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.”

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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. However, understanding JavaScript trends is probably not of strategic importance, and can be left to middle managers running website operations.

“The biggest part of being tech-savvy is developing really good instincts around what is and is not of strategic importance in a given business context,” Rao said. This does not mean simply purchasing the latest trendy tech product. “Savvy is about understanding your own business and its environment through a technology lens, not about shopping or build-versus-buy optimization.”

Increasing tech aptitude

CEOs can learn more about how tech can impact their business strategy through reverse mentoring, Woerner said, and working with younger staff members to learn how they use technology and what they would like to use it for in the workplace.

Case studies can be an effective learning tool, Woerner said. Trying bringing a case study from another company to an executive meeting, and discussing what tech was used to solve a problem and how it fits into your own business context.

CEOs need somebody on their team to provide them and other C-level executives with a tech education, said Matt Guarini, vice president and research director serving CIOs at Forrester. “They also have to seek out some additional training, through peer networks or continuing education,” Guarini said. “There are definitely opportunities out there to become more knowledgeable about how tech is being deployed, to help companies put the right strategy in place.”

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Role of the CIO

The CIO can be a key player in keeping the CEO and other executives informed on how technology can impact the company’s products, services, and operations, Guarini said. “If the CIO can get credibility with the C-suite, they can present what they are doing but also advise them, talking about the implications of tech they should think through,” he added.

The most successful boards of directors have the CIO join meetings and provide updates on all things tech, including cyber risks and how digitization fits into strategy, Woerner said.

“At the CIO level, what you really want to think about is how you can help your company become more tech savvy,” Woerner said. To do this, CIOs must have their IT organizations running well, delegating tasks to ensure they have time to work with the executive committee and board. “The CIO should be thinking about what the important conversations are that they should be having with their peers to help them with their business, rather than just making sure services are running,” Woerner said.