IBM 2010 Global CEO Study: Australian/New Zealand CEOs face serious challenges to bridge ‘complexity gap’

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Sydney, Australia - 19 May 2010: Less than half of global CEOs believe their enterprises are adequately prepared to handle a highly volatile, increasingly complex business environment, according to a major IBM survey of more than 1,500 Chief Executive Officers from 60 countries and 33 industries worldwide, including 22 respondents from New Zealand and 51 from Australia.

Based on in-person interviews conducted by IBM consultants, the 2010 IBM CEO Study reveals that global CEOs believe that -- more than rigor, management discipline, integrity or even vision -- successfully navigating an increasing complex world will require creativity, which emerged as the number one leadership competency.

Also for the first time, the Study uncovers starkly divergent strategic concerns and priorities among CEOs in Australia and New Zealand (A/NZ) compared to CEOs in Asia, Europe or North America – the first time such clear regional variations have appeared in this biennial survey of private and public sector leaders.

An astounding number of A/NZ CEOs told IBM they feel their organisations need to change to cope with this drastically different world. Eighty-four percent of A/NZ CEOs interviewed said they expect the level of complexity to grow significantly over the next five years, but only 39 percent believe their organisations are equipped to deal with it successfully – the largest leadership challenge identified in eight years of research.


Source: IBM 2010 CEO Study (Go to ‘Insights and select region for A/NZ Report)

According to Matt English, Partner, Innovation and Growth Consulting, A/NZ IBM Global Business Services,   “Over the last 10 years, globalisation and the nature of the Australian market has driven Australian CEOs to become more competitive and responsive to changes across various international markets. Post GFC, Australian CEOs recognise that they need to go further. Australian CEOs see the need for greater creativity, insight and vision to be more proactive to stay competitive.”

This understanding of the intricacies of changing business forces is a key focus for Australian CEOs. The influence of an explosion of data and communication on enterprises impacts this stronger awareness of future complexity and therefore heightens the level of concern among Australian CEOs.

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 and effectively predict their outcomes.

Ninety-five percent 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.

Paul Hardy, Global CEO, Aurecon, comments “Changing global economies, demographic trends, the information explosion and increasingly diverse business models are creating complexity.  This creates significant opportunities, as well as new demands, for enterprises.”

“For Aurecon, organisational leadership is about agility and client focus.  We are significantly enhancing our ability to respond to clients across a range of markets in diverse geographies through greater collaboration and innovation.”

Aurecon, is a leading engineering, management and specialist technical services consultancy with over 6000 staff across 87 offices in Australia, New Zealand, China, South-East Asia, the Middle East and Africa.

Managing complexity

The A/NZ CEOs said that the complexity of an interconnected world is exacerbated by a number of factors. For example, 25 percent said they will have to double revenue from new sources in the next five years; and 81 percent 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 6th to 2nd place in importance; contributing to complexity by creating a world that is massively interconnected.  And at the same time, it is viewed that organisations need to define the toolsets to manage complexity, detect patterns in large swathes of information and predict outcomes with greater certainty.

A/NZ CEOs are especially determined to put customers – or citizens, in the case of public sector leaders – front and centre. “Getting connected” to better understand, predict and give customers what they really want is the top priority for 91 percent. The CEOs in our total sample who put getting closer to customers first on their agendas are also 29 percent more likely than other CEOs to anticipate that the information explosion will have a major impact on their organisations over the next five years, and 18 percent more likely to be using insight and intelligence to realise their strategy. 

One World, Diverging Views

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.

A/NZ CEOs differ substantially from their peers. Only 36 percent are focusing on simplifying their products and operations to better manage complexity – which is a smaller percentage than in any other geographic area except the United States. That said, 63 percent of A/NZ CEOs are intent on reducing their fixed costs and increasing their variable costs, so that they can rapidly scale up or down.

Understanding the 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.

About the IBM 2010 Global CEO Study

This study is the fourth edition of our biennial Global CEO Study series. To better understand the challenges and goals of today’s CEOs, we met face-to-face with the largest-known sample of these executives. Between September 2009 and January 2010, we interviewed 1,541 CEOs, general managers, and senior public sector leaders who represent different sizes of organisations in 60 countries and 33 industries, including respondents from Australia and New Zealand.

To read the A/NZ CEO Study findings go to:

Watch the video (under CEO Videos): George Maltabarow, CEO, Energy Australia ‘You need dedicated groups to drive innovation’.

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