Transcript IBM Global 2008 CEO Study (Canadian Perspective)

IBM Global Business Services
IBM Global 2008 CEO Study
The Enterprise of the Future
FEI Vancouver Chapter
October 21, 2008
© Copyright IBM Corporation 2008
We spoke to 1,130 CEOs face-to-face and conducted in-depth analysis
to determine the characteristics of the Enterprise of the Future
The IBM Global CEO Study focused on how organizations are addressing:
 New and changing customers – changes at the end of the value chain
 Global integration – changes within the value chain
 Business model innovation – their response to these changes
Industry break down of the 1,130
-
Communications
Distribution
Financial Services
Industrial
Public
Other
10%
22%
17%
23%
22%
6%
Source: IBM Global CEO Study 2008,
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Global CEO Study 2008 | October 2008
Geographic break down of the 1,130
EMEA
36%
Americas
31%
68 in
Canada
Asia Pacific
33%
© Copyright IBM Corporation 2008
CEOs see significant change and opportunity ahead, and are
radically changing their business designs to respond
CEOs are:
 Expecting significant change (increased by 33%)
 Clear that the ability to manage change has not kept pace – 39% feel
unprepared
 Investing heavily in engaging newly prosperous and more informed and
collaborative customers
 Moving aggressively toward global business designs, deeply changing
capabilities, partnering more extensively and using M&A
 Responding to customer expectations of corporate social responsibility as an
opportunity to differentiate
The collective wisdom of these CEOs
has led us to the five core traits of
the Enterprise of the Future.
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Global CEO Study 2008 | October 2008
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The Enterprise of the Future is …
1
Hungry
for
change
4
2
Innovative
beyond
customer
imagination
Global CEO Study 2008 | October 2008
3
Globally
integrated
4
Disruptive
by nature
5
Genuine,
not just
generous
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IBM Global Business Services
The Enterprise of the Future is …
Hungry for Change
… capable of changing quickly and successfully. Instead of merely
responding to trends, it shapes and leads them. Market and industry
shifts are a chance to move ahead of the competition … and
disadvantage competitors
© Copyright IBM Corporation 2008
More CEOs than ever before – 8 in 10 – anticipate turbulent change
and plan bold moves in response .. and at the same time the Change
Gap* has tripled
2006
%
8
13%
12%
22%
31%
2008
22
CHANGE
GAP*
6%
%
CHANGE
GAP*
19%
11%
83%
65%
20%
61%
57%
Change Needed
No/limited Change
Moderate Change
Substantial Change
Past Change Success
No/limited Success
Moderate Success
Change Needed
Past Change
Success
Source: IBM Global CEO Study 2008
6
Change Needed
Past Change
Success
Successful
* Difference or ‘gap’ between expected level of change needed and past success in managing change
Global CEO Study 2008 | October 2008
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… and the Change Gap for Canadian CEOs was 50% larger than
their global peers
2006(Global)
22
%
8
2008 (Global)
CHANGE
GAP*
13%
12%
22%
31%
6%
2008 (Canada)
%
33
CHANGE
GAP*
19%
CHANGE
GAP*
21%
10%
11%
83%
5%
%
86%
20%
24%
Change Needed
No/limited Change
Moderate Change
65%
Substantial Change
61%
57%
53%
Past Change Success
No/limited Success
Moderate Success
Successful
Change Needed
Past Change
Success
Change Needed
Past Change
Success
Change Needed
Past Change
Success
Source: IBM Global CEO Study 2008,
* Difference or ‘gap’ between expected level of change needed and past success in managing change
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Companies that delivered higher revenue growth managed change
more successfully
Underperformers**
Outperformers**
%
%
29
19
CHANGE
GAP*
4%
13%
24%
83%
CHANGE
GAP*
5%
10%
17%
85%
17%
22%
CEOs of organizations with
outperforming revenue growth
are more confident about their
ability to implement change
66%
54%
Change Needed
No/limited Change
Change Needed
Past Change
Success
Change Needed
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Global CEO Study 2008 | October 2008
Moderate Change
Moderate Success
Substantial Change
Successful
Past Change
Success
* Difference or ‘gap’ between expected level of change needed and past success in managing change
Source: IBM Global CEO Study 2008; n (underperformers) = 173, n (outperformers) = 164
Past Change Success
No/limited Success
** Performance based on industry comparisons within survey
sample of revenue CAGR 2003 to 2006
© Copyright IBM Corporation 2008
CEOs say the gap widens because of the accelerating pace of
change
“The key to successful transformation is
changing our mind-set. For large
companies, it is easy to be complacent —
we have to change this. Our company
culture must have a built-in change
mechanism.”
