CEOs beg for change

Chief concerns for Australian CEOs in the medium term is managing structural change and identifying strategic partnerships, according to an IBM survey.

Figures from IBM's 2006 global CEO study show that almost 60 percent of Australia and New Zealand's top CEOs believe competitive and market pressures will drive radical change within their companies over the next two years.

The study, which examines where CEOs focus innovative effort, is based on responses from 750 CEOs of major global organizations across 20 industries, with 60 respondents from Australia and New Zealand.

In improving growth over the next two years, most CEOs (41 percent) will focus on innovating products and services, followed by improving operations (32 percent) while a surprisingly high number (27 percent) cited changing their business model to extract growth.

IBM global business services Australia managing partner, Ian Ball, said collaboration, which refers to a non-contractual agreement between a company and a supplier, customer or competitor, is more widely used by the region's CEOs than elsewhere to reduce risk and increase efficiency and flexibility.

"CEOs in Australia and New Zealand use collaboration as a strategy to respond to the constraints of a small and highly competitive market as it offers speed and strategic flexibility and can reduce the risk and capital investment required for innovation," he said.

Australian CEOs further supported collaboration by identifying business partners (50 percent) as the top source of ideas with employee and customer input valued less (31 percent). This contrasted with global responses, which cited employees (41 percent) as the most relied-on contributors.

"Innovation is no longer just about products, or even about increasing the effectiveness and efficiency of core processes and functions; it's also about innovating through business models and competing in new ways. Innovation in business models and operations won't just create opportunities for cost savings, but also for additional revenue generation," Ball said.

Where innovation stalled, the report shows CEOs blamed internal inhibitors such as employee distaste for change rather than external reasons, yet only 35 percent were willing to make it their responsibility.

"The challenge CEOs face is to manage the balance between short-term business goals and long-term innovation strategies, combined with people issues of change fatigue and cynicism of the change process," Ball said.

The study follows IBM's 2004 global CEO study, which revealed CEOs had turned their agenda from cost-cutting to driving growth.