Capitalising on Complexity - Ross Pearce

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© 2010 IBM Corporation Implications for the CIO Point of View Presentation of CIO Implications of the 2010 IBM CEO Study: Capitalizing on Complexity 20 & 21 July 2010

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Transcript of Capitalising on Complexity - Ross Pearce

Page 1: Capitalising on Complexity - Ross Pearce

© 2010 IBM Corporation

Implications for the CIOPoint of View Presentationof CIO Implications of the 2010 IBM CEO Study: Capitalizing on Complexity

20 & 21 July 2010

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© 2010 IBM Corporation2

CIO Implications of the IBM Global CEO Study 2010

• IBM executed the 2010 CEO study called Capitalizing on Complexity, culling the insights from over 1,500 interviewed CEOs.

• This is part of a larger program of C-suite executives, which recently included the 2009 CIO study.

• Findings of the CEO study focused on complexity in the modern business arena, with CEO focus on creativity, customers, and operational dexterity.

• As CIOs are key collaborators and enablers of the CEO’s agenda, the results of this study have profound implications for the CIO’s own agendas and thought processes.

• Although having very different competencies, the CEOs & CIOs interviewed often had complementary views and priorities about business.

• The implications for CIOs provide additional insight into how they can better support the CEO while improving the effectiveness of his or her own responsibility.

Introduction and overview

A new IBM CEO study was conducted: Capitalizing on Complexity

The results have interesting and significant implications for CIOs

CEO

CIO

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© 2010 IBM Corporation3

CIO Implications of the IBM Global CEO Study 2010

2005 study

2004 study 2008 study

2007 study

2008 study2005 study2003 studyTotal interviews: 450 Total interviews: 889 Total interviews: 1230

Total interviews: 1130

Total interviews: 404

Total interviews: 456

Total interviews: 320

2010 studyTotal interviews: 1917

CFO studies

CEO studies

2006 studyTotal interviews: 765

CHRO studies

2009 studyTotal interviews: 393

CSCO study

2009 CIO study (NEW)Total interviews: 2598

Face-to-face: 2598

Total interviews: 1564 Face-to-face: 1564

2010 CEO study

Recent studies of interest to the CIO

The IBM Global CIO and CFO studies are part of our C-suite series

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CIO Implications of the IBM Global CEO Study 2010

Agenda

CFO and CIO studies CEOs view of the world Outperformers

CIO implications of: Embody Creative Leadership Reinvent Customer Relationships Build Operating Dexterity

Wrap Up & Questions

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CIO Implications of the IBM Global CEO Study 2010

The study represents organizations in 60 countries and 33 industries

Note: The CEO response sample has been weighted based on 2008 Actual Regional GDP of the IMF World Economic Outlook, October 2009;* Growth Markets include Latin America, Asia Pacific (excluding Japan), Middle East and Africa

13%Communications

25%Distribution

18%Financial services

24%Industrial

20%Public

Sectors

25%Growth markets*

21%North America

42%Europe

12%Japan

In this largest known sample of face-to-face CEO interviews, we spoke with over 1,500 CEOs and public sector leaders

Regions

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CIO Implications of the IBM Global CEO Study 2010

The study represents different-sized organizationsin 78 countries and 19 industries

In our first Global CIO Study 2009, we spoke face-to-face with over 2,500 CIOs to understand their goals and challenges

Sector

Public18%

Distribution24%

Financial Services

21%

Industrial24%

Others2%Communications

11%

Source: IBM Global CIO Study 2009

Organization Size

1,000-10,000 Employees

50%

>10,000 Employees

34%

<1,000 Employees

16%

Geography

North America

24%

Japan6%

Western Europe

38%

Rapidly Developing

Markets32%

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© 2010 IBM Corporation7

CIO Implications of the IBM Global CEO Study 2010

Successful CIOs blend three pairs of roles that seem contradictory, but are actually complementary

By integrating these three pairs of roles, the CIO makes innovation real, raises the ROI of IT and expands business impact

