The Customer Activated Enterprise

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Openingspresentation at the Marketing Transformation Forum on October 30st at Lute, Amstelveen on the key findings of IBMs 2013 CxO Study

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  • The right partner for a changing world: At IBM, we collaborate with our clients, bringing together business insight, advanced research and technology to give them a distinct advantage in today’s rapidly changing environment.The IBM Institute for Business Value, part of IBM Global Business Services, develops fact-based strategic insights for senior business executives around critical public and private sector issues.
  • This report is IBM’s first study of the entire C-suite — and the 17th in the ongoing series of CxO studies developed by the IBM Institute for Business Value.We now have data from more than 23,000 interviews stretching back to 2003.Our latest study draws on input from:Chief Executive Officers (CEOs) 884Chief Finance Officers (CFOs) 576Chief Human Resources Officers (CHROs) 342Chief Information Officers (CIOs) 1,656Chief Marketing Officers (CMOs) 524Chief Supply Chain Officers (CSCOs) 201
  • As with our prior studies, this one is based on in-depth, in-person conversations. We sat down with 4,183 leaders in 70 countries. What we discovered underlines how rapidly change is sweeping across business and society.
  • We spoke in person with 4,183 top executives covering more than 20 industries in 70 countries. Our respondents represent a wide range of public and private sector organizations.
  • Outperforming enterprises surpass their industry peers in terms of revenue growth and profitability, while underperforming enterprises do worse on both counts, in the opinion of the CxO concerned. Some 8 percent of the organizations in our sample are outperformers, and 25 percent are underperformers.
  • This study explores how C-suite leaders are working together to address the attendant challenges and opportunities, which were barely discernible a decade ago.
  • We asked which external forces CxOs think will most affect their enterprise in the next three to five years, and compared the results with our findings from earlier studies.One of the most notable trends has been the steady rise in the importance attributed to technology. CEOs put it first, as they did in 2012.For them, technology is not just part of the infrastructure needed to execute a business strategy. It’s what makes entirely new strategies possible.
  • Interbrand, one of the larger brand analysts, published its ‘Most valuable brands 2013’ report in October 13. Upon evaluation 6 brands were IT related. In comparison, only 3 were IT related in 2003 when we started our research.
  • Interbrand, one of the larger brand analysts, published its ‘Most valuable brands 2013’ report in October 13. Upon evaluation 6 brands were IT related. In comparison, only 3 were IT related in 2003 when we started our research.
  • Interbrand, one of the larger brand analysts, published its ‘Most valuable brands 2013’ report in October 13. Upon evaluation 6 brands were IT related. In comparison, only 3 were IT related in 2003 when we started our research.
  • Other CxOs have different priorities.Although all include technology in their list of the top three forces, their views reflect their respective areas of focus:CFOs fret most about macroeconomic factors.CIOs, CMOs and CSCOs put more emphasis on market factors,While CHROs see people skills as the biggest issue.Is this a troubling disconnect? Not as long as the lines of communication are open. CEOs in outperforming organizations told us their teams work particularly well together. That enables them to create substantial advantage by integrating multiple perspectives.
  • In an era of abundant connectivity and information, and ubiquitous digitization, the new economic equation favors transparency:In search of innovation, more than half of CxOs expect to open up their enterprises — bringing down barriers to extend collaboration inside and outside.Some 60 percent of CxOs now look to partners who will have an equal hand in creating business value.And almost half are sourcing innovation from the outside.Nearly seven in ten CxOs recognize the new imperative — a shift to social and digital interaction.Over half expect to meet an even more difficult demand: understanding and engaging the customer as an individual rather than as a category or market segment.
  • When we published our first study in 2004, CEOs ranked their own customers sixth on the list of all market factors they believed would drive the most change in their organizations. Today, digitally enfranchised and empowered customers lead the agenda for every CxO profession.More than half of CxOs say customers now have a considerable influence on their enterprises.
