Leading for innovation & growth

ExEcutivE OutlOOk 2013 rEpOrt

The findings of our annual C-suite

survey are in. This year, we spoke

with 179 executives in a broad

range of industries across the globe.

We asked them about their views

on innovation and how they plan

to sustain growth amid ongoing

economic uncertainty.

What they told us was that company

culture was their key focus for the

year. And, that for many, the main

barriers to innovation and agility

are those that are embedded within

their organisational culture.

In fact, C-suite executives appear

to be just as focused on the

cultural aspects of organisational

innovation and change as they are

on implementing new technology

and creating new products.

While this initially surprised us, it

also reminded us of the critical

nature of talent in an uncertain

economic environment. We know

that competitiveness is not just

about great products and efficient

processes—it’s about people. And

it seems that after four-plus years

of global economic turmoil, many

leaders are again recognising that

their employees’ attitudes are

critical to business success.

We are pleased to share the

thoughts and insights of these

business leaders in more detail

throughout this report.

introduction

2

Pam BerkLich

We conducted our annual Executive

Survey in January 2013, canvassing

the views and opinions of senior

leaders across the world on the

topic of: Leading for innovation

and sustaining growth.

We commissioned an on-line

survey over a two-month period

from 15 November 2012, which

targeted C-suite and senior

management executives only.

All responses were confidential

and have been aggregated.

Responses were received from

179 executives in a wide range of

industries, including:

• energyandutilities

• oilandgas

• healthcare

• bio-technology

• banking/financialservices

• property

• ITandcommunication

• manufacturing

• retailandFMCG

aBout the survey

3

46% VP, Director

38% CEO,MD,Chairman

16% EVP, SVP

/ JoB titLes of survey ParticiPants

/ comPany size

15% Morethan

10,000 employees

18% 250-999 employees

23% 1,000–4,999

employees

38% Less than

250 employees

6% 5,000–10,000 employees

what they said

exPect growth this year

88%

forecast significant growth

34%

have a Proactive aPProach to innovation

42%

BeLieve their comPetitive Position is unchaLLenged

11%

feeL accountaBiLity for growth is too narrow

22%4

Despite the challenging business environment of 2012,

and the ongoing uncertainty on global markets, 88% of

business leaders have a positive outlook for the growth

of their business in 2013.

While most executives (55%) are expecting only marginal

growth this year, one-third (33%) is looking forward to

‘significant’ growth within their organisation. Just seven

per cent of business leaders are expecting no change for

their organisation on this front, and a mere one per cent is

anticipating a major decline.

Leaders in Asia-Pacific have higher expectations for business

performance this year than those in the Americas and Europe,

which is to be expected given the ongoing debate over debt

issues and constrained government spending in those regions.

most exPect to grow this year

/ outLook By geograPhicaL region

/ exPected revenue/Business growth

Signi�cant decline

Marginal decline

No change

Marginal growth

Signi�cant growth

7% No change

4% Marginal decline

1% Significant decline

33% Significant growth

55% Marginal growth

88% Positive

Signi�cant decline

Marginal decline

No change

Marginal growth

Signi�cant growth

7% No change

4% Marginal decline

1% Significant decline

34% Significant growth

55% Marginal growth

4% 6%

17%

22%

44%

11%

36%

56%

5%7%

55%

34%

0

20

40

60

80

100

APACAmericas/EMEAALL APACAmericas/EMEAALL

Significant declineMarginal declineNo changeMarginal growthSignificant growth

3%

5

As you would expect, for many businesses (37%) profit-

generating and core-business activities are given priority over

longer-term investments to promote expansion and growth.

However, it appears that more than one in five business

leaders (22%) would like to see a greater focus on these

‘growth’ initiatives, but believe this is stymied by a lack of

accountability for competitiveness further down the line in

their organisational hierarchies.

In fact, the majority of barriers to improving long-term business

prospects (52%) appear to be imbedded in the culture of the

organisation: lack of accountability (22%); too great a focus on

short-term quick-fixes (17%); lack of knowledge required to

contribute to solutions (13%).

Businesses of all sizes seemed to be equally affected by these

cultural barriers to improving competitiveness. Whether from

large or small organisations, the same proportion of leaders

reported the concern that employees did not take individual

accountability for competitive longevity and instead saw this as

a job for top management only.

Just one in ten business leaders (11%) believes that their

competitive position is so strong that no challenges to it can

be seen on the horizon.

sustaining growth

/ chaLLenges for Business Longevity

No challenges

Lack of understanding

Organization only looks

Sustainability issues

Pro�t-generating activities take priority17%

Organisation looks to quick fixes only

13%Lack of understanding of

threats to sustainability

11%No challenges identified

37% Profit-generating activities take priority

22% Lack of individual accountablity/seen as the job of top management only

6

Leaders appear to be acutely aware of the need to fully engage

each and every employee in the task of maintaining and

improving business competitiveness over the long term. With

two-thirds of leaders (65%) nominating this as a key focus area,

it seems that 2013 will see a greater focus on individual training

and stronger communication of business-critical issues.

In fact, leaders are just as focused on the cultural aspects of

organisational innovation as they are on implementing new

technology and rolling out new products. It seems that the

race to remain competitive is seen not only as a product or

process issue, but as a human issue—and leaders know their

employees’ attitudes are critical to success.

