Within CEE, 66% of CEOs say they personally have strong digital skills (percentage of respondents saying “agree” or “agree strongly”), well above the global rate of 55% and Western Europe’s 53%. But fewer of them are active on social media than their international peers (35%, versus 43% globally and 45% in Western Europe).
Like their counterparts around the globe, CEOs in Central and Eastern Europe need to be attuned to issues of digital trust as the world becomes more interconnected and ever larger quantities of customers’ and counterparties’ data end up in companies’ hands.
And businesses are putting more effort into leveraging that data to improve their performance. In our conversations with clients in the region, we have been noticing a shift in priorities in the way they use technology.
In the past, companies mostly asked what technology could do to make them more efficient, while today they’re focusing their efforts on how it can help them acquire new clients and sell more to current ones. That shift is helping to place issues of digital trust at the top of the CEO agenda.
Fortunately, the region’s rapid technological advance over the past 20 years – the process of “leapfrogging” over older technologies that constitute legacy systems in more advanced economies – may be bolstering digital trust.
Take banking as an example. While consumers in the West have decades of experience with brick-and-mortar branches and need to be persuaded to trust online access, many of their CEE counterparts don’t need any convincing: online is the only kind of banking they’ve ever known. In a region where face-to-face trust is often in short supply, CEOs need to explore how they can leverage their online credibility with customers.
Meanwhile, business leaders in the region seem remarkably sanguine about the danger from cyber threats. Just 46% of CEOs said they were “somewhat concerned” or “extremely concerned” about this issue – the lowest percentage on a list of 10 threats. We believe this number is set to grow in the coming years, moving closer to the global figure of 61%.
For now, the low number may be a function of company size: Since hackers can attack companies anywhere in the world, it makes economic sense for them to go after the biggest, richest targets. As companies in the region grow, they will become increasingly attractive targets.
Trust between companies and regulators is also crucial, and the case of LinkedIn in Russia illustrates how countries are becoming more focused on developing and enforcing local rules on data storage and data protection.
A Moscow court ordered that the business-oriented social networking site be blocked throughout Russia, after finding it violated a requirement to store the personal data of Russian citizens on servers inside the country, and had collected the data of unregistered users without legitimate grounds1. As governments step into the area of digital trust in an attempt to protect their citizens and the interests of the state, further such cases are bound to arise, making it crucial for CEOs to understand developments in this area and monitor compliance.
Trust and cooperation among various spheres will also be key to unlocking the region’s potential for innovation. Central and Eastern Europe has a long, proud tradition of technical education, and CEE is a popular destination for multinationals to outsource research and development. Where the region still needs to improve is in converting all that knowledge into homegrown companies.
The ability to innovate will become key for the region as its advantage on labour costs is steadily eroded by rising wages. This was reflected in the survey: CEOs selected innovation as the top area to strengthen in order to capitalise on new opportunities, followed by digital and technological capabilities and human capital, as stated above
The challenge for CEE policymakers and business leaders is to create a truly integrated ecosystem for tech development. At the moment, the region has all the pieces of the puzzle: academia, research, a vibrant startup scene and established businesses. What’s missing is the integration of all of these elements.
Smart CEOs (and other leaders) will look for ways to break down the silo mentality that keeps different elements of the ecosystem from working together effectively.