Using Digital to Extend Growth

Gartner recently hosted a webinar where they discussed their much-anticipated annual CEO and Business Executive Survey.

While there are ongoing trends (CEOs are still facing pressure to demonstrate ROI for their digital investments and digital as a unique revenue stream priority continues to grow), this year’s survey revealed four important takeaways and trends:

  1. CEOs should capitalize on edge opportunities, like extending and scaling digital diversification, to prolong growth in 2019/2020.
  2. There isn’t enough focus on defining and driving new business models.
  3. Digital giants have a mixed effect.
  4. Talent is a major constraint of growth.
digital diversity

Takeaway #1: Diversify Digital

In 2017, CEOs started to recognize big change in digital as separate revenue source. Today, in light of economic slowdowns and trade concerns, enterprises are looking to digital as the place to focus. Cross-selling, up-selling and evolving digital product management are strategies alongside growing paid digital services and monetizing activity data.

Gartner says that some aspect of business offerings are digital for most businesses. And, in the near future, digital will be business as usual. To illustrate this point, consider that in their 2012 survey, only 2.1 percent of respondents mentioned “digital” as a top business priority. In 2019, 18.6 percent did.

The question to ask: Which digital business and operating models should you explore as part of your three-year strategy?
drive new business models

Takeaway #2: Drive New Business Models

A somewhat surprising result of the 2019 CEO survey is the lack of maturity in digital business models.

Subscription models were considered mature for 11 percent of CEOs and direct sales/disintermediation was mature for 20 percent of CEOs. Even affiliate/network marketing (13%), product-to-service (12%), and freemium (4%) were all at or under 13 percent maturity.

Out of the following example business models, blockchain (24%) was highest for considering to implement and Internet/platform-based (37%) was highest for growing.

  1. (Internet) Platform-based
  2. Direct sales/disintermediation
  3. Product to service
  4. Affiliate or network marketing
  5. Dynamic pricing
  6. Subscription
  7. Pay-as-you-go/usage metered
  8. Peer-to-peer
  9. Blockchain
  10. Circular economy
  11. Long-tail
  12. Freemium
  13. Crowdsourcing
  14. Crowdfunding

One trend is clear, CEOs see the need to evolve their digital transformation. Twenty-two percent said their business model would be very different within three years and 64 percent said theirs would be somewhat different. Related to their operating model, 21 percent said theirs would be very different and 65 percent said theirs would be somewhat different.

The question to ask: Which digital business and operating models should you explore as part of your three-year strategy?
Effect of Digital Giants

Takeaway #3: Effect of Digital Giants

The digital giants, like Facebook, Google, Amazon, Apple, and international players like Alibaba are looming large over most organizations. Gartner found that 64 percent of CEOs believe the digital giants will impact their industry within five years. And, only 18 percent thought that change would be positive, creating significant opportunities.

Because the digital giants greatly influence technologies, customer experience expectations, new business models, and organizational structure, many CEOs are concerned that the giants will cause significant difficulties for incumbents (21% of the 64%) and cause existential threats to incumbents (8% of the 64%).

The question to ask: What are the potentially positive and negative impact the digital giants may have on your organization over the next five years?
Access to Talent Concerns

Takeaway #4: Access to Talent Concerns

The Gartner survey revealed that 52 percent of CEOs are concerned about developing a digital talent base and the technical skills required.

The top tech-specific skills needed included data/analytics, digital, technology, and programming.

Outsourcing IT and digital work were a focus for 41 percent of CEOs and filling the gaps with internal training/development was a focus for 59 percent of CEOs.

The question to ask: Which skills are your priorities for the coming 1-2 years and which of those would be best served through outsourcing and through internal development?

The Gartner report, “2019 CEO Survey: The Year of Challenged Growth”  struck home a pattern that CEOs may relate to. While they may find “irksome” the concept of digital transformation (Gartner called it the “D” word), it is a strategic priority that is here to stay. CEOs will need guidance in order to lead in this area, as well as support to prove the digital growth and ROI. If you found this article helpful, you may enjoy other thought leadership pieces from SDLC Partners:

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