  • In fact, CEOs told us customers exert a bigger influence on their organization’s business strategy than all but the C-suite itself.But accepting customers as active stakeholders is one sure way to quell the factions and unite the C-suite in a common purpose.CxOs asked to give up autonomy and customers wary of being targeted will need to find new, more collaborative ways of working together that engender trust. The erosion of trust poses a serious challenge for many organizations, and in some cases whole industries, as they seek to return to growth.If one issue has the potential to unite the C-suite to act in concert, establishing trust-based relationships with customers stands at the top.
  • Instead, CEOs stand ready to relinquish absolute control of what is typically considered their domain — developing business strategy.
  • A growing number of CEOs believe customer influence shouldn’t be confined to activities in which customers have traditionally participated, such as developing new products or services.
  • In two-thirds of the organizations that outperform their peers, leaders are not just managing customer experiences; they are reorienting their organizations, strategies and investments to cultivate contemporary relationships across all manner of customer interactions.Some of the most advanced enterprises are establishing customer advisory boards to get direct input on strategic issues.
  • Deep collaboration is a universal ambition: nine out of ten CxOs foresee doing so in the near future.Accepting customers as stakeholders in determining an enterprise’s future has huge cultural and organizational implications. These businesses can’t just be customer-centric. They must be customer-activated. That requires creating fully reciprocal relationships with customers.It means being ready — and willing — to change course to pursue those paths that create mutual value. And it requires finding ways to include customers in key decisions. It also involves building a workforce that is both willing and able to engage with customers on a regular basis and providing them with an opportunity to share their insights within the larger company.
  • CxOs are adjusting their priorities accordingly in a subtle rebalancing act.They plan to spend less of their personal time on IT systems and operations and other such issues, and more time improving the customer experience.
  • CxOs intend to use digital channels much more extensively to engage with customers in the future. And here’s one instance where they’ve already embraced the shift:In 2012, 57 percent of CEOs expected digital channels to become one of their company’s key means of interacting with customers within the next five years.In 2013, 52 percent of CxOs say they are already there.
  • The problem? Two-thirds of enterprises have a weak digital-physical strategy — or none at all. Some organizations are reconfiguring their offerings to capitalize on social networks and mobile connectivity. Others are reshaping their operating models to inject customer input into every aspect of the buying and selling chain. But they’re often not doing both at once.
  • CMOs, in particular, consider it critical to put the components of a strong digital strategy in place. They want to overhaul every aspect of the customer interface.
  • CMOs, in particular, consider it critical to put the components of a strong digital strategy in place. They want to overhaul every aspect of the customer interface.
  • This is surprising, given that 76 percent of CxOs aspire to know their customers better.Watson’s analysis exposed the urgency that’s driving the C-suite: rising customer expectations, decreasing tolerance, the limited insights face-to-face contact with customers provides.
  • Absent a social strategy, CxOs are missing much of the equation, and there’s a huge payoff for making the effort.The better an enterprise understands its customers, the more likely it is to thrive.
  • The most progressive enterprises analyze social data to understand customers’ core values and what’s happening in their lives. Such attributes, when well understood, lay the base for customer experiences tailored to the individual. They get us closer to cracking the “social genome”: the traits that make each of us uniquely human.And outperformers show the way. CxOs in these enterprises are 29 percent more likely to plan on spending more time crafting engaging customer experiences.
  • In the words of HuubDevroye: “It’s a race to the finish line. The companies that best understand all aspects of the value chain and get a 360-degree view for the customer experience will win.”
  • The right partner for a changing world: At IBM, we collaborate with our clients, bringing together business insight, advanced research and technology to give them a distinct advantage in today’s rapidly changing environment.The IBM Institute for Business Value, part of IBM Global Business Services, develops fact-based strategic insights for senior business executives around critical public and private sector issues.
