Fortune magazine’s June report on executive technophobia is sure to create a massive stir in business circles. Their study, in association with professional services firm Deloitte and think tank FutureWorld, links business performance directly to technological competence and a willingness to embrace of innovation in the boardroom.
It seems that more than 40% of CEOs are uncomfortable with technology – they are “technologically illiterate” in the words of the report authors. The quality of their decison-making is reported to be seriously impaired by this lack of essential skill and translates directly into lower revenues and profitability growth during the past five years.
Based on clues that emerged in a 2003 study by the Boston Consulting Group, Deloitte studied the executive focus on ‘new growth’ and ‘out-of-the-box innovation’ in their clients and found that there was an ‘Innovation Premium’ of between 10% and 20% on shareholder value for those companies that capitalized actively on technological and intellectual capital.
In some industries this represents a sub-optimal use of resources to the tune of more than US$100 billion per annum.
How does your board rate? How much shareholder value is being destroyed? What would be the upside of conquering technophobia and innophobia? What could be the national impact?
(Read the full story in the detailed Analysis/Synthesis section, and take part in the debate with other subscribers and the team of FutureWorld gurus – for subscribers only)
ANALYSIS >> SYNTHESIS: How this scenario came to be
1998: Study reveals worrying trends
CEOs of the world’s largest companies are struggling to keep pace with the impact of digital technology and many are being left behind, placing their corporations at risk in the medium to longer term. Their own senior teams also lack basic IT skills and understanding, without which they cannot steer their corporations into the next millennium. Despite this, corporations are failing to address the problem.
These are the conclusions of a survey of forty-nine global 100 companies published on June 24, 1998, by the Wolfsberg Executive Development Centre (Switzerland). “The degree of incompetence is staggering”, said report author Prabhu Guptara. “Many CEOs are afraid of computers, some are unable even to read their own e-mail without help. Only a minority use the Internet or company Intranets regularly, while more than 25% entirely avoid using either.”
“Many CEOs and other senior team members are out of touch with the world in which their companies increasingly are operating.”
2003: New generation executives boost focus on new ideas and innovation
Major corporations are seeding their ageing executive teams with bright young executives. Frustrated with tradional succession plans they fast-track promising individuals, from inside and outside the organization, into key executive positions.
A strong interest blossoms in innovation after five years of focus on ‘back to the basics’ after the .com shakeout. The old adage that “you can’t save yourself to market domination” finds new legs. Innovation conferences are over-booked and good experiences with corporate venturing make headlines.
An unnamed GE source said: “We have exhausted most traditional avenues for growth – we’ve bought all the competitors we can afford, moved into every geographical niche, milked the entire value chain and every cash cow. We are now radically innovating in ways that would have been unthinkable a decade ago. It’s about step changes. We are using technology in dramatic new ways.
Making assets bleed to deliver value is old school thinking. We are leveraging GE’s Innovation Premium – a balanced portfolio using Growth, Innovation and High Expectations to drive value. The key challenge has been to take the executive teams along, to get their buy-in. I think we’ are beginning to see the change”.
Saatchi’s are now talking of Lifetime Brands – how to get consumers to stick with a brand for life. He’s a “Safeway kid”, or they are a “Virgin Family”. Others are calling it “Brand Religion”.
2004: US Health Care industry accused of technophobia
In an interview in Wired magazine in September 2004, Tommy Thompson, US Secretary of Health & Human Services slates his industry: “Technologically, health care is way behind every other industry. Grocery stores are more advanced than hospitals and clinics.”
Sounds like a serious call for radical innovation.
2005: Tools and technology made us ‘human’
A new book by Stan Davis and Wolfgang Grulke focuses on the usage of disruptive technology and links it to the advancement of human capability throughout history.
“Throughout Man’s time on this planet, the use of tools has always chronicled the development of our physical and intellectual capabilities.”
First we used tools to amplify our physical strength. In the past decades we have focused on enhancing our mental capabilities.
“Anyone who does not actively use the latest tools and technolgoies – is not using those essentially human qualities” say the authors.
2006: New study leaks reveals hidden technophobia
So you thought it had gone away. Reports are leaking ourt of a new Deloitte study that technophobia is still rife in executive circles. Far worse than ever imagined.
What’s worse, it’s having massive impact on business productivity and national economic performance.
2007: Fortune magazine blasts executive management
The Fortune article gives massive publicity to the Deloitte/FutureWorld study out this month.
Corporate soul-searching results with massive focus on assuring shareholders with specific analysis of business performance. Company’s Innovation Premium becomes a key measure for annual reports.
Consulting revenues explode, in a phenomenon akin to the re-engineering boom of the 1990s.
2008: Nations take up the Innovation Premium challenge
The World Economic Forum expands its World Competitiveness Report to focus on innovation and defines a country’s Innovation Premium.
Several governments create measurements comparing their ‘growth and innovation performance’ against other key nations. Within countries a focus on the rate of growth across industries becomes a strategic measure.
The WEF measurements include a global (weighted) standard for countries’ and industries’ Innovation Premiums.