The 2006 Global CEO Study, undertaken by IBM Business Consulting Services, has found that 65% of the world`s top corporate CEOs plan to radically change their companies in the next two years, due to pressures from competitive and market forces.
The study also found CEOs are looking beyond growth through new products and services. They are increasingly focused on innovation in their business models and operations as key mechanisms for driving change.
The study is based on in-person interviews with over 750 of the world`s top CEOs. This year`s study follows IBM`s Global CEO Study in 2004, which revealed that CEOs had moved their agenda from cost-cutting to driving profitable growth.
While in the past, CEOs have focused primarily on product and service innovation, the 2006 study indicates CEOs are now prioritising business model innovation. About a third of innovation resources are now targeted at business model innovation. Furthermore, among those CEOs prioritising business model innovation, 61% fear that changes in the business model of a competitor could likely result in a radical change to the entire landscape of their industry.
"It`s very clear that CEOs today are looking at new kinds of innovation to drive substantial organisational change and business growth," says Alfons Meyer, business consulting services executive for IBM SA.
"It`s not just product innovation any more. It`s about understanding how to innovate a business model or an operational process or management behaviour, such as real-time risk management, global small business, collaborative pharmaceutical development or digital film distribution," says Meyer.
In terms of how to drive innovation, the study found that 76% of CEOs ranked business partnerships and collaboration as top sources for new ideas. This greatly contrasts with internal research and development, which ranked eighth as a source for new ideas, cited by only 17% of CEOs.
While 76% of CEOs said collaboration is critical, only 51% said their organisations currently collaborate extensively. This is exaggerated in emerging markets, where 82% are collaborating, compared to only 44% in mature markets, the study suggested.
In terms of driving innovation, CEOs stated that internal inhibitors were more significant than external hurdles. However, only 35% of CEOs were willing to take on these inhibitors by making innovation a CEO responsibility.
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