  • The Customer Activated Enterprise

    1. 1. IBM Institute for Business IBM Institute for Business Value
    2. 2. The IBM global C-suite Study draws on a decade of research with over 20,000 interviews CEOs CIOs CMOs 6,300 7,000 2,200 600 IBM Institute for Business Value CSCOs CFOs CHROs 4,500 1,500
    3. 3. This study covers 4,183 face-to-face conversations with CxOs in 70 countries North America Western Europe Central and Eastern Europe 605 1,349 304 631 Japan 637 475 South America IBM Institute for Business Value 182 Middle East and Africa Asia Pacific
    4. 4. Our respondents represent a wide range of public and private-sector organizations, covering more than 20 industries 13% 13% Communications Sector Distribution Sector 23% Financial Services Sector 4,183 interviews 29% Industrial Sector Public Sector 22% IBM Institute for Business Value
    5. 5. We compared outperformer and underperformer responses and have highlighted key differences Three performance categories Outperformers High revenue growth and high profitability Underperformers Low revenue growth and low profitability 8% 25% 2013 67% Peer Performers All other performance combinations Particular attention on Outperformers → In this study we focus on common performance factors, while we highlight the most significant differences between out- and underperformers → Relative performance is defined by self-assessment of revenue growth and profitability compared to industry peers
    6. 6. Much has changed since 2004: digitization has given customers far more clout and transformed their expectations 2004 Focus on on cost reduction Focus cost reduction to deal with increasingly to deal with increasingly global competition global competition 2008 Business models evolve to Business models evolve enable external partnerships to enable external and collaboration partnerships and collaboration IBM Institute for Business Value 2014 The digitally active customer moves to the top of the C-suite agenda
    7. 7. CEOs consider technology the single most important external force shaping their organization’s future CEO Studies 2004–2013 2006 2008 2010 2012 1 1 1 1 1 2 2 2 2 2 2 Market factors 3 3 3 3 3 3 Macro-economic factors 4 4 4 4 4 4 People skills 5 5 5 5 5 5 Regulatory concerns 6 6 6 6 6 6 Socio-economic factors 7 7 7 7 7 7 Globalization 8 8 8 8 8 8 Environmental issues 9 IBM Institute for Business Value 2004 2013 9 9 9 9 9 Geopolitical factors Technology factors
    8. 8. In the most recent Interbrand study of most valuable brands 6 were based on information technology IBM Institute for Business Value 10 most valuable brands in the world
    9. 9. In the most recent Interbrand study of most valuable brands 6 were based on information technology IBM Institute for Business Value 10 most valuable brands in the world
    10. 10. Good to see already 5 out of the top10 brands being involved in the Marketing Transformation Forum IBM Institute for Business Value 10 most valuable brands in the world
    11. 11. All CxOs think technology is one of the top three forces External forces impacting the enterprise (3–5 years) CEO CFO CHRO CIO CMO CSCO Market factors 2 2 2 2 2 2 Macro-economic factors 3 3 3 3 3 3 People skills 4 4 4 4 4 4 Regulatory concerns 5 5 5 5 5 5 Socio-economic factors 6 6 6 6 6 6 Globalization 7 7 7 7 7 7 Environmental issues 8 8 8 8 8 8 Geopolitical factors 9 9 9 9 9 9 Technology factors IBM Institute for Business Value
    12. 12. CxOs expect to reframe their approach, shifting to more collaboration and open business models with customer and partners Business landscape changes 20% Smaller partner 11% base Face-to-face 20% interaction Partnering to 25% increase efficiency Focus on customers % as segments 33 Operational control 73% Bigger partner network 68% 61% 54% 28% 20% IBM Institute for Business Value 52% Neutral 20% 40% 60% Social/digital interaction Partnering to increase value Focus on customers as individuals Organizational openness
    13. 13. CxOs aren’t just listening to customers; they are compelled to act and change course, in response to the direct influence of the customer Customer influence on the enterprise 10% 54% 36% Large extent IBM Institute for Business Value Influenced to a large extent Some extent 54% Limited extent
