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Capitalising on complexity

Fewer than half of the CEOs recently surveyed are successfully handling growing complexity in their organisations.

According to a new IBM survey of more than 1500 chief executive officers from 60 countries and 33 industries worldwide, chief executives believe that – more than rigour, management discipline, integrity or even vision – successfully navigating an increasingly complex world will require creativity.

Conducted through in-person interviews with consultants from IBM’s Institute for Business Value, less 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% 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 is 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,” said Oliver Fortuin, general manager, IBM Sub Saharan Africa. “But it is 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.”

Managing complexity

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% of CEOs 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 percent 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.

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.

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