How are leaders responding to a competitive and economic environment unlike anything that has come before? To find out, we conducted face-to-face interviews with 1,541 CEOs, general managers and senior public sector leaders around the world. Those conversations, in combination with our statistical and financial analyses, offer insight into the agendas and actions of global leaders. In our past three global CEO studies, CEOs consistently said that coping with change was their most pressing challenge. In 2010, our conversations identified a new primary challenge: complexity. CEOs told us they operate in a world that is substantially more volatile, uncertain and complex. Many shared the view that incremental changes are no longer sufficient in a world that is operating in fundamentally different ways. Four primary findings arose from our conversations:
- Today’s complexity is only expected to rise and more than half of CEOs doubt their ability to manage it. Seventy-nine percent of CEOs anticipate even greater complexity ahead. However, one set of organisations we call them ‘Standouts’ has turned increased complexity into financial advantage over the past five years.
- Creativity is the most important leadership quality, according to CEOs. Standouts practice and encourage experimentation and innovation throughout their organisations. Creative leaders expect to make deeper business model changes to realise their strategies. To succeed, they take more calculated risks, find new ideas and keep innovating in how they lead and communicate.
- The most successful organisations co-create products and services with customers, and integrate customers into core processes. They are adopting new channels to engage and stay in tune with customers. By drawing more insight from the available data, successful CEOs make customer intimacy their number one priority.
- Better performers manage complexity on behalf of their organisations, customers and partners. They do so by simplifying operations and products, and increasing dexterity to change the way they work, access resources and enter markets around the world. Compared to other CEOs, dexterous leaders expect 20 percent more future revenue to come from new sources.
How CEOs can capitalise on complexity:
The effects of rising complexity calls for CEOs and their teams to lead with bold creativity, connect with customers in imaginative ways and design their operations for speed and flexibility to position their organisations for twenty-first century success.
So, how are these objectives different than CEOs’ past aspirations, now that they’ve identified escalating complexity as their greatest challenge in the new economic environment? Previously, CEOs recognised the need for business model innovation, but today they are struggling to find the requisite creative leadership to produce such innovation. In the past, they told us they needed to be closer to customers; today they need to go much further and bring customers inside their organisations. In addition to this while global integration is not a brand new goal, CEOs are realising they must take it a step further and think in terms of increasing overall operating dexterity. To capitalise on complexity, CEOs:
Embody creative leadership
Facing a world becoming dramatically more complex, it is interesting that CEOs selected creativity as the most important leadership attribute. Creative leaders invite disruptive innovation, encourage others to drop outdated approaches and take balanced risks. They are open-minded and inventive in expanding their management and communication styles, particularly to engage with a new generation of employees, partners and customers.
Reinvent customer relationships
In a massively interconnected world, CEOs prioritise customer intimacy as never before. Globalisation, combined with dramatic increases in the availability of information, has exponentially expanded customers’ options. CEOs said that ongoing engagement and co-creation with customers produce differentiation. They consider the information explosion to be their greatest opportunity in developing deep customer insights.
Build operating dexterity
CEOs are revamping their operations to stay ready to act when opportunities or challenges arise. They simplify and sometimes mask complexity that is within their control and help customers do the same. Flexible cost structures and partnering capabilities allow them to rapidly scale up or down.
Source: IBM Global