    14. 14. CEOs say customers come second only to the C-suite in terms of the strategic influence they wield Key influencers of enterprise strategy 20% 78% C-Suite 55% Customers 53% Board of Directors 44% Corporate strategy function Non-executive senior leadership 26% Key external business partners 25% Parent company 23% 0% IBM Institute for Business Value 20% 40% 60% 80% 100%
    15. 15. CEOs stand ready to involve customers in what is typically considered their domain: developing business strategy Customer inclusion in business strategy development 43% % 40more Today 60% 43% 60% IBM Institute for Business Value 3–5 Years
    16. 16. CEOs share control with customers – and expect their influence on business strategy to grow the most Areas of the business where CEOs want to include customers 82% New product and service definition 71% Product/service testing 20% Customer policies and procedures development 59% Environmental and social policies development 56% 50% 33% 45% 36% Product/service sourcing Privacy and security policy validation 33% 0% 20% Today IBM Institute for Business Value 60% 48% Pricing structure development 75% 72% 43% Business strategy development 90% 44% 40% 60% 3–5 Years 80% 100%
    17. 17. Deep and trusted relationships with customers pay off: more outperforming organizations collaborate extensively with customers Greater collaboration with customers translates into greater financial success 39% more 54% Underperformers 60% Outperformers IBM Institute for Business Value
    18. 18. Deep collaboration is a universal ambition: nine out of ten CxOs foresee doing so in the near future CxOs plan to collaborate much more extensively with customers 90% 46% % 96more Today 90% 3–5 Years 46% IBM Institute for Business Value
    19. 19. Recognizing the change in customers’ expectations, CxOs are rebalancing their priorities Areas of personal involvement 20% Customer experience management +8% eCommerce +7% +5% Talent management Supplier, vendor and partner management -5% Risk and security -5% IT systems and operations IBM Institute for Business Value -6%
    20. 20. CxOs intend to interact digitally with customers to a much greater extent in the future Customer interaction channels 52% Digital 88% 20% ] 69% more 80% Face-to-face 70% 57% Call centers 48% 45% Traditional media 24% 0% 20% Today IBM Institute for Business Value 40% 60% 3–5 Years 80% 100%
    21. 21. As competitors cross industries, the intersection between the digital and physical becomes the leading edge of innovation Types of digital strategy 33% 36% 36% have an integrated digital-physical strategy 31% Integrated digitalphysical strategy IBM Institute for Business Value Limited digital strategy No digital strategy
    22. 22. CMOs plan to put the components of a broad digital strategy in place throughout the organization Digital ambitions – CMOs 87% 16% Integration of cross-channel touchpoints 13% 83% Analytics to capture customer insights 20% 78% Social networks to foster collaboration 13% 73% Workforce aligned to opportunities 11% 69% Digitally enabled supply chain Today IBM Institute for Business Value 3-5 Years
    23. 23. In line with CMOs, four-fifths of CIOs aim to digitize their front office to sync with customers more effectively IT focus area – digitizing the front office 5% 12% % 83 will focus on front office digitization 83% Large extent IBM Institute for Business Value Some extent Limited extent
    24. 24. Most CxOs recognize that they don’t understand their customers well today, yet anticipate greatly improving going forward High level of customer understanding 35% 76% % 117more Today 35% IBM Institute for Business Value 76% 3–5 Years
    25. 25. The more deeply an enterprise understands its customers, the more likely it is to flourish High level of customer understanding 29% % 62more Underperformers 47% Outperformers IBM Institute for Business Value
    26. 26. CxOs in outperforming enterprises are focusing more heavily on improving the customer experience Focus on improving the customer experience 42% more 29% Underperformers 54% Outperformers IBM Institute for Business Value
    27. 27. “ ” IBM Institute for Business Value It’s a race to the finish line. The companies that best understand all aspects of the value chain and get a 360-degree view for the customer experience will win. Hubertus (Huub) Devroye Director of Global Marketing and Demand Generation The Dow Chemical Company, Switzerland
    28. 28. IBM Institute for Business Value
    29. 29. IBM Institute for Business IBM Institute for Business Value

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