Mastering the connected economy – key findings of IBM’s 2012 CEO study

IBM 2012 CEO Study

In IBM’s 2012 CEO Study, top leaders identified openness and collaboration as the critical areas to master change in the coming years – how do leadership and employees prepare for the new challenges?

About the CEO study

IBM conducts a ‘CEO Study’ every other year, interviewing more than 1,700 CEOs and public sector leaders from around the world on their views.  The top leaders identified openness and collaboration as the critical areas to address and master our ‘connected economy’ over the coming years.

Two years ago, the focus of the 2010 study was on managing the increasing complexity raising the question: Complexity is the 2015 challenge! – Are leaders ready for ‘glocal’?

What’s new in 2012?

This year’s CEO Study looks into the future of 2015 to 2017.  The focus shifts to leveraging the softer factors, namely people and innovation, to navigate and connect in an increasingly technology-driven world that reshapes the workplace and the marketplace.  The CEOs agree that change is the only constant.  There is no ‘normal’ anymore – say good-bye to a stable status quo and expect unpredictability!

Let’s look at some key findings:

IBM 2012 CEO Study

Pivotal technology

Technology is the enabler for relationships and collaboration in the new age.  What has changed is how people interact with others as well as with and within organizations.  Technology now ranks number one of all external factors that influence organizations – surpassing people skills and market factors, which reflects a dramatic shift over the past years.  This makes technology the driver and single most important differentiator for successful organizations as 75% of CEOs agree – and a field that organizations cannot afford to fall behind in.

Outperforming organizations prepare for the convergence we see in the “digital, social and mobile spheres – connecting customers, employees, and partners in new ways to organizations and to each other.”  Thus, the driving forces for success in organizations remain with innovation and people to master and leverage technology.

Future leadership traits

What does this mean for leaders?  What are the traits looked for in leaders to master the challenge?

Organizations look for leaders that inspire.  Leaders who are obsessed with understanding their customer as a persona and what drives their individual behavior.  Leaders who work as a team across the C-level suite to align and combine the organization’s assets and strengths.

Half of the CEOs expect social channels to be a primary way to engage customers.  No wonder that outperforming organizations are those who have the ability to translate data effectively into insights and insights into action, or so 84% of the study responders believe.

These organizations manage change better.  They are open to venture into other industries or explore even more disruptive innovation by creating entirely new industries and business models.  Strong analytical capabilities to uncover patterns are only one side of the coin, where the other is creative and connected minds that can answer questions no one thought to ask in the first place.

Innovation dilemma

But what if your organization is not the out-performer?  What does it take your organization to get there?

It is no secret that large companies tend to lose their innovative momentum; see Starting an ERG as a strategic innovation engine!  (part 3 of 3).  To compensate the lack of creativity within, they buy start-ups, for example, or focus on hiring only the best and brightest (a.k.a. ‘war on talent’) to fuel their future idea and product pipelines.

What happens in reality, however, is that hiring managers like to look at the ‘odd-ball’ applicant, the out-of-the-box thinker they acclaim to look for, but then play it safe when it comes to decision time and go with a ‘lower risk’ candidate instead.

This leads to the next dilemma: Job applicants noticed the trend and adapted.  There is new truth to the survival of the fittest:  When you look at applicants for management positions, you may notice that their resumes and interview responses became increasingly similar over the past years.  They present themselves homogenous and ‘smooth’ with as little personal ‘edges’ as possible that may stick out and cause controversy.  The common theme you hear is the mistakes the candidates would not make – rather than articulating what they would do in their new role.

Risk-avoidance wins over leadership taking charge.  This mindset works its way down the hierarchy and across the organization.  You can notice it in narrow job descriptions, many detailed rules, and processes full of ‘red tape’.  It does not surprise that innovation perishes in large organizations and management turns to buy fresh ideas from the outside in one way or another.

