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IBM Global CEO Study The Enterprise of the Future. Kirill Korniliev, CGM IBM EE/A September 1 st 2008. 2006 Innovation. 2008 The Enterprise of the Future. Key Findings. - PowerPoint PPT Presentation
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© Copyright IBM Corporation 2008
IBM Global Business Services
IBM Global CEO Study
The Enterprise of the FutureKirill Korniliev, CGM IBM EE/ASeptember 1st 2008
Global CEO Study 2008 | May 2008 2 © Copyright IBM Corporation 2008
The new edition the IBM Global CEO Study builds on the strong momentum created by IBM’s premier business research
2004Your turn!
Key Findings Revenue growth is the
number one priority Responsiveness is a new key
competence Improving internal capabilities
is a first step toward growth
456 personal CEO interviews 765 personal CEO interviews
2006Innovation
Key Findings Business model innovation
matters External collaboration is
indispensable Innovation must be
orchestrated from the top
2008The Enterprise of the Future
A new cycle is launched with key findings on changes in the value chain -- from customers to global integration -- and the business model innovation necessary to respond
1130 personal CEO interviews
Global CEO Study 2008 | May 2008 3 © Copyright IBM Corporation 2008
We spoke to 1,130 CEOs and conducted in-depth analysis to determine the characteristics of the Enterprise of the Future
How are organizations 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
Scope Approach
ANALYSIS
Quantitative and Qualitative
Current behavior Investment patterns Future intent Choices of financial outperformers Case studies of excelling organizations
SCOPE & APPROACH
1130 CEOs and Public Sector Leaders
One-hour interviews 78% Private, 22% Public Sector 32 Industries 33% Asia, 36% EMEA, 31% Americas 80% Established, 20% Emerging
Economies
Global CEO Study 2008 | May 2008 4 © Copyright IBM Corporation 2008
The Enterprise of the Future is …
Globally integrated
3Hungry for change
1Disruptive by nature
4Genuine, not just generous
5Innovative beyond customer imagination
2
© Copyright IBM Corporation 2008
IBM Global Business Services
The Enterprise of the Future is …
Hungry for Change
Global CEO Study 2008 | May 2008 6 © Copyright IBM Corporation 2008
2004 2006 2008
Market factors
People skills
Macroeconomic factors
Globalization
Regulatory concerns
Technological factors
Socioeconomic factors
Environmental factors
Geopolitical factors
84% 67%
42%
33%
44%
41%
48%
48%
35%
CEOs see change coming from everywhereExternal Forces Impacting the Organization
Source: IBM Global CEO Study 2008; n (2004) = 403, n (2006) = 760, n (2008) = 1130
Market factors
People skills
Technological factors
Globalization
Regulatory concerns
Macroeconomic factors
Environmental factors
Socioeconomic factors
Geopolitical factors
Global CEO Study 2008 | May 2008 7 © Copyright IBM Corporation 2008
The “change gap” triples in just two years
In two years the gap between the ability to manage change and the challenge ahead has tripled
The number of companies reporting limited or no success has surged 60%
More CEOs than ever before – 8 in 10 – anticipate turbulent change, and plan bold moves in response
Source: IBM Global CEO Study 2008; n (2006) = 709, n (2008) = 1104
ChangeNeeded
Past ChangeSuccess
* Difference or ‘gap’ between expected level of change needed and past success in managing change
ChangeNeeded
Past ChangeSuccess
2006 2008
Change NeededNo/limited Change Moderate ChangeSubstantial Change
No/limited SuccessModerate SuccessSuccessful
Past Change Success
22%CHANGE GAP*8%
CHANGE GAP*
6%11%
83%
19%
20%
61%
13%
22%
65%
12%
31%
57%
Global CEO Study 2008 | May 2008 8 © Copyright IBM Corporation 2008
Managing change becomes a core capability
* Difference or ‘gap’ between expected level of change needed and past success in managing changeSource: IBM Global CEO Study 2008; n (underperformers) = 173, n (outperformers) = 164
** Performance based on industry comparisons within survey sample of revenue CAGR 2003 to 2006
Change NeededNo/limited Change
Moderate Change
Substantial Change