Source: IBM Global CIO Study 2009

AblePragmatist

SavvyValue Creator

RelentlessCost Cutter

CollaborativeBusiness Leader

InspiringIT Manager

MakingInnovation real

Raising the ROI of IT

Expandingbusiness impact

InsightfulVisionary

AN

Z

ANZ

ANZ

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CIO Implications of the IBM Global CEO Study 2010

The Global CFO Study 2010 is the largest known CFO-level study of its kind with over 1,900 participants

Organization Size

<=$500MM 25%

$501MM to $1B 15%

>$1B to $5B 28%

>$5B to $10B

11%

>$20B14%

>$10B to $20B

7%

Source: IBM Global CFO Study 2010

Sector

Public13%

Communications 13%

Industrial25% Distribution 28%

Financial Services

20%

Others1%

Geography

Asia Pacific

27%

EMEA 42%

Americas31%

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CIO Implications of the IBM Global CEO Study 2010

Using Regression analysis, we developed a model that segmented participants into four profiles based on capabilities and maturity

Finance Profiles

Source: IBM Global CFO Study 2010

Finance Efficiency

Business InsightLow High

Low

High23%

12%

32%

33%

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CIO Implications of the IBM Global CEO Study 2010

Comparing the agenda of each, we see remarkable alignment between the studies

CEO Themes CIO Priorities CFO PrioritiesEmbody creative leadership

Business intelligence and analytics

Risk management and compliance

Measuring and monitoring business performance

Supporting and managing enterprise risk

Reinvent customer relationships

Customer and partner collaboration

Aligning finance with the business

Build operating dexterity Business process management

Continuous process improvement and business improvement

Source: IBM Global CEO Study 2010IBM Global CIO Study 2009 IBM Global CFO Study 2010

A focus on these priorities turns Strategy into execution.

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CIO Implications of the IBM Global CEO Study 2010

Expect high/very high level of complexity over 5 years

Currently experiencing high/very high level of complexity

32%

more

“Complexity is increasingly multi-faceted. It presents an opportunity and a threat at the same time.”

Yoichiro Ushioda, Chairman and CEO,JS Group Corp, Japan

Experienced and expected level of complexity

79%

60%

Expect high/very high level of complexity over 5 years

Feel prepared for expected complexity

30%

Complexity gap*

“The world is non-linear, so the ability to cut through complexity relies on processing a large amount of information quickly and extracting nuggets to make quick decisions. Building advantage will be an outcome of dealing with complexity better than our competitors”

Julian Segal, Director and CEO,Caltex Australia Limited, Australia

Expected level of complexity and preparedness to handle

49%

79%

Today’s complexity foreshadows an even more complex future

Source: 2010 CEO study

Source: IBM Global CEO Study 2010

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CIO Implications of the IBM Global CEO Study 2010

Change Needed Past ChangeSuccess

In the 2008 CEO study a similar “capability” gap was identified regarding managing change

The Change Gap* Triples

* Difference or ‘gap’ between expected level of change needed and past success in managing change

“We have seen more change in the last ten years than in the previous 90.”Ad J. Scheepbouwer, CEO, KPN Telecom

Change Needed Past ChangeSuccess

2006 2008

Source: IBM Global CEO Study 2008

Change Needed

No/limited Change

Moderate Change

Substantial Change

No/limited Success

Moderate Success

Successful

Past Change Success

22%CHANGE GAP*8%

CHANGE GAP*

6%

11%

83%

19%

20%

61%

13%

22%

65%

12%

31%

57%

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CIO Implications of the IBM Global CEO Study 2010

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On average, only 41% of projects were considered successful. But the top 20%—the Change Masters—reported an 80% success rate.

44% of all projects failed to meet either time, budget or quality goals, while 15 % either stopped or failed to meet all objectives

Average Project Success Rates

The top* 20% of organizations reported an average project success rate of 80%, reflecting a 95% increase above the average share of successful projects

Change Masters vs. Change Novices

PROJECTS THAT EITHER MISSED ALL GOALS OR WERE STOPPED

15%

PROJECTS THAT DID NOT MEET EITHER TIME, BUDGET OR QUALITY GOALS

44%

PROJECTS THAT FULLY MET THEIR OBJECTIVES

41%

95%SUCCESS RATE INCREASE

BOTTOM 20% CHANGE NOVICES

8%

41%

80%

AVERAGE TOP 20% CHANGE MASTERS

Share of successful projects

A/NZ Average = 35%

Only 11% Change

Masters in A/NZ

A/NZ 49%

A/NZ 17%

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© 2010 IBM Corporation14

CIO Implications of the IBM Global CEO Study 2010

Increasing CEOs recognize that Technology is driving much ofthis change….