Masao Yamazaki, President and CEO, West Japan
Railway Company
“The speed of change, with regard to the
Chinese market, is very quick. You have to
be ready or you are left behind.”
Richard Lavin, Group President, Caterpillar Inc.
“The rate of change has increased
dramatically. Customers are demanding
radical change in product innovation. Our
company will need to greatly increase its
capabilities to deal with these demands.”
Dennis Jönsson, CEO, Tetra Pak
“My organization has not been quick enough;
change is hard. A few years ago we were a
national company, now we're a global
company.”
US
“We're in a white-water world.”
Canada
9
“What worked in the past will not work in the
future. This is the 21st century, not the latter
half of 20th.“
“Change in our organization is not happening
fast enough… the gap is opening up.”
US
Australia
Global CEO Study 2008 | October 2008
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CEOs can no longer focus on a narrow set of challenges and intend
to manage a broader agenda and greater uncertainty
External Forces Impacting the Organization
Market factors
84%
67%
48% Market factors
42%
44%
48% People skills
41%
35%
People skills
Macroeconomic factors
Technological factors
Globalization
Regulatory concerns
Technological factors
33%
Socioeconomic factors
Environmental factors
Geopolitical factors
2004
2006
2008
Source: IBM Global CEO Study
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Global CEO Study 2008 | October 2008
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Interestingly, people skills top the list in Canada by a long shot!
External Forces Impacting the Organization
Global CEOs
Canadian CEOs
Market Factors
48%
People Skills
48%
64% 64%
People Skills
Technological Factors
44%
Market Factors
Technological
Factors
36%
35%
Globalization
35%
Regulatory
Concerns
30%
Macro-Economic
Factors
21%
Environmental
Issues
Budgets
29%
Regulatory Concerns
29%
Globalization
24%
Socio-Economic Factors
20%
Environmental Issues
20%
18%
Macro-Economic Factors
Socio-Economic
Factors
Geopolitical
Factors
15%
17%
Other
7%
Geopolitical Factors
11%
8%
Source: IBM Global CEO Study 2008,
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Global CEO Study 2008 | October 2008
© Copyright IBM Corporation 2008
Are you ready?
Building the Enterprise of the Future
HUNGRY FOR
CHANGE
Ad hoc and
reactive
change
Project-driven
change
Change
portfolio and
program
Anticipating
and proactive
change
Change
becomes the
strategy
Does your organization have a healthy appetite for change?
Have you seeded your organization with visionary challengers and provided
them with the freedom to effect meaningful change?
Do you manage change as a structured program and measure change
management effectiveness?
Do you have robust processes in place to incubate new product, service
and business model concepts — and redirect investment when required?
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IBM Global Business Services
The Enterprise of the Future is …
Innovative Beyond
Customer Imagination
… surpasses the expectations of increasingly demanding customers.
Deep collaborative relationships with customers and partners foster
innovation
© Copyright IBM Corporation 2008
Customers are becoming more demanding, but rather than seeing
this development as a threat, CEOs see an opportunity for
differentiation
Means
Rise of purchasing power in
rapidly developing
economies and prosperity in
Western economies
4.62
5.19
5.28
Rise of informed and
collaborative customers
5.30
“Developing countries grow
gradually at first, then suddenly
emerge as large markets. We
must be prepared to respond
quickly. This will require us to
make fundamental changes to
our business now, rather than
implement event-driven
reactions.”
Yasuo Inubushi, President, Kobe
Steel
Increasing customer
expectations for Corporate
Social Responsibility
Global
5.29
5.04
Canada
1
2
Very negative
impact
Source: IBM Global CEO Study 2008,
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Global CEO Study 2008 | October 2008
3
4
No impact
5
6
7
Very positive
impact
© Copyright IBM Corporation 2008
Three-quarters of CEOs view increasingly demanding customers
not as a threat, but as opportunity to differentiate
“There are no homogenous consumers
anymore. We have to find ways to address
different segments with individual sales
channels and product offerings without
increasing complexity and its related costs.”
Impact
Negative
impact
10%
No
impact
14%
Dr. Torsten Oletzky, CEO, ERGO
Versicherungsgruppe AG
Positive
impact
76%
Focus Areas
• New operational capabilities
• Increased transparency
• New customer segments
“The rise of the informed and knowing
consumer will continue to have an impact
regarding our go-to-market priorities. We
must know how to leverage new media.
We've been surprised by the impact that
just a few consumers can have with their
blog entries.”
