages of market and company evolution," Rao said.
For example, the CEO of a growing B2B, customer-driven company that supplies machine parts likely needs to deeply understand how cloud-based CAD workflows are evolving.