Manyleaders(53%)donominate‘productinnovation’asakey

focus area that will strengthen their business prospects over the

longer term, while the implementation of new technology is a

seen as a critical issue for 48% of leaders. However, winning in

the marketplace will also be dependent upon the alignment of

individual goals with those of the entire organisation, and this

is likely to create new pressures and opportunities for staff with

responsibilities for HR, communications, change management

and team leadership going forward.

focus areas to strengthen comPetitiveness

/ sustainaBiLity factors that require integration

65%

53%

51%

48%

27%

26%

0 10 20 30 40 50 60 70 80

Environment

Education

Technology

Goals and policy

Product innovation

Organisation and employee

Environment

Education

Technology

Goals and policy

Product innovation

Organisation and employeeEnvironment

Education

Technology

Goals and policy

Product innovation

Organisation and employee

7

Manyleaders(42%)saytheytakeaproactiveapproach

to innovation and have measureable goals and resources

allocated to their initiatives. However, one-fifth (20%) says

core business activities remain their only focus, while 37%

see incremental change as the way forward.

The overall approach to innovation appears to be heavily

influenced by the geographical reach of the organisation,

and by whether or not it is operating in the private sector.

Globalfirmsandmulti-nationalsaremorelikelytotakea

planned, proactive approach to innovation, while local

firms and those in the public or not-for-profit sectors were

less likely to do so. Public sector organisations and not-for-

profits remain firmly focused on core business activities only,

with just one in five actively planning for—and allocating

resources to—innovation.

Promoting innovation

/ aPProaches to innovation By comPany tyPe

/ how the organisation aPProaches innovation

not sure

focus on core

incremental innovation

Measurable goals

1% Not sure

42% We have measurable goals and allocate resources for innovation over the long term

37% Our focus on incremental innovation

20% We remain focused on our core business activities only

1%

20%

37%

42%

0

20

40

60

80

100

Local conglomerateMulti-nationalGlobal �rmNon-pro�t/Government/GLCsALL

3%

17%

50%

30%

Localconglomerate

20%

34%

46%

Multi-national

12%

37%

51%

Global firm

6%

47%

27%

20%

Non-profit/Government/

GLCs

ALL

Not sure

We remain focused on our core business activities only

Our focus on incremental innovation

Have measurable goals & allocate resources to protect long term initiatives towards innovation

8

According to senior leaders, the main barriers to innovation

appear to be those embedded within organisational cultures.

While one-in-five leaders (20%) see legislative requirements as

a major barrier to innovation, three-in-ten (31%) say it is mainly

hampered by employees’ resistance to change, and a further

15% feel that their organisation has a culture of risk aversion.

A lack of structure and process regarding funding,

executive sponsorship and the requirements or business

case for innovation initiatives does appear to be an issue

for a significant proportion of businesses, yet the key issue

is undoubtedly cultural readiness for change across all

layers of organisations.

Barriers to innovation

/ Biggest hurdLe to the imPLementation of innovation

No time for innovation

Contracting issues

Lack of funding

Lack of implementation

Risk aversion culture

Legal requirements

Resistance to change

2% No time for innovation

3% Contracting issues

15%Lack of implementation/

performance criteria or business case

31% Resistance to change

20% Stiff legal requirements

15% Risk aversion culture

14% Lack of funding/sponsorship

9

Of course, time will tell whether or not leaders’ revenue

predictions turn out to be accurate. However, it’s interesting

to note that those leading organisations with a structured,

proactive approach to innovation are far more positive

about their 2013 revenue outlook than those who focus only

on core business activities, or who take an incremental

approach to innovation.

Here, the difference is quite stark—45% of those with a

proactive approach are expecting significant growth in their

revenue this year, compared to just 23% of those who are

focusing their efforts entirely on core business activities.

revenue outLook and aPProach to innovation

/ revenue outLook 2013 By different segments toward innovation

0

20

40

60

80

100

Focused on core business activities onlyFocus on incremental innovationProtecting long term business innovation initiativesALL

9%

68%

23%

Focused on core business activities only

6%8%

59%

27%

Focus on incremental innovation

3%4%5%

43%

45%

Protecting long term business innovation

initiatives

4%7%

55%

34%

ALL

Significant declineMarginal declineNo changeMarginal growthSignificant growth

10

While most leaders are expecting some growth for their

business in the year ahead, those located in the Asia-

Pacific region expressed more optimism than others.

Giveneconomicfactorsoutsideorganisations’control,

this result is hardly surprising. Likewise, larger global

firms and multi-nationals were more confident about

their outlook than local organisations—perhaps due

to their ability to leverage multi-country markets and

spread risk more favourably.

What stands out from the research is that those

organisations with the greatest positivity going into

2013 are those with a proactive approach to innovation.

They see significant opportunities to innovate product

lines and to ensure processes are more efficient.

Yet, the biggest challenge for leaders seeking sustained

growth appears to be cultural readiness to change

within organisational walls. Even after accounting for

the different regulatory requirements and industry

dynamics that undoubtedly shape an organisation’s

approach to innovation, leaders are clearly saying that

employee populations are resistant to change.

Cultural change seems to be the focus of leaders

across the world as they look for new ways forward in

an uncertain and increasingly competitive global

market. While many see that processes and products

need to adapt to meet demand, leaders see their own

people as both the key, and a potential barrier, to

achieving this.

concLusion

11

exit

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