IBM study: CEOs accept change as a permanent state

Wake-up call for A/NZ executives

Seeking insight into the 'enterprise of the future' IBM yesterday released the findings of what it claims is the biggest global study of CEOs ever conducted.

Based on face-to-face interviews with 1,130 CEOs from 40 countries across 32 industries, including 69 executives in Australia and New Zealand, the study identified the main challenges likely to shape the future of business.

It revealed widespread concern by CEOs about their organisation's ability to absorb and manage change as well as a widening gap between winners and losers in the global economy.

Surprisingly, a high number of CEOs saw change as an opportunity to build new competitive advantage.

Overall, 83 per cent of respondents expect substantial change in the future, an increase of 28 per cent in just two years.

But CEOs believe their ability to effectively manage change is increasing at a far slower pace.

CEOs point specifically to their own customer base as the source of the most important changes they will have to address, as two new and more demanding classes of customers emerge.

They are the 'information omnivore', and the 'socially-minded' customer. Of all the trends identified in the study, CEOs plan their biggest increases in spending to be directed at responding to these two customer sets.

The "information omnivore" craves all types of information and often broadcasts its views and expectations worldwide via the Internet.

These customers are described in the study as producers creating entertainment and advertising content for their peers, while demanding flexibility and responsiveness from companies with whom they choose to do business.

Although these customers are more demanding, the majority of CEOs do not see them as a threat, but as an opportunity for differentiation based on meeting the heightened expectations of this group, and capitalising on new market opportunities that will emerge, the study said.

Overall CEOs are planning a 22 per cent increase in investments in the next three years to serve these more sophisticated and demanding customers.

The investment is even more pronounced among financial out-performers.

CEOs of firms with higher net profit margin growth indicate that investments targeted at information omnivores will increase 36 per cent over the next three years.

The majority of these new investments will be dedicated to new operational capabilities that improve collaboration and product innovation, and are more oriented to transparency and tailored to specific market segments.

The study shows the impact of the information omnivore is driving investment in every major geography.

Respondents also agreed there is a significant rise in customer expectations around corporate social responsibility ('CSR') which will play an important role in differentiating an enterprise in the future.

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