In the second half of 2012, IBM issued its fifth biennial Global CEO Study titled Leading Through Connection. IBM says this study is based on face-to-face conversations with more than 1,700 CEOs in 64 countries. I have been reading it and want to share with you what I make of it.
Social – concerned, fearful, skeptical, uncertain?
It appears that CEOs are increasingly accustomed to volatility and expect unpredictability. The same cannot be said for social.
My reading of the study suggests that CEOs are concerned and fearful about social, in particular, its role in enabling customers to exercise power over organisations. Second, most of them are skeptical of the value of social media – I suspect in driving revenues and profits. Even those who do see value in getting into social, are uncertain as to how to go about it. Given that so few of them have dived into social media this does not surprise me. How does one get comfortable with riding a bike? By riding a bike – you get on the bike, you ride, you fall off, you pick yourself up, you get back on the bike and soon you are riding the bike. Is social any different?
Are CEO’s customer obsessed and what is their take on customer analytics?
According to the study, CEO’s told IBM that three leadership traits, in particular, are the most critical for navigating through this disruptive era: ‘customer obsession’, ‘inspirational leadership’ and ‘leadership teaming across the C-suite’. I’ll come back to the latter two, let’s take a look at ‘customer obsession’.
When the world is unpredictable and the power continues to shift to customers it makes sense that ‘customer obsession’ is seen as the critical leadership trait. Yet I wonder what this means? Does this mean that CEOs will get out of their offices and get deeply involved with customers? Spending time with them face to face like Lou Gerstner did when he took charge of IBM. Or undertaking the kind of experience showcased in Undercover Boss.
According to the study, CEOs are investing in analytical capabilities that promise to yield customer insights. More than 70% of CEOs say that they are looking to get a better grasp of customer needs and generate improved organisational responsiveness to customer insights. So, I suspect that ‘customer obsession’ entails spending money on technology in the hope that this will yield insights into customers that enable the enterprise to stay one step ahead of customers. This is great news for the organisations selling analytics technologies (SAS, IBM….). Whilst I see the value of analytics I remain doubtful of the impact this will make until and unless the CEO gets out and actually walks in the shoes of the customer and experiences the experience of the front line workers.
What does IBM advise? IBM recommends that CEOs orient their organisations to get insight into and engage customers as individuals rather than aggregates (segments, markets). The earlier IBM CMO study suggested that marketers are stuck on traditional research methods that look at and provide insight into these aggregates and not individual customers. Where can organisations get insight at the level of the individual customer? Through harvesting and mining ‘Big Data’ according to IBM.
What are the roadblocks on this ‘data based, insight driven nirvana’?
In its study IBM refers to come organisations as ‘outperformers’ (they are doing better financially than their peers) and ‘underperformers’ (doing financially worse than their peers). What are the three key differences between these ‘outperfomers’ and ‘underperformers’ according to IBM?
- ‘translate insights into action’ – 84% better than industry peers;
- ‘excel at managing change’ – 73% better than peers;
- ‘moving into adjacent industries – 48% better.
So here we see the two major obstacles in the way of ‘data enabled, insight driven nirvana of business performance’. Ability to act on insight. And, in particular, act in such a way as to effect organisational change with efficacy: to make changes in the business (based on the insight) and to get the people in the organisation to go along with and internalise these changes. And to do so quickly before the window of opportunity closes. Clearly some organisations are better at this than others – those that excel at this are in the minority. Interestingly, this issue of taking action/effecting change based on insight has been surfaced by VoC vendors like Mindshare.
Are CEO’s aware of the scale of the challenge?
It appears that CEO’s are aware of the scale of the challenge that is facing them. How do I come to this conclusion? Leadership traits that are of importance to CEOs and what traits CEO’s are looking for in employees. Let’s consider the leadership traits first and what they can tell us.
When it comes to critical leadership traits, ‘customer obsession’, ‘inspirational leadership’ and ‘leadership teaming across C-suite’ were almost equal in importance. Statistically speaking, I suspect there is no significant difference between the three of them. It kind of suggests, to me, that these are inter-related. Let’s take a look at the latter two and what they can tell us.
‘Leadership teaming across C-suite’ suggests that CEO’s get that the default state of organisation – the silo structure and silo metrics – is that of optimisation of the parts and suboptimisation of the whole. It also indicates that CEOs are aware that genuine collaboration and teamwork starts at the very top – if the C-suite does not work well together then it is highly unlikely that the lower ranks will work well together. I also read into this an implicit acknowledgement that many C-suites do not work well as one team – personal interests and functional agendas compete against the well being of the whole. This explains why ‘inspirational leadership’ is seen as a critical leadership trait: CEOs get that they have to inspire (to bring forth) the best of their people (starting with the C-suite) including working as one team for the collective benefit. Is it possible I am concocting a story that appeals to me and is not in the study? I leave you to decide for yourself.
IBM claims that CEOs are creating more open and collaborative cultures. That does not strike me as being an accurate description of what is so based on my travels. And I get that I have only experienced a small number or organisations. What is more interesting is the claim that collaboration is the primary trait that CEOs are looking for in employees: 75% of CEOs label this trait as critical. Why? According to IBM, CEO’s see technology as an enabler of collaboration and relationships and are focussed on changes in how people engage with the organisation and with one another in order to fuel responsiveness, creativity and innovation.
It is interesting to note that CEO’s put ‘human capital’ as the most important source of economic value closely followed by ‘customer relationships’, with ‘product/services innovation’ being in third place. If ‘human capital’ is that important then the value placed on collaboration and open-cultures is understandable. If ‘customer relationships’ and ‘product/services innovation’ are this important then the investments in analytics and collaboration technologies make sense. What does not make sense, to me, is the attitude around social: customer can be a great source of innovation.
Only 33% of CEOs consider business model innovation as key source of economic value. This puzzles me given that one of the key issues that organisations have to grapple with is that of coming up with fresh business models that make the most of the opportunities and deal effectively with the disruptions caused by ‘social’ technologies and customer behaviour. Perhaps many CEOs have not fully awakened to the scale of the challenge/disruption/opportunity facing them. What do you think?
I doubt that technology is the no1 priority of CEOs. Why? Because ‘technology’ got 71% of the votes, closely followed by ‘people skills’ at 69% and ‘market factor’ at 68%. It occurs to me that there is nothing in it – that all three of these factors are as important as each other.