Innovation from within

Innovation means taking risks; yet we tend to hire ‘safe’ and complacent managers and leaders that don’t rock the boat too much.  What we get in the end is a somewhat harmonized workforce that lacks diversity of thought ‑ despite possibly matching more visible and publicly promotable diversity criteria (see also How to create innovation culture with diversity!).

Reinventing innovation from within an organization is not always easy.  It requires top management commitment to build a strong internal framework and foster intrapreneurship throughout the workforce.  It takes establishing a reliable, predictable, and continuous innovation process with room to experiment and learning from failure.  For a simple reason, all this is necessary to succeed: you cannot leave your workforce behind if you seek creative ideas that lead to the next discovery and breakthrough.  – Read more on How to become the strategic innovation leader?  (part 2 of 3).

Employees of the Future

Ever-new technological advances shifted change to the unpredictable: pervasive smart-devices, mobility, virtual social networks and the ‘big data’ flood this combination generates, new business models they enable, and so on.  Organizations cannot even anticipate anymore what skills their workforce will need in only three or so years from now.

Consequently, rather than looking for specific skills (which is the starting point for the “war on talent”) they look for flexibility in employees to create and respond to disruptive innovations and change to new businesses and business models.  The most valued future employees must be comfortable with change and ambiguity, able to adapt and even reinvent themselves while leveraging their personal networks for professional success.  This is why human capital is seen most important (by 71% of CEOs) to make connections that fuel creativity and innovation for sustained economic value and growth.

The 2012 ‘Pulse of the Profession’ study by Project Management Institute (PMI) comes to similar results from a project management perspective: It notes that organizations seek to become more agile by placing more importance on change management and project risk management as well as on talent management to grow and conquer new markets.

Lead with openness and values

It requires more than inspiration to tap into employees effectively and on a deeper level than what their job description outlines.  Setting tight rules proves counterproductive, since the surrounding ambiguity makes it impossible to foresee and regulate all possible cases.

Quite the opposite is needed:  opening up and establishing a framework of values that guide employees in their response and dealing with unforeseen situations and customer interactions.  This value framework provides a bed for ideas to flow freely but also to connect with employees and let them to bring their whole self to work ‑ including their social networks.

Yet, in an increasingly connected world, innovation cannot come from inside of the organization alone.  Out-performers take risks by accepting and inviting innovative sparks from outside their own organization in ‘win-win’ partnerships that amplify innovation for growth.  Within, they communicate a clear purpose and mission with ethics and values that resonate with and guide their staff while fostering a collaborative environment.

Innovation Partnerships and Alliances

Many have tried to make it to the top alone but only few organizations truly understood how to integrate and control their entire value chain in sustainable ways.  As a lesson to learn from, Apple stands as an example for a company that was close to losing everything but learned from its mistakes.  Apple famously re-invented itself to become to most validated company worldwide (read more how Apples did it in Innovate to Implement!)

Success requires a broad organizational open-mindedness and flexibility to think and act disruptive were needed.  The CEOs see the future in innovation partnerships and close alliances where organizations share their data and collaborate on a deeper level than before without holding tight control.

– Are you ready to taking the leap to open up?

Author: Stephan Klaschka

Stephan Klaschka is an awarded innovation executive, C-level consultant, Intrapreneur, and serial entrepreneur with over 25 years of international work experience. He held various senior business operations, strategy, regulatory compliance and innovation roles with Boehringer Ingelheim, leaving as Director of Global Innovation Management and Strategy. In this first-of-its-kind position, Stephan's work was central to the new growth rejuvenation strategy as a catalyst to initiate and drive pivotal innovations, leadership development, and disruptive and digital transformation across the Boehringer Ingelheim group worldwide. He has recently served as CEO interim of the "German Institute for Telemedicine and Health Promotion" (DITG). Stephan holds Masters Degrees in Computer Science, Management, and Business Administration as well as advanced degrees in Strategy, Innovation, and Leadership from leading schools in Europe and the United States. PMP certified. He has published extensively and created award-winning workshops on topics including intrapreneurship, healthcare, pharma, and new technologies. Stephan currently consults independently out of New York.

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