Rob Hurlbut, CEO, Attune Foods
“We must redefine our value proposition to
customers. Information and advisory content
are becoming even more valuable than
traditional drivers.”
H. Edward Hanway, Chairman & CEO, CIGNA Corp.
Source: IBM Global CEO Study 2008
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Global CEO Study 2008 | October 2008
© Copyright IBM Corporation 2008
Are you ready?
Building the Enterprise of the Future
INNOVATIVE
BEYOND
CUSTOMER
IMAGINATION
Customer
intelligence
Customer
information
transparency
Two-way
customer
interaction
Customer
collaborative
development
Expanding
customer
aspirations
Which of your offerings are breaking new ground, opening entirely
new segments or markets? What can you learn from them?
Are you systematically evaluating potential geographic markets?
How do you achieve the efficiencies of global brands, products and
services while remaining locally relevant?
When customer preferences shift, are you the first to understand and
act on this or do your competitors react more quickly?
Are you effectively integrating disparate data and systems to gain
new customer insights?
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IBM Global Business Services
The Enterprise of the Future is …
Globally Integrated
… business designs are strategically designed to access the best
capabilities, knowledge and assets from wherever they reside in the
world and apply them wherever required
© Copyright IBM Corporation 2008
CEOs are planning radical changes in business design to capitalize
on global integration
Equally Important
Deeply change mix of
capabilities, knowledge
and assets
57%
32% 32%
11%
Maintain current mix of
capabilities, knowledge
and assets
Partner extensively
55%
35% 35%
10%
Do everything in-house
Actively enter new markets
Globalize brands/products
Optimize operations globally
Grow through mergers & acquisitions
Drive multiple cultures
43%
40%
39%
37%37%
20%
33%33%
27%
32%32%
50%50%
24%
30%
34%
34%
Defend your core
Localize brands/products
29%
Optimize operations locally
26%
36%
Grow organically
Strive for one culture
Source: IBM Global CEO Study 2008; private sector responses
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Global CEO Study 2008 | October 2008
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CEOs are planning radical changes in business design to capitalize
on global integration; Canadian CEOs however seem more
domestically focused
Equally
Important
3
Actively enter new markets
Partner extensively
Globalize brands/products
Drive multiple cultures
Optimize your operations globally
Deeply change the mix of capabilities/
knowledge/assets (c/k/a) in your organization
Grow through mergers & acquisitions
2
1
0
1
2
3
Defend your core
Do everything in-house
Localize brands/products
Strive for one culture
Optimize your operations locally
Maintain the current mix of
c/k/a in your organization
Grow organically
Canada
Global
Source: IBM Global CEO Study 2008
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Cluster analysis revealed four common approaches toward global
integration
Localizers
19%
Localizers
19%
Extensive
Extensive
Globalizers
Globalizers
31%
31%
1. Extensive Globalizers
-
2. Globalizers
-
Blended
Thinkers
17%
Highly networked businesses, adopting a global
approach to all elements of integration
Businesses that optimize globally, but already
have part of the capabilities, knowledge and
assets they need, and focus on a single culture,
not multiple
3. Blended Thinkers
-
Businesses that optimize through a mix of global
and local approaches, with multiple cultures
4. Localizers
Blended
Thinkers
17%
-
Globalizers
Globalizers
33%
33%
Insulated businesses with a blended growth
approach
Source: IBM Global CEO Study 2008
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Global CEO Study 2008 | October 2008
© Copyright IBM Corporation 2008
Cluster analysis revealed four common approaches toward global
integration
Actively enter new markets
Deeply change mix of capabilities,
knowledge and assets
Partner extensively
Globalize brands/products
Optimize operations globally
Grow through mergers & acquisitions
Drive multiple cultures
Defend your core
Maintain current mix of capabilities,
knowledge and assets
Do everything in-house
Localize brands/products
Optimize operations locally
Grow organically
Strive for one culture
Extensive Globalizers (n=230)
Blended Thinkers (n=131)
Globalizers (n=246)
Localizers (n=140)
Source: IBM Global CEO Study 2008
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Global CEO Study 2008 | October 2008
© Copyright IBM Corporation 2008
Are you ready?
Building the Enterprise of the Future
GLOBALLY
INTEGRATED
Exploring
global
opportunities
Driving
specific global
initiatives
Building global
capabilities
systematically
Global centers
of excellence
Global
enterprise
innovation
Are you effectively integrating differentiating capabilities, knowledge and
assets from around the world into networked centers of excellence?
Does your organization have a globally integrated business design (even
if it does not have a global footprint)?
