CEOs for change, survey says

In an IBM survey of 765 CEOs and top executives, 65 per cent said they plan to radically change their companies in the next two years in response to growing competitive and market pressures. But it won’t be easy: More than 80 per cent stated that their organizations have not been very successful at managing change in the past.

IBM unveiled the results of its latest CEO survey at an event in New York City this week.

The goal of the research was to capture CEOs’ current views on innovation and find out what they’re doing to enable innovation, IBM says. It defines innovation as using new ideas, or applying current thinking in fundamentally different ways, to effect significant change.

CEOs are looking at new kinds of innovation to drive substantial organizational change and business growth, said Ginni Rometty, senior vice president of IBM’s enterprise business services division, in a statement. “It’s not just product innovation any more. It’s about understanding how to innovate a business model, or an operational process, or management behavior – such as real-time risk management, collaborative pharmaceutical development, or digital film distribution.”

Asked how they drive innovation, three-quarters (76 per cent) of respondents ranked business partnerships and collaboration as top sources for new ideas but only 52 per cent of the CEOs surveyed believed their organizations were collaborating beyond a moderate level.

Among companies that use collaboration extensively, IBM found a correlation with improved financial performance. Companies with higher revenue growth report using external sources, such as partners and customers, significantly more than slower growers do. These out-performers used external sources 30 per cent more than underperformers, IBM says.

According to CEOs surveyed, some of the top benefits of collaboration with partners include: reduced costs; higher quality and customer satisfaction; access to skills and products; increased revenue; and access to new markets and customers.

“We need third parties as benchmarks and sparring partners. This also helps our staff to broaden their view,” said one respondent about the benefits of collaboration. “If you think you have all of the answers internally, you are wrong,” said another CEO.

Inside companies, employees provide the most innovative ideas, according to 41 per cent of respondents. Surprisingly, only 14 per cent of CEOs ranked internal R&D as a source for new ideas.

Meanwhile, there are plenty of factors hampering innovation. About 35 per cent of respondents said the top obstacles to innovation within the company are an unsupportive culture and climate. Government and other legal restrictions (32 per cent) topped the list of external obstacles to innovation.

IBM conducted a similar survey two years ago. In 2004, CEOs said they were shifting their agendas from cost-cutting to revenue-generating efforts.

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