Source: IBM Global CEO Study 2010

Three most important ‘external’ forces over the next three years

And that the impact of Technology will continue to increase in reshaping the competitive landscape

A/NZ 52%

A/NZ 36%

A/NZ 42%

A/NZ 42%

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CIO Implications of the IBM Global CEO Study 2010

Complexity gap*

“Really, I am not afraid of complexity at all. On the contrary, this just motivates me.”

Jacques Pellas, Secrètaire Général, Dassault Aviation, France

* Complexity gap = Difference between expected complexity and the extent to which CEOs feel prepared to manage it

Lo

ng

-te

rm,

stea

dy-

sta

te

per

form

anc

e

Short-term,crisis performance

Top 50 percent

Standouts

22% Gap 6%

Gap

52% Gap 35%

Gap

Top

50

perc

ent

Standouts are also better prepared to manage the expected complexity

In the CEO Study we identified “Standout” organisations that delivered superior performance during both the long term and recent short term

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CIO Implications of the IBM Global CEO Study 2010

“Outperformers” across recent studies show similarities

CEO Study 2010

“Standouts”

CFO Study 2010

“Value Integrators”

CIO Study 2009

“High Growth”

MCW Study 2008

“Change Masters”

Embody Creative Leadership

High focus on enterprise risk management

Work with business to co-create and champion innovation

Top management sponsorship and understanding of change challenge.

Reinvent Customer Relationships

Drive integration of information across the enterprise

Actively use collaboration and partnering technologies… Proactively craft data into actionable information

Build Operating Dexterity

Continuous process improvement

Closely involved in co-creating the business strategy

Consistent use of good, solid change management methodology

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CIO Implications of the IBM Global CEO Study 2010

• Creativity is #1 leadership quality• Drive change in the organization to

stay ahead of market and use of wide range of communication styles and tools

• Break with status quo of industry, enterprise and revenue models

• Simplify operations and products to better manage complexity

• Use iterative strategies, make quick decisions and execute with speed

• Integrate globally, increase cost variability and exploit partnering to increase agility

• “Getting closer to customers” is the single most important theme

• Better understand customer needs through collaboration and info sharing

• Exploit the information explosion to deliver unprecedented customer service

Standouts capitalize on complexity in three ways

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CIO Implications of the IBM Global CEO Study 2010

Decision making and its technological supporter, Business Intelligence and analytics, ranked high for both CEOs and CIOs

54%more

Thorough decisions Quick decisionsBoth

42%15% 43%

41%31% 28%

Standouts

Others

Ways in which to achieve rapid change over next five years: Decision Making

Source: IBM Global CEO study 2010

86%

80%

77%

76%

73%

70%

Business intelligence and analytics

Virtualization

Risk management and compliance

High growth Low growth

The most important visionary plan element for CIOs: Business Intelligence

Source: IBM Global CIO study 2009

A/NZ 100%

A/NZ 92%

A/NZ 100%

A/NZ 95%

A/NZ 89%

A/NZ 76%

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© 2010 IBM Corporation19

CIO Implications of the IBM Global CEO Study 2010

Imperatives for CEOs Implications for the CIO

• Embrace ambiguity: Reach beyond silos, exemplify breakthrough thinking, act despite uncertainty.

• Take risks that disrupt legacy business models: Pilot radical innovations, continually tweak your models, borrow from other industries’ successes.

• Leapfrog beyond “tried-and-true” management styles: Strengthen your ability to persuade and influence, coach other leaders, use a wide range of communication approaches.