No/limited Success
Moderate Success
Successful
Past Change Success
Outperformers**Underperformers**
19%CHANGE GAP*
Change Needed Past ChangeSuccess
Change Needed Past ChangeSuccess
29%CHANGE GAP*
5%10%
85%
17%
17%
66%
4%
13%
83%
24%
22%
54%
Companies capable of successfully managing change are hungry for change to push their competitive advantage
Outperforming organizations are significantly better than their peers at successfully navigating change
Global CEO Study 2008 | May 2008 9 © Copyright IBM Corporation 2008
“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
© Copyright IBM Corporation 2008
IBM Global Business Services
The Enterprise of the Future is …
Innovative Beyond Customer Imagination
Global CEO Study 2008 | May 2008 11 © Copyright IBM Corporation 2008
No impact 19%
Positive impact 67%
Negative impact 14%
Companies go after new customers in new markets
Investment* past 3years
Investment* next 3years
Source: IBM Global CEO Study 2008, n = 609; * Total investments: all asset investments + all investments in R&D, marketing and sales
Rise of purchasing power in rapidly developing economies and prosperity in Western economies
19%INCREASE
23.2%
27.5%
Impact Investment*
Global CEO Study 2008 | May 2008 12 © Copyright IBM Corporation 2008
CEOs see more potential in a new class of customer
Source: IBM Global CEO Study 2008, n = 609
No impact 14%
Positive impact 76%
Negative impact 10%
Impact
“In the future, we will be talking more and more about the ‘prosumer’— a consumer/producer who is even more extensively integrated into the value chain. As a consequence, production processes will be customized more precisely and individually.”Hartmut Jenner, CEO, Alfred Kärcher GmbH
Rise of the Informed and Collaborative Customer: The Information Omnivore
Global CEO Study 2008 | May 2008 13 © Copyright IBM Corporation 2008
Nintendo is well-positioned for the future – an organization innovative beyond customer imagination
To regain its leadership position, Nintendo leveraged the loyalty and expertise of its core customer segment- Established online community of experienced and loyal gamers called
“Sages”- Offering incentives in return for customer information and community
contributions- Gaining valuable insights into market needs and preferences
Nintendo successfully connected with two new customer groups- New customer groups included women and older men- Influencing everything from game offerings to new product design- Regaining market leadership with 44% market share after a low of
22% in the mid-2000s
Nintendo: Building market share through customer collaboration
© Copyright IBM Corporation 2008
IBM Global Business Services
The Enterprise of the Future is …
Globally Integrated
Global CEO Study 2008 | May 2008 15 © Copyright IBM Corporation 2008
CEOs push ahead to capitalize on global integration
75% actively enter new markets in pursuit of new customers and scarce talent
86% plan fundamental changes in capabilities that distinguish leading organizations – knowledge and asset mix
85% of CEOs plan to partner to globally integrate – more than half plan to do so extensively
* total % of CEOs who answered between left hand side 3 to 0 (0 = both sides equally important)Source: IBM Global CEO Study 2008, n = 872, n=860, n=880
37%Defend your core
Actively enter new markets 37%
3 0 3
75 %*
20%43%
32%
3 0 3
86
Deeply changemix of capabilities,
knowledge and assets
Maintain current mix
%*
32% 11%57%
35%Partner
extensively
Do everything in-house
3 0 3
85%*
35% 10%55%
The vast majority of CEOs aggressively move toward global integration – and radically reconfigure business designs
Global CEO Study 2008 | May 2008 16 © Copyright IBM Corporation 2008
CEOs recalibrate their businesses
57%
55%
43%
40%
39%
24%
30%
32%
35%
37%
33%
32%
50%
34%
10%
11%
20%
27%
29%
26%
36%
Partner extensively
Globalize brands/products
Drive multiple cultures
Optimize operations globally
Deeply change mix
Grow through mergers & acquisitions
Do everything in-house
Localize brands/products
Strive for one culture
Optimize operations locally
Grow organically
32%
35%
33%
32%
50%
34%