Do you have a detailed plan for global partnering and M&A?
Are you developing leaders that think and act globally?
Do you nurture and support social connections to improve integration and
innovation?
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IBM Global Business Services
The Enterprise of the Future is …
Disruptive by Nature
… challenges existing business models, disrupting the basis of
competition. Shifts the value proposition, overturns traditional delivery
approaches and, as soon as opportunities arise, reinvents itself and its
entire industry
© Copyright IBM Corporation 2008
CEOs implement initiatives to evolve their business model;
outperformers aim to disrupt their enterprise or industry model
 Business Model Innovation. “Significantly changing the structure and / or
financial model of the business”. There are three types of business model
innovation:
-
-
-
24
Industry model innovation – Innovating the industry value chain by Moving into
new industries, redefining existing ones or creating entirely new value chains
Revenue model innovation – Innovating how revenue is generated through new
value propositions or pricing models
Enterprise model innovation – Innovating value chain roles by Changing the
extended enterprise to be either more integrated or more specialized or Transforming
networks of employees, suppliers, customers and others
Global CEO Study 2008 | October 2008
© Copyright IBM Corporation 2008
Across the globe, a full two-thirds of all CEOs plan to be engaged in
some form of business model innovation over the next 3 years
“When the business model is innovative, operations and the
product will follow automatically.”
Ronald de Jong, CEO, Philips Germany
69%
Established Economy
Emerging Economy
Canadian Economy
29%
29% 30%
69% 69%
66%
28%
2%
6%
2% 1%
Limited/No
BMI Focus
Moderate BMI
Focus
Strong BMI
Focus
Limited/No
BMI Focus
Moderate BMI
Focus
Strong BMI
Focus
Source: IBM Global CEO Study 2008,
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Global CEO Study 2008 | October 2008
© Copyright IBM Corporation 2008
Within the various business models, CEOs plan to implement
distinct initiatives
Enterprise Model
Innovation Focus
Revenue Model
Innovation Focus
Industry Model
Innovation Focus
Collaboration is instrumental to drive
Enterprise Model Innovation
Revenue Model innovators
shift the value mix
Industry Model Innovation
remains rare
91%
73%
71%
56%
57%
36%
38%
Work Within
Organization
Focus on
Differentiating
Activities
n = 234
Intense
Collaboration
with External
Partners
New Pricing/Taxation
Structures and Models
n = 369
Reconfigure
Product/Service/Value
Mix
Create Entirely
New Industries
36%
Move Into New
Redefine
Industries
Existing Markets
n = 203
Source: IBM Global CEO Study 2008
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Global CEO Study 2008 | October 2008
© Copyright IBM Corporation 2008
Canadian CEOs are more focused internally and much less on
collaborating with external partners
Enterprise Model
Innovation Focus
Revenue Model
Innovation Focus
Industry Model
Innovation Focus
Collaboration is instrumental to drive
Enterprise Model Innovation
Revenue Model innovators
shift the value mix
Industry Model Innovation
remains rare
Canadian CEOs
91%
73%
71%
56%
38%
Work Within
Organization
56%
57%
44%
Focus on
Differentiating
Activities
n = 234
36%
44%
Intense
Collaboration
with External
Partners
New Pricing/Taxation
Structures and Models
n = 369
Reconfigure
Product/Service/Value
Mix
Create Entirely
New Industries
36%
Move Into New
Redefine
Industries
Existing Markets
n = 203
Source: IBM Global CEO Study 2008
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Global CEO Study 2008 | October 2008
© Copyright IBM Corporation 2008
Are you ready?
Building the Enterprise of the Future
DISRUPTIVE
BY NATURE
Exploring
Business Model
Innovation
opportunities
Experimenting
with BMI
Implementing
BMI initiatives
Multiple BMI
strategies
Radical and
pervasive BMI
Is a disruptive business model about to transform your industry? Is it more
likely to come from you or your competitors?
Do you spend time thinking about where the next disruption will come
from?
Are you watching other industries for concepts and business models that
could transform your market?
Are you able to create space for entrepreneurs and innovative business
models while continuing to drive performance today?
28
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IBM Global Business Services
The Enterprise of the Future is …
Genuine, not just
Generous
… doing well in the world goes beyond philanthropy and regulatory
compliance. it reflects genuine concern for society in all actions and
decisions and prospers and profit as a result
© Copyright IBM Corporation 2008
Faced with rising customer expectations of CSR, more than twothirds of CEOs take a positive view, and plan to innovate … more
Canadian CEOs see CSR as an opportunity and not a threat
Impact of increasing customer expectations of corporate social responsibility
Global
“Our strong commitment to corporate sustainability
will be a clear differentiator for us with all
stakeholders.”