• Enable smarter decisions: Provide facts about the business through analytics, improve the decision-making process with technology, make ambiguity the realm of creativity

• Advocate the “art of the possible”: The CEO may not know what can be done with new technology -- the CIO can meet the CEO’s vision to what IT can help create

• Enable the collaborative enterprise through technology: CIOs have an important role in enabling new management styles across the organization. Technology is key to pursue more "viral communications" as a mode of communications, incorporate collaboration technology into daily interaction.

So what builds creative leadership?

“There is no innovation in my organization without the involvement of IT.”

Government CIO, Brazil

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© 2010 IBM Corporation20

CIO Implications of the IBM Global CEO Study 2010

Standouts capitalize on complexity in three ways

• Creativity is #1 leadership quality• Drive change in the organization to

stay ahead of market and use of wide range of communication styles and tools

• Break with status quo of industry, enterprise and revenue models

• Simplify operations and products to better manage complexity

• Use iterative strategies, make quick decisions and execute with speed

• Integrate globally, increase cost variability and exploit partnering to increase agility

• “Getting closer to customers” is the single most important theme

• Better understand customer needs through collaboration and info sharing

• Exploit the information explosion to deliver unprecedented customer service

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CIO Implications of the IBM Global CEO Study 2010

CEOs want to better understand customer needs and actively work with them

Better understanding of needs

New or different services

New or different products

New or different channels

82%

70%

69%

61%

51%

CEOs’ view of “How customer expectations will change over the next 5 years”

Respondents answered “very large extent”

Source: IBM Global CEO study 2010

44%

68%

54%

74%

36%

58%

... and anticipate much greater levels of integration and transparency with customers

In five years, CIOs expect end-customers to continuously explore new channels...

High-growth CIOs proactively craft data into actionable information

High growth

Low growth

+37%

+55%

+61%

CIOs’ view of changes in customer interaction

Source: IBM Global CIO study 2009

A/NZ 37%

A/NZ 42%

A/NZ 67%

A/NZ 34%

A/NZ 85%

A/NZ 46%

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CIO Implications of the IBM Global CEO Study 2010

Impact on organization of information explosion

29%more

More focus on insight and intelligence to realize strategy

18%more

49%

OtherCEOs

63%

Customer focusedCEOs

66%

OtherCEOs

78%

Customer focusedCEOs

“Customer relations will require near-real time information and the ability to change ‘on the fly’ which will require innovation.”

Energy and Utility CIO

Customer-centric CEOs will need customer-centric CIOs to fulfill their agendas

Customer focused CEOs use data...

... to generate insight and intelligence

Source: IBM Global CEO study 2010 Source: IBM Global CEO study 2010

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CIO Implications of the IBM Global CEO Study 2010

• Honor your customers above all else: Unprecedented level of focus, heightened customer exposure for every employee, measure what customers value.

• Use two-way collaboration to sync with customers: Make customers part of your team, solicit customer wants, co-innovate and interact with customers in new ways, deliver true process transparency.

• Profit from the information explosion: Tap the value of limitless data, use analytics to translate data into insight into action that creates business results, share information freely to build trust and improve customer relationships.

• Build a Customer-centric IT organization: The opportunity is to embed customer centricity in everything the IT organization does, be able to measure customer value, and provide insight to guide business decisions based on that

• Enable customer interaction and collaboration: The CIO will also need to design customer interaction/transaction/collaboration systems to enable collaboration with massive customer bases and to understand and use collaboration information.

• Embrace business analytics to embrace customer understanding: Develop strengths in collecting, aggregating, analyzing, and optimizing operations based on new analytics and predictive capabilities

So how do you reinvent customer relationships?

Imperatives for CEOs Implications for the CIO

The challenge is to change from a “push-model to a pull-model, where the customer expresses requirements and IT answers immediately.