Defend your coreActively enter new markets 37%
Maintain current mix of capabilities, knowledge and assets
Source: IBM Global CEO Study 2008; private sector responses
Equally Important
Global CEO Study 2008 | May 2008 17 © Copyright IBM Corporation 2008
Four archetypes emerge as the predominant design
Source: IBM Global CEO Study 2008
Cluster analysis reveals global integration approaches
Drive multiple cultures
Grow organically
Strive for one culture
Localize brands/products
Do everything in-house
Defend your core
Partner extensively
Globalize brands/products
Optimize operations globally
Deeply change mix of capabilities, knowledge and assets
Grow through mergers & acquisitions
Optimize operations locally
Maintain current mix of capabilities, knowledge and assets
Actively enter new markets
Extensive Globalizers (n=230, 31%)
Globalizers (n=246, 33%)
Blended Thinkers (n=131, 17%)
Localizers (n=140, 19%)
Global CEO Study 2008 | May 2008 18 © Copyright IBM Corporation 2008
Outperformers opt for globalized business designs
Source: IBM Global CEO Study 2008; n = 200; * Performance based on industry comparisons within survey sample of absolute profit margin (average of 2003 and 2006)
Blended Thinkers
17%
Extensive Globalizers
31%
Globalizers 33%
Localizers 19%
Blended Thinkers
12%
Extensive Globalizers
32%
Globalizers 39%
Localizers 17%
All Companies Outperforming* Companies
64% 71%
Two-thirds of firms choose a globally integrated business design
Global CEO Study 2008 | May 2008 19 © Copyright IBM Corporation 2008
“A few years ago, we were a national company; now we’re a global company. Our integrated supply chain must adapt to meet demand in 50 countries. We’re going to have to bring people in from the outside.”Jim Guyette, President and CEO, Rolls-Royce North America
© Copyright IBM Corporation 2008
IBM Global Business Services
The Enterprise of the Future is …
Disruptive by Nature
Global CEO Study 2008 | May 2008 21 © Copyright IBM Corporation 2008
Business model transformation erupts
More than 2 in 5 pursue business models that are more externally collaborative
More than 1 in 5 pursue an even more disruptive path: redefining their markets, moving into or creating wholly new industries
More than two-thirds of CEOs strongly focus on the most sustainable form of innovation – business model transformation
Business Model Innovation Focus
Source: IBM Global CEO Study 2008; n = 1106
29%
2%
69%
Limited/NoBMI Focus
Moderate BMIFocus
Strong BMIFocus
Multiple BMITypes 20%
Industry ModelInnovation 18%
Enterprise Model Innovation 39%
Revenue ModelInnovation 23%
Global CEO Study 2008 | May 2008 22 © Copyright IBM Corporation 2008
Outperformers make the boldest moves
Underperformers* Outperformers*
Revenue ModelInnovation
Industry ModelInnovation
Enterprise ModelInnovation
Source: IBM Global CEO Study 2008; * Performance based on industry comparisons within survey sample of absolute profit margin (average of 2003 and 2006) n (underperformers) =120, n (outperformers) =109
“For us, enterprise model innovation is primarily about having the right business model to enter other markets and secure new capabilities.”Andrew Brandler, CEO, CLP Holdings Limited
22%
28%
49%
36%
44%
20%
Business Model Innovation Focus More outperformers (28%) choose the most difficult transformation - disrupting industries - and more (49%) choose collaborative business models
© Copyright IBM Corporation 2008
IBM Global Business Services
The Enterprise of the Future is …
Genuine, not just Generous
Global CEO Study 2008 | May 2008 24 © Copyright IBM Corporation 2008
CEOs positive about customers’ CSR expectations
Since 2004 three forces of change consistently rose on CEOs’ agendas; all are linked to corporate social responsibility (CSR)
CSR-focused CEOs put developing new products and services at the top of their agenda
CEOs view of increasing customer expectations of CSR
“The consumers’ concept of quality will no longer be measured by only the physical attributes of a product – it will extend to the process of how the product is made, including product safety, environmental and social responsibility compliance.”
