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  • © Copyright IBM Corporation 2006

    IBM Global Business Services

    Expanding the innovation horizon - the global CEO study

    Matt English & Mike Gordon 5 December 2006

  • 2

    IBM Global Business Services

    © Copyright IBM Corporation 2006

    1. The CEO study context

    2. Three key messages for CIOs

    Agenda

  • 3

    IBM Global Business Services

    © Copyright IBM Corporation 2006

    Americas 25%

    Asia Pacific 40%

    Europe 35%

    Overall Survey Scope: 765 CEOs and business leaders representing all major countries - 150 Financial Services CEOs participated in the

    survey - 84 from Banking companies - 35% of these came from the Asia Pacific region

    – equating to about 55 CEOs

    Purpose: Understand the role of innovation on CEOs agenda

    Innovation Definition: “New ideas or current thinking applied in fundamentally different ways resulting in significant change”

    Innovation focus: - Products, Services and Markets - Business Models - Operations

    Source: The Global CEO Study 2006, IBM

    The Global CEO Study 2006 focussed on the CEO’s innovation agenda

  • 4

    IBM Global Business Services

    © Copyright IBM Corporation 2006

    Banking CEOs are focused on product, services and markets innovation versus a more balanced approach

    Innovation Area Emphasis • Product and service have typically been viewed as the way to target markets and drive growth…

    • …yet, there is an growing realisation that products quickly turn into commodities…

    • …leading to increased focus on closing the gap in operational and business model innovation

    “…Product and services can be copied, business model is the differentiator…”

    42% 33%

    25%

    63%

    20% 17%

    0%

    10% 20%

    30%

    40%

    50% 60%

    70%

    Products, Services, and

    Markets

    Operations change

    Business & Enterprise

    Models

    Overall Banking

  • 5

    IBM Global Business Services

    © Copyright IBM Corporation 2006

    Source: The Global CEO Study 2006, IBM

    “We need to develop a business model based on strategic partnerships that creates value for our company…and for the industry…in this era of specialization.”

    Innovation Area Emphasis Operating Margin Growth in excess

    of competitive peers

    Products/ services/ markets

    Operations Business Model

    % C

    A G

    R o

    ve r 5

    y ea

    rs

    -1%

    0%

    1%

    2%

    3%

    4%

    5%

    But business model innovation correlates most strongly with superior margin growth

  • 6

    IBM Global Business Services

    © Copyright IBM Corporation 2006

    The challenge is that the nature of innovation is changing to be more multi-dimensional and dynamic

    Innovation – Historical

    R&D Product

    Innovation Service

    Innovation

    Innovation – Future

    Product & Service

    Innovation

    Operations Innovation

    Business Model

    Innovation Innovation Agenda

    Source: IBM, Global Business Services, 2006

  • 7

    IBM Global Business Services

    © Copyright IBM Corporation 2006

    1. The CEO study context

    2. Three key messages for CIOs

    Agenda

  • 8

    IBM Global Business Services

    © Copyright IBM Corporation 2006

    Three key messages for CIOs

    1 2 3 Innovation can be ignited by business and technology integration

    Collaboration, particularly external collaboration, is indispensable

    Deep business model innovation is critical

    “CEOs do not seem intimidated or content simply to cope… [Instead they see change] as both reason and license to expand their innovation horizon…”

    CEOs are embracing change —

    Source: IBM Global CEO Study 2006

  • 9

    IBM Global Business Services

    © Copyright IBM Corporation 2006

    Deepen business understanding through componentization

    IBM Component Business Modeling™ (CBM) Breaks down the operation into its component processes - Determines the core strengths that differentiate and provide the greatest

    business value - Enables companies to look at the business through a uniquely different

    lens

    Identifies opportunities for improvement - Via process enhancements or outside partnerships

    Increases process flexibility Strengthens integration across processes Enables business and IT communities to work together

    1

  • 10

    IBM Global Business Services

    © Copyright IBM Corporation 2006

    Component Business Modeling for the organisation

    Maps the entire business on a single page - People, processes and technology - Strategic, financial and transformational views

    Shows how well business priorities are being met - Identifies deficiencies and opportunities for

    improvement

  • 11

    IBM Global Business Services

    © Copyright IBM Corporation 2006

    CBM and SOA help close the gap between business and IT

    Composable Services

    (SOA)

    Flexible Business Transformation

    Business Process Outsourcing Mergers, acquisitions and divestitures

    Flexible IT On demand Operating Environment

    Software Development

    Integration Infrastructure Management

    Requires

    Development Infrastructure Management

    Service-oriented architecture (SOA)

    Composable Processes

    (CBM)

  • 12

    IBM Global Business Services

    © Copyright IBM Corporation 2006

    IT Service Management (ITSM) — built on the SOA foundation

    Integrate people (IT roles), IT processes, and systems management resource data

    across SOA applications

    Monitor ITSM processes and SOA applications

    Automate ITSM best practices (ITIL) and policy-based

    management

    Model and simulate ITSM processes for process

    improvement while capturing the requirements and planning

    aspects of ITSM

    Implement and customize process models through

    assembly of service components

  • 13

    IBM Global Business Services

    © Copyright IBM Corporation 2006

    Collaboration, particularly external collaboration, is indispensable

    What CEOs told us… Over 75 percent ranked collaboration and partnering as very important to innovation Employees are the top source of innovative ideas, followed closely by business partners and customers - Ideas are increasingly coming from

    external sources

    What we found… Extensive collaborators outperformed their peers in both revenue growth and average operation margin Companies that used external sources more often reported higher revenue growth than those that didn’t

    2

    Academia

    Associations, trade groups, etc.

    Competitors

    Consultants

    Customers

    Business partners

    4020 30100

    Internal R&D

    Internal sales or service units

    Employees

    Most significant sources of innovative ideas*

    * Respondents could select up to three choices

    Percent of respondents

    Internal sources External sources

  • 14

    IBM Global Business Services

    © Copyright IBM Corporation 2006

    Collaboration is essential, yet there is a gap between importance and practice

    • “…we need to develop a business model based on strategic partnerships that create value not just for the company but also for the industry as a whole; we cannot do everything in this era of specialization…”

    • “…key for success will be focus on core competencies and rapidly form intelligent partnerships…”

    Banking CEOs on Importance of Collaboration

    76%

    52%

    64%

    23%

    Collaboration of Significant

    Importance

    Significant Extent of

    Collaboration

    Overall Banking

    Collaboration Gap

    Collaboration Importance versus Extent

    % o

    f r es

    po nd

    en ts

  • 15

    IBM Global Business Services

    © Copyright IBM Corporation 2006

    How can CIOs help close the collaboration gap?

    Collaborative technologies

    Technology barriers

    Incompatible data definitions

    Open standards and architectures

    Security concerns

    Proprietary standards and architectures

    Insufficient capacity or scalability

    Virtualized resources

    Team workspaces

    Web conferencing

    Blogs, Wikis

    Leverage collaborative technologies and remove barriers

    Instant messaging

    Data mining/ federated database

    Firewalls

    SOAs

  • 16

    IBM Global Business Services

    © Copyright IBM Corporation 2006

    Make collaboration easier — and an expected way of doing business

    Create the right climate - Encourage employees, customers and potential

    partners to share ideas - Tame cultural resistance to collaboration - Establish collaborative initiatives

    Frequent, publicized opportunities for intra- and inter-organizational collaboration

    Work with other company leaders to make coll