Negative
impact
11%
Tom Johnstone, CEO, SKF
“ Our company is investing extensively in
corporate social responsibility. We need to be a
reference in this domain. As the leader of the
luxury industry, we have to stay ahead.”
No
impact
20%
Yves Carcelle, Chairman and CEO, Louis Vuitton
Positive
impact
69%
“I see corporate responsibility going through three
phases. People start to consider issues like the
environment because they are compelled to do so.
Then they realize that it actually makes business
sense. Eventually they move beyond compulsion
and selfish motives to become passionate
because it is the right thing to do.”
Vinod Mittal, Managing Director, ISPAT Industries
Source: IBM Global CEO Study 2008,
30
Global CEO Study 2008 | October 2008
© Copyright IBM Corporation 2008
Are you ready?
Building the Enterprise of the Future
GENUINE,
NOT JUST
GENEROUS
Regulatory
compliance
Strategic
philanthropy
Values based
self-regulation
Efficiency
through CSR
CSR as
growth
platform
Do you understand your customers’ CSR expectations? How are you
involving them in solutions?
Do you know which NGOs your customers listen to and are you
collaborating with those groups?
Have you gained insights from current green initiatives that can be applied
to your broader corporate social responsibility strategy?
Are you offering employees the opportunity to personally make a
difference?
How do you ensure that actions taken throughout the enterprise — and the
extended value chain — are consistent with your CSR values and stated
policies?
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IBM Global Business Services
The Enterprise of the Future
Positioning for Your Future
© Copyright IBM Corporation 2008
Building an Enterprise of the Future is a journey --- Where does
your organization stand?
Building the Enterprise of the Future
33
HUNGRY FOR
CHANGE
Ad hoc and
reactive
change
Project driven
change
Change
portfolio and
program
Anticipating
and proactive
change
Change
becomes the
strategy
INNOVATIVE
BEYOND
CUSTOMER
IMAGINATION
Customer
intelligence
Customer
information
transparency
Two-way
customer
interaction
Customer
collaborative
development
Expanding
customer
aspirations
GLOBALLY
INTEGRATED
Exploring
global
opportunities
Driving
specific global
initiatives
Building global
capabilities
systematically
Global centers
of excellence
Global
enterprise
innovation
DISRUPTIVE
BY NATURE
Exploring
Business Model
Innovation
opportunities
Experimenting
with BMI
Implementing
BMI initiatives
Multiple BMI
strategies
Radical and
pervasive BMI
GENUINE,
NOT JUST
GENEROUS
Regulatory
compliance
Strategic
philanthropy
Values based
self-regulation
Efficiency
through CSR
CSR as
growth
platform
Global CEO Study 2008 | October 2008
© Copyright IBM Corporation 2008
IBM launched InnovationJam 2008 to answer the “How” question in closing the gaps in creating the
Enterprise of the Future. Participants from across the globe shared views on leading their
companies and industries through:
Change, disruption
and innovative
business models
Sustainable growth: the
planet and its people


Lead the waves of change
with collaborative business
models and disruptive
innovation
Build brands, products and services
that attract a growing class of
environmentally and socially-aware
customers, employees, investors and
partners
Global integration for
large and small
The new customer:
informed and empowered


Tap into new markets and
scarce talent by integrating
global organizations and
partnering with global
networks
Differentiate your
organization by engaging a
new class of informed,
demanding and collaborative
customers
Results will be available in early 2009.
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Global CEO Study 2008 | October 2008
© Copyright IBM Corporation 2008
In Summary …
 Organizations will evolve to the Enterprise of the Future
 Need for change continues to accelerate due to both external and internal
factors
 Entities have only been successful in achieving large scale change about 60%
of the time
 The culture for and the management of change is thus receiving increasing
focus
 Change is required around 4 dimensions
-
-
-
35
Innovation around the customer reflecting changing expectations for products and
services and for how they are provided/delivered
Global integration to exploit opportunities, capabilities, knowledge and assets where
ever they may reside
Rethinking business models sharpening focus
Address changing expectations around corporate social responsibility
Global CEO Study 2008 | October 2008
© Copyright IBM Corporation 2008
IBM Contact
John Fursey
Strategy & Change Consulting
Leader
IBM Global Business Services
Canada
416-478-3354
[email protected]
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Global CEO Study 2008 | October 2008
© Copyright IBM Corporation 2008