CEOs believe that creativity – rather than rigour, management discipline, integrity or even vision – is required to successfully navigate an increasingly complex world.
This is one of the findings from a major new IBM survey of more than 1 500 CEOs from 60 countries and 33 industries worldwide, conducted through in-person interviews with consultants from IBM's Institute for Business Value.
Fewer than half of global CEOs believe their enterprises are adequately prepared to handle a highly volatile, increasingly complex business environment. CEOs are confronted with massive shifts – new government regulations, changes in global economic power centres, accelerated industry transformation, growing volumes of data, rapidly evolving customer preferences – that, according to the study, can be overcome by instilling "creativity" throughout an organisation.
More than 60%t of CEOs believe industry transformation is the top factor contributing to uncertainty, and the finding indicates a need to discover innovative ways of managing an organisation's structure, finances, people and strategy.
The study also uncovers starkly divergent strategic concerns and priorities among CEOs in Asia, Japan, Europe, Africa or North America – the first time such clear regional variations have appeared in this biennial survey of private and public sector leaders.
"Coming out of the worst economic downturn in our professional lifetimes – when management discipline was the priority – it's remarkable that CEOs have gone all the way to the other end of the spectrum to identify creativity as the most important leadership competency for the successful enterprise of the future," says Oliver Fortuin, GM of IBM sub-Saharan Africa. "But it's also entirely consistent with the view that their biggest challenge will be dealing with the accelerating complexity and speed of a world that is becoming increasingly linked and operating as a massively interconnected system."
CEOs told IBM that today's business environment is volatile, uncertain and increasingly complex. Eight in 10 CEOs expect their environment to grow significantly more complex but only 49% believe their organisations are equipped to deal with it successfully – the largest leadership challenge identified in eight years of research.
The CEOs said that the complexity of an interconnected world is aggravated by a number of factors. For example, CEOs expect revenue from new sources to double over the next five years and 76% foresee the shift of economic power to rapidly developing markets.
Over the last four studies, the expected impact of technology on organisations has risen from sixth to second place in importance; contributing to complexity by creating a world that is massively interconnected.
The study highlights the attributes of top-performing organisations based on revenue and profit performance during the past five years, including the economic downturn.
* Top-performing organisations are 54% more likely than others to make rapid decisions. CEOs indicated they are learning to respond swiftly with new ideas to address the deep changes affecting their organisations.
* 95% of top performing organisations identified getting closer to customers as their most important strategic initiative over the next five years – using Web, interactive, and social media channels to rethink how they engage with customers and citizens. They view the historic explosion of information and global information flows as opportunities, rather than threats.
* Organisations that have built superior operating dexterity expect to capture 20% more of their future revenue from new sources than their more traditional peers.
Vast complexity is further intensified by regional differences. The study noted that perspectives varied with geography – differences of opinion about what changes to make, what new skills will be needed and how to succeed in the new economic environment. These regional variations also compound the complexities with which CEOs must contend.
China proved much more resilient than the developed nations during the economic downturn. So CEOs in China are, understandably, less concerned about volatility than CEOs in other regions. In fact, they are becoming increasingly confident of their place on the world stage.
But if China is to fulfil its global aspirations, it will need a new generation of leaders with creativity, vision and international management experience. Many of the country's CEOs recognise this; 61 percent believe "global thinking" is a top leadership quality. Most companies will also need new industry models and skills. They cannot simply replicate the models they have used in their domestic market, which has a completely different cost structure. CEOs in China are also devoting far more energy to building new skills and capabilities than their peers in the West.
In North America, which faced a financial crisis that led to governments becoming major stakeholders in private enterprise, CEOs are more wary of "big government" than CEOs elsewhere. A full 87 percent anticipate greater government intervention and regulation over the next five years, compounding their sense of uncertainty.
In Japan, 74% of CEOs expect the shift of economic power from mature to rapidly developing markets to have a major impact on their organisations. By contrast, the European Union is less concerned about this shift, with only 43% of CEOs expecting to be impacted.
Understanding these and other sharp differences emerging by region is increasingly important as economies and societies become more closely linked. Organisations confront these differences as they increasingly operate across boundaries and across different regions.