IBM 2010 Global CEO Study: New Zealand CEOs Face Serious Challenges to Bridge ‘Complexity Gap’

Integrity and creativity selected as most crucial leadership criteria for future success in New Zealand

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Auckland, NZ - 24 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 new survey by IBM of more than 1,500 Chief Executive Officers from 60 countries and 33 industries worldwide, including 22 respondents from New Zealand – the largest number of respondents in eight years of research.

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 ill-equipped 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 they know how to deal with it successfully. This ‘complexity gap’ poses more serious challenges than any other factor measured in the eight years IBM has been conducting this research. This complexity gap, brought by the explosion of data and volatility of global economies, is larger here in A/NZ than any other part of the world.

Ross Pearce, Organisation & People Practice Leader, IBM New Zealand and local leader of the Study, says “The larger ‘complexity gap’ in New Zealand demonstrates how our economy and society is becoming increasingly more closely linked with developing and global markets, as well as the impact of regulation and technology on organisations. This interconnectedness is creating a world of complexity for organisations over the next few years and this presents both significant challenges and opportunities at the same time.”

Tony Carter, Managing Director, Foodstuffs Auckland, who also participated in the Study, says “There is no doubt that business has become more complex over the past few years and this has dramatically increased the challenges that CEOs face.”

Based on face-to-face interviews conducted by IBM business 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.

However A/NZ CEOs differ and place integrity before creativity as the key leadership competency. Nevertheless, they are adept at dealing with ambiguity. Fifty-three percent of A/NZ CEOs use iterative strategic planning processes as distinct from formal annual strategy reviews, although only 25 percent favour quick decisions – compared with a global average of 33 percent. A/NZ CEOs are also willing to embrace new management and communication techniques; 71 percent tend to persuade and influence rather than to command and control, while 43 percent prefer managed viral communication to top-down communication.

Tony Carter is not surprised to see integrity rated as a higher attribute in New Zealand compared to other countries. “In my experience values are the glue that hold organisations together and acting with integrity is one of the key attributes of a good leader.”

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. This contributes to complexity by creating a world that is vastly interconnected, and at the same time, defining 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.

“Customers have become much more demanding and discerning in recent years and successful companies need to meet that challenge by improved information,” says Tony Carter. “There is no doubt that poor service simply will not be tolerated by customers like it perhaps was in the past. Successful companies will be those that better meet their customer’s expectations.”


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.

Tony Carter was a little surprised that only 36 percent of CEOs are focused on simplifying their operations. “As the world gets more complex and demanding, companies will need to simplify their own operations to better meet the challenges they are likely to face.”

Understanding the sharp differences emerging by region is now more 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 81 respondents from Australia and New Zealand.

For access to the full study findings and case studies, please visit:

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