Victor Fung, Chairman, Li & Fung
Faced with rising customer expectations of corporate social responsibility, more than two-thirds take a positive view, and plan to innovate
Negative impact 12%
No impact
20% Positive impact
68%
Global CEO Study 2008 | May 2008 25 © Copyright IBM Corporation 2008
Organizations profit – and prosper – by doing good
Investment past 3years
Investment next 3years
25%INCREASE
10.7%13.4%
Source: IBM Global CEO Study 2008, n = 609; * Total investments: all asset investments + all investments in R&D, marketing and sales
Investment*
“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.”Yves Carcelle, Chairman and CEO, Louis Vuitton
CEOs plan their largest increase in customer investment to meet their CSR expectations
Global CEO Study 2008 | May 2008 26 © Copyright IBM Corporation 2008
Marks & Spencer is well-positioned for the future – an organization genuine, not just generous
To meet growing corporate social responsibility expectations, British retailer Marks & Spencer (M&S) has embarked on a £200-million, five-year plan- Impacting almost every aspect of its operations
M&S established online supplier exchange- Connecting the thousands of factories, farms and fisheries that
supply its products- To simultaneously improve efficiency and sustainability
Engaging customers in solving issues (e.g., giving shopper bags “for life”)
M&S has proven it is possible to do well while doing good- Operating profit CAGR of over 14% over past five years
Marks & Spencer: Serious about social responsibility
© Copyright IBM Corporation 2008
IBM Global Business Services
The Enterprise of the Future
Positioning for Your Future
Global CEO Study 2008 | May 2008 28 © Copyright IBM Corporation 2008
Are you building your Enterprise of the Future?
Ad hoc and reactive change
Project driven change
Change portfolio and program
Anticipating and proactive change
Change becomes the strategy
HUNGRY FORCHANGE
Regulatory compliance
Strategic philanthropy
Values based self-regulation
Efficiency through CSR
CSR as growth platform
GENUINE, NOT JUST GENEROUS
Exploring Business Model Innovation opportunities
Experimenting with BMI
Implementing BMI initiatives
Multiple BMI strategies
Radical and pervasive BMI
DISRUPTIVE BY NATURE
Exploring global opportunities
Driving specific global initiatives
Building global capabilities systematically
Global centers of excellence
Global enterprise innovation
GLOBALLYINTEGRATED
Customer intelligence
Customer information transparency
Two-way customer interaction
Customer collaborative development
Expanding customer aspirations
INNOVATIVE BEYONDCUSTOMERIMAGINATION
Building the Enterprise of the Future
Global CEO Study 2008 | May 2008 29 © Copyright IBM Corporation 2008
CEO Roundtable, Moscow, June 24 2008
“Enterprise of the Future” roundtable event for business leaders, media and academia to present and discuss the findings of the IBM Global CEO Study.
Event attended by 16 CEOs and other board-level leaders from Russian and international companies including:
Sberbank Mirax Group IKEA VTB 24 RussNeft Nornikel ABB Russian Stanard Bank
Per Kaufmann, CEO, IKEA Russia & CIS and Dmitry Tarasov, Sberbank, Director for Strategic Planning talked about their own business models and strategies for entering new markets.
Global CEO Study 2008 | May 2008 30 © Copyright IBM Corporation 2008
CEO Roundtable in Moscow – leaders talk
«At Sberbank we are constantly adding new products and services to our business in order to stay competitive. Our customers are increasingly demanding and they сontinuously test our business model because if they do not get what they are looking for from us, they will switch to a competitor»
(Dmitry Tarasov, Sberbank, Director for Strategic Planning)
«IKEA's global strategy is to be a bit of affordable glitter in people's lives - it is essential that we maintain this as we expand into new markets. One of the things we need to improve is our affordability in the emerging markets, like Russia. We need to develop a clear strategy for markets where the average consumer does not have much money to spend»
(Per Kaufmann, CEO, IKEA Russia & CIS)
Global CEO Study 2008 | May 2008 31 © Copyright IBM Corporation 2008
For more information
For all study materials and book orders check out: www.ibm.com/enterpriseofthefuture w3.ibm.com/services/gbs/ceo_study_2008.html
© Copyright IBM Corporation 2008
IBM Global Business Services
IBM Global CEO Study
The Enterprise of the FutureKirill Korniliev, CGM IBM EE/ASeptember 1st 2008