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The secret to being a leading CEO: Embracing disruptive innovation

22 Feb 2016

Leading CEOs are utilising cognitive computing to transform their business, according to a new IBM study titled Redefining Competition: Insights from the Global C-suite Study - The CEO perspective.

In fact, the study shows half of leading CEOs believe cognitive computing will revolutionise their business in the next three to five years - 19% more than market-following CEOs and 35% more than all C-suite leaders combined.

According to the study, leading CEOs place less emphasis on cloud and Internet of Things as a result of early adoption of these technologies, while market-following CEOs are just beginning to stress their importance.

The study highlights how emerging technologies are intersecting and combining in new ways, causing enterprises to redefine how they engage with their customers and partners. This opens up opportunities for new business models and expanded ecosystems.

“CEOs know they need to prepare for a future in which disruption is pervasive, technological advances occur at great speed, traditional industry classifications no longer exist and ecosystems revolutionise entire markets,” says Peter Korsten, IBM Global Business Services global leader thought leadership and eminence.

In a recent Global C-suite study, all CxOs identified the risk of industry disruption caused by an unlikely competitor outside their industry as a primary competitive threat.

CEOs are particularly attuned this concern with 60% expecting more competition from other industries - a 50% increase from 2013 - compared to 54% of the C-suite as a whole. In response, 69% of CEOs are actively pursuing opportunities to play a new or different role in their ecosystems.

“The most critical risk is entrant from other industries,” says Oki Matsumoto, Monex Group founder, chairman and chief executive officer.

“To cope with the competition, we have two counter measures, the first is to capture the trend and take a critical role in it. The second is to sharpen our competitiveness continuously,” he says.

IBM's study shows leading CEOs are especially focused on disruptive innovation - 58% compared to 44% of market followers. They’re looking to reinvent their firms rather than simply tweak existing products or services.

Leading CEOs are also more likely to rethink the customer segments they target and explore new geographic markets and delivery channels.

In fact, 100% of the leading CEOs surveyed are engaging in rapid experimentation, pilots and prototyping, compared to just 66% of market followers. Yet they understand that investments with the power to transform an enterprise often take more time to pay off than those that only deliver incremental advances. Furthermore, 68% are prepared to wait three or more years for positive returns on innovation, compared with 57% of market followers.

“We need to shorten our new service development cycle and become more agile. As soon as we identify a trend, we should prepare a prototype, gain customer feedback and refine it continuously,” says Yutaka Nagao, Yamato Transport Japan CEO.

To help ensure their companies thrive in this time of extreme disruption, the study recommends CEOs energise their engagement strategy using predictive and cognitive analytics to investigate new trends, deepen customer engagement and embrace new markets and delivery channels.

By embracing rapid experimentation and prototyping, as well as making long-term investments in innovation and new talent, CEOs will be better equipped to navigate disruption and be considered a leader among their peers, IBM says.

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