The IBM Global CEO Study, the largest study of chief executives ever conducted, reveals a dramatic increase in the number of global business leaders who see important change ahead, and also highlights how the ability to absorb and manage change is widening the gap between winners and losers in the global economy.
CEOs reported a surprising level of optimism about change as an opportunity to build new competitive advantage. Overall, 83% of surveyed CEOs expect substantial change in the future, an increase of 28% in just two years. However, CEOs report their ability to effectively manage change is increasing at a far slower pace.
Collectively, CEOs set their organization's ability to manage change 22 percentage points lower than their expectations for the level of change they will have to manage—a 'change gap' that is widening.
CEOs point specifically to their own customer base as the source of the most important changes they will have to address, as two new and more demanding classes of customers emerged: the 'information omnivore,' and the 'socially-minded' customer. Of all the trends identified in the study, surveyed CEOs plan their most substantial increases in investment in response to these customer sets.
The IBM Global CEO Study, based on face-to-face interviews with 1,130 CEOs from 40 countries across 32 industries, is designed to capture insights on how the challenges CEOs face today will impact the future of business. The study, titled "The Enterprise of the Future," was conducted by IBM Global Business Services in conjunction with the Economist Intelligence Unit.
"The enterprise of the future accepts change as a permanent state in an organization. Those CEOs who demonstrate the capacity to manage major change know they can beat the competition by reaching new classes of customers, and making bold moves to shift business design around principles of global integration," says Ginni Rometty, senior vice president, IBM Global Business Services. "And it's clear that out-performers are distancing their enterprises from the competition based on their organizational capacity to take advantage of change."
The Rise of the Information Omnivore
The "information omnivore" craves all types of information and often broadcasts its views and expectations worldwide via the Internet. These customers are swapping passive roles for much deeper involvement. "Consumers" are becoming "producers," often creating entertainment and advertising content for their peers, while demanding flexibility and responsiveness from companies with whom they choose to do business. Although these customers are more demanding, the majority of CEOs do not see them as a threat, but as an opportunity for differentiation based on meeting the heightened expectations of this group, and capitalizing on new market opportunities that will emerge.
Overall CEOs are planning a 22% increase in investments in the next three years to serve these more sophisticated and demanding customers.
The investment is even more pronounced among financial out-performers. CEOs of firms with higher net profit margin growth indicate that investments targeted at information omnivores will increase 36% over the next three years. The majority of these new investments will be dedicated to new operational capabilities that improve collaboration and product innovation, and that are more oriented to transparency and tailored to specific market segments.
The study shows the impact of the information omnivore is driving investment in every major geography. In Europe, CEOs indicated they plan a 23% investment targeted at these customers over the next three years, a 20% jump from the previous three years. In North America, CEOs plan a 19% investment—jumping 27% over the same time period. Asia Pacific CEOs plan a 16% investment—a 20% jump—and Latin America CEOs indicated a 16% investment—jumping 18% over the last three years.
