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IBM Global CEO Study 2006 Russell Boyd Solomon Lukie Mark Maglana
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2 Survey Participants » 765 executives » 61% operate in mature markets » 52% have less than 5,000 employees » Highest industry representation »Banking »Government »Industrial products
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3 Contents » What has changed? » What are the challenges? » Our learning objectives
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4 What Has Changed? » From cost cutting to sustained growth » Emphasis on business model innovation » Importance of external collaboration » CEO’s responsibility for innovation
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5 Innovation Types Defined » Business Model Innovation in the structure and/or financial model of the business » Operational Innovation that improves the effectiveness and efficiency of core processes and functions » Products/services/markets Innovation applied to products or services or “go-to- market” activities
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6 Business Model Innovation
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7 Outperformers & Underperformers » Comparison of average revenue growth, operating margin growth, and historical operating margins » Outperformers – companies above the average » Underperformers – companies below the average
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8 Innovation Priorities
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9 External Collaboration » Business partners and customers now a major source of innovation » Internal R&D no longer top source
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10 Sources of Innovation
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11 Percent of External Ideas Used
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12 Responsibility for innovation » No longer limited to R&D Manager » CEO primarily responsible » Innovation seen as everyone’s job
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13 What are the Challenges? » Business and technology integration gap » The gap in aspired external collaboration and actual external collaboration. “It was theoretically easy, but practically hard to do” » Balancing the energy spent with the benefits
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14 What are the Challenges? » External » Internal
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15 External Challenges
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16 Internal challenges
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17 Questions
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18 Questions/concerns (1) Collaboration » Is the collaboration trend driven by corporate growth demands as much as the need to differentiate? » Is collaboration perhaps “opportunism” and a necessary, but passing fad? » Does the collaboration model suit SME’s as well as large global operators? » Who will continue R&D in the longer term? Will these firms be fitter for survival? » Why is internal collaboration a problem but external collaboration a success? » Where are the cost savings from external collaboration derived from? » What is driving higher customer satisfaction from collaboration? » Are the woes of global car manufacturers a sign of the future for collaborators? For example, the merger / collaboration between Mercedes Benz and Chrysler?
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19 Questions/concerns (2) Innovation and the CEO » Do the CEO statements reflect what’s actually happening in their organisations? » Is the pressure on CEO’s for results driving short term thinking? » How does a CEO excite, motivate and involve the whole firm in innovation? » The Google model begs the question: “will large firms accept teams learning through experimentation and failure? » Is business improvement through technical innovation real or a CEO perception? » How do you balance a team focus with individual rewards?
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20 Questions/concerns (4) » Page 31. “Companies that reward individual contributions achieved 2% higher operating margins…and grew revenue nearly 3% faster than those that did not.”
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21 Learning objectives (1) Business model innovation considerations: » how global connectivity is forcing new business models » how to search out competitive differentiators » how innovative business models are determinants of strategy success or failure » “what-if” analysis techniques for selecting alternative business models » Ways to leverage internal / external capabilities
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22 Learning objectives (2) External collaboration considerations: » the drivers of external collaboration » the strengths & weaknesses of a “virtual” business » does IP protection remain valid as firms move to collaboration? » why internal collaboration is a big problem for large firms and can it be resolved? » how does external collaboration reduce costs and improve customer satisfaction? » cultural changes that are conducive to external collaboration » which firms should maintain their own R&D capability?
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23 Learning objectives (3) Consider the role of the innovative CEO » the source of a CEO’s inspiration to innovate? » balancing orchestration from the top with the need for momentum at the grassroots? » techniques organisations use to filter innovation opportunities » organisational culture conducive to innovation » the parameters of change - does one size fit all? » challenges arising out of the business and technology integration gap » overcoming the technology gap and finding measures which bring results.
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24 Thank You!
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25 Appendices
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26 Common Business Model Innovations
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27 Product innovation
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28 Collaboration Benefits
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29 Use of Collaboration
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30 Margin of Performance
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