Let’s not declare the economic downturn dead, but executives worldwide look to be cautiously optimistic, according to a worldwide survey of CEOs commissioned by IBM Corp.
John Fursey, leader of Big Blue’s strategy and change practice in Canada, says business leaders feel they have costs under
control after three or four successive years of cutting. Now, they’re looking to top-line growth rather than belt-tightening to boost profits.
Translation: The scissors are back in the drawer — for now.
“”It doesn’t mean that cost reduction isn’t important,”” says Fursey, but CEOs feel they’ve got costs in check. Still, he says, “”We’re not going back to the days of the late ’90s, when the focus was on revenue, not profitability.””
More than 450 CEOs worldwide were interviewed for the study. Eighty per cent said revenue growth had replaced cost-cutting as their No. 1 priority. And to boost revenue, nine out of ten said their companies had to become more responsive.
This will require a shift in the technology environment, says Fursey. Companies whose technology is structured too much along lines-of-business — for example, a financial institution with mortgage, car loan and line of credit systems — will have to move to a component-based model. A component model is based more on function than line-of-business, making the system more “”plug-and-play”” than a silo environment.
The component model becomes even more responsive when its plug-and-play nature can accommodate business functions performed by an outsourcer, Fursey says.
More than half the CEOs surveyed expected their companies “”to be engaged in significant company-wide transformation initiatives”” within the next two years, according to the survey.
Knowing you need to change is one thing. Executing is another. Only half of CEOs surveyed rated their companies’ past change management as successful. More telling, 60 per cent said their companies lack the internal skills and leadership to manage the change. That’s partly due to overzealous downsizing in the ’90s, says Fursey. It’s also due to the age dynamic. One CEO said his entire executive rank was on the brink of retirement.
This means a looming war for talent to manage the transformation. The more specialized the skill set, the bigger the talent gap, says Fursey. While that does mean highly technical skills are at a premium, it’s more commonly the leadership skills of the plant manager, the line-of-business manager and the product manager that are in demand.