Banking Industry CIO, France

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© 2010 IBM Corporation24

CIO Implications of the IBM Global CEO Study 2010

Standouts capitalize on complexity in three ways

• Creativity is #1 leadership quality• Drive change in the organization to

stay ahead of market and use of wide range of communication styles and tools

• Break with status quo of industry, enterprise and revenue models

• Simplify operations and products to better manage complexity

• Use iterative strategies, make quick decisions and execute with speed

• Integrate globally, increase cost variability and exploit partnering to increase agility

• “Getting closer to customers” is the single most important theme

• Better understand customer needs through collaboration and info sharing

• Exploit the information explosion to deliver unprecedented customer service

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© 2010 IBM Corporation25

CIO Implications of the IBM Global CEO Study 2010

Standouts simplify operations and products to better manage complexity

Others

Standouts

30%more

61%

47%

CEOs see changes to operating strategy: Simplify

Source: IBM Global CEO study 2010

Others

Standouts

16%more

45%

39%

The most crucial capability for execution success over the next 5 years is execution speed

Source: IBM Global CEO study 2010

“The aim is adaptability, the tool is execution speed.”Dr. Faruk Yarman, General Manager,

Havelsan, Turkey

High growth

Low growth 22%more

50%

61%

CIOs think business processes will be completely standardized and low cost

Source: IBM Global CIO study 2009

A/NZ 59%

A/NZ 46%

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© 2010 IBM Corporation26

CIO Implications of the IBM Global CEO Study 2010

Execution speed and global integration provide Standouts with increased dexterity

60%more

10%

Others

16%

Standouts

Most crucial capabilities for execution success over the next 5 years

CEOs focus on global integration

Source: IBM Global CEO study 2010

Many CIOs foresee a strongly centralized infrastructure in five years

76% 76%

High growth

Low growth

Source: IBM Global CIO study 2009

A/NZ 78%

A/NZ 78%

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CIO Implications of the IBM Global CEO Study 2010

• Simplify whenever possible: Simplify interactions with customers, simplify products and services by masking complexity, simplify for the organization and partners.

• Manage systemic complexity: Put complexity to work for your stakeholders, take advantage of the benefits of analytics.

• Promote a mindset of speed and flexibility: Act quickly, push execution speed, course-correct as needed.

• Be “glocal”: Leverage the world through partners, constantly tune your operating model – global where possible, local where necessary.

• Simplify IT whenever possible: IT can develop and deploy simplified, streamlined business processes to improve efficiency and simplify operations

• Manage systemic complexity: Proactively manage the complexity and efficiency of the IT environment, leverage analytics for management to better understand complexity

• Enable operational speed and flexibility: Enable the organization to act quickly through an adaptable, efficient, and flexible IT environment and through strategic service providers

• Embrace “glocal” IT operations: Leverage the world through partners, constantly tune your operating model to use the right skills in the right place at the right time.

So what are the steps to build operating dexterity?

CEO Imperatives Implications for the CIO

“Simplification and standardization are key strategies that we have been using for several years to reduce existing and future complexity.”

Brenda Barnes, Chairman and CEO,Sara Lee, United States

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CIO Implications of the IBM Global CEO Study 2010

Imperatives for CEOs Implications for the CIO

Seizing the upside of complexity for CEOs and CIOs

Honor your customers above all else

Use two-way communications to sync with customersProfit from the information explosion

Embrace ambiguity

Take risks that disrupt legacy business modelsLeapfrog beyond “tried-and-true” management styles

Simplify whenever possible

Manage systemic complexity

Promote a mindset of being fast and flexibleBe “glocal”

Reinventcustomer

relationships

Buildoperatingdexterity

Embodycreative

leadership

Build a customer-centric IT organization

Enable customer interaction and collaborationEmbrace business analytics embrace customer relationships

Enable smarter decisions

Advocate the “art of the possible”

Enable the collaborative enterprise through technology

Simplify IT whenever possible

Manage systemic complexity

Enable operational speed and flexibility

Embrace “glocal” IT operations

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© 2010 IBM Corporation29

CIO Implications of the IBM Global CEO Study 2010

Standouts capitalize on complexity in three ways

Do you understand what technology is on the horizon to empower your CEO and executive team to achieve their vision?

Is your IT environment designed to be flexible and adaptable to change, including its use of flexible operational models and service providers?

Is your IT environment capable of capturing, synthesizing, and analyzing diverse information sets for analytics purposes and ultimately for optimizing customer operations?

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CIO Implications of the IBM Global CEO Study 2010