CEOs see change on the horizon
06-05-2008
by Bryan Collins

There has been a dramatic increase in the number of global business leaders who see important change ahead, according to an IBM study of CEOs around the globe.

The Enterprise of the Future study shows 83 percent of CEOs expect substantial change in the future. This represents an increase of 28 percent since 2006.

"The enterprise of the future accepts change as a permanent state in an organisation. Those CEOs who demonstrate the capacity to manage major change know they can beat the competition by reaching new classes of customers," said Ginni Rometty, senior vice president of IBM Global Business Services.

"And it's clear that out-performers are distancing their enterprises from the competition based on their organisational capacity to take advantage of change," she added.

The IBM Global CEO Study is based on interviews with 1,130 CEOs, business and public sector leaders from 40 countries participated in structured interviews during 2007 and 2008. The report reveals the number of CEOs successfully managing change increased from 57 percent to 61 percent since 2006. The amount of CEOs reporting limited or no success in managing change rose from 12 percent to 19 percent.

"Both numbers have gone up. It is not as if there is a big change in terms of people not being able to handle change. That is the good news," said Susanne Dirks, leader at the Global Centre for Economic Development in the IBM Institute for Business Value, speaking with ENN.

The CEOs pointed to their customer base as the source of the most important change and said they would have to make substantial investment increases to reach the new customer set. In particular the IBM study identified two emerging consumer sets: the information omnivore and the socially-minded customer.

"The information omnivore is a challenge in terms of that customer being very demanding and doing a lot of research before they make any decisions. They want to be much more actively involved in the producing cycle of products," Dirks told ENN.

Socially-minded consumers tend to weigh up the societal and ethical issues surrounding a company and its product before making a decision to purchase. The rise of this consumer set is evidenced by the growth in popularity of Fair Trade products.

"The socially minded customer is a challenge because they will take social responsibility and things like that into consideration before they purchase the product," said Dirks."

Overall, CEOs are planning a 22 percent increase in investment over the next three years to serve these more sophisticated and demanding customers and 25 percent increase to reach social-minded customers.

"The company that is ready for those changes can tailor products that fit the socially minded or the omnivore type of customer. Change is a challenge but it is also a big opportunity," said Dirks.

"Nintendo, for example, was losing market share and managed to improve the market share by addressing their customers and working with them on the solution and having them advise their new customers," she highlighted.

Additionally, 75 percent of surveyed CEOs said they plan to actively enter new markets while 85 percent intend to form partnerships in order to capitalise on global integration opportunities.