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Unformatted text preview: ,3 xlzfivdflrfldfiflfil . cor A QUESTION about how to run your business? Ask 6,000 CEOs, CIOs, and CF05 from companies of all sizes. IBM did just that for the latest round of what it calls C—suite Studies. At GOOD, we think it’s worthwhile to peek through this window into the psyche of the contemporary executive brain. So, collected here lof3 4 g» Creative Solutions to Complex Problems RESPONDING To CHANGE hastypically been the primary duty of a chief executive officer, but even change is changing. IBM interviewed more than 1,500 CEOs and, unlike in previous CEO studies, in this survey the CEOs reported that complexity, not change, is the primary chal- lenge before them. What does complexity mean? That new trends are interacting, creating levels of volatility, unpredictability, opportunity, and threat in forms never encountered before—be it upstart companies, market movements, the pro- liferation of data, or heightened expectations and scrutiny from customers. Almost 80 percent of CEOs surveyed said they see the world becoming even more complex in the years to come, but just under half of these executive suite occupants feel ready for it. This doesn’t mean they aren’t trying. The 51 percent . who admit they don’t have all the answers as they confront an onslaught of uncertainty may just end up being the business leaders of the com- ing decade. IBM calls the difference between the number of CEOs who see uncertainty coming and those who don’t feel confident in their ability to manage it the “complexity gap.” But complex- ity, while sometimes threatening, also offers great opportunity. So how to harness the unknown for profit? Be creative. For the first time in these studies, are a few of the key takeaways from each of the three latest studies, and discussions with three corner-office holders at companies in GOOD’s orbit about how these lessons apply to their enterprises. - 6000 creativity was cited as the most important lead- ership quality by CEOs, over more traditional management talents. Speed, operational dexter- ity, and experimentation are all valued more than ever under this mind—set. The most successful CEOs today are honing their organizan'ons to be nimble, responsive, and resourceful, while also being creative in improving customer relation- ships. In facing complexity, CEOs who respond with creative solutions are the ones who have - turned it into financial advantage. LEADERSHIP QUALITIES SE03 sAiYFARE THEM ' 03mm OVER THEN’tu FJVE YEAR on c: o\° - CJ‘I m o\° Global Thinking: CID CJ‘I ,\° Influence, AN INTERVIEW l YSQ‘\ fl i l i ; >W. Engaging More in Business Strategy THE 2.009 STUDY wasthefirstinwhich IBM surveyed chief information officers, and it found what sets the best-performing CIOs apart: strategic thinking, not just IT management. CIOs at the better-performing companies behave differently than the rest, in two key ways. They get involved in creating income, not just creat- ing internal IT solutions. CIOs at higher-growth companies also get involved strategically to help foster innovation in general. This could mean convincing the company to adopt or use new technology to make products, or it could mean streamlining processes to save money, like initi- ating new ways to communicate both within the company and with the customer. More and more, customers expect enhanced communication and responsiveness from a com- pany. They expect technology to facilitate that and, as a result, to offer more transparent access to company production and decision-making processes in exchange for valuable customer loyalty. The CIO has a dual opportunity in this trend: to facilitate bonds with customers, and to capture data from interactions in a way that can provide valuable insights—like what new prod. uct to develop, or which one to kill. The study identified one way in particular that CIOs can enable creativity: standardization. It seems counterintuitive in some respects, but the CIOs at the better-performing companies say they can enable more nimble reactions to mar- ket forces if the technology infrastructure they employ is simple, scalable, and consistent across the Whole company. CIOs in high-growth orga-' nizations place more weight on standardizing business practices and automating activities, like gathering data from interactions. In fact, more than three—quarters of the CIOs in the study predict they will have “strongly centralized” IT infrastructures within the next five years. Why does falling in line enable creativity? Because to communicate in new ways, and measure it all, means you need a common language—within the company and with the customer. HOW CIOs SPEND THEIR-TIME; 1, j, On income- generating activities: On cutting costs: _‘_______’_____._ AN INTERVIEW / + Optimizing the Value of Data WHILE CREATIVITY MIGHT BE a buzz— word for CEOs to be inspired by, you typically don’t want your CFOs to get artistic with their work. But IBM’s interviews with 1,900 financial leaders found that companies do need creativity in the finance sphere. We don’t mean creative accounting—the euphemism for impropriety—but creative thinking about value and impact, as well as creative ideas for company strategy based on the hard data for which finance departments are known. In other words, the job of the CFO isn’t just accounting anymore; it’s providing a key voice in company strategy too. The study finds that CF03 at the best—performing companies pair solid number skills with savvy revenue thinking. - Part of that still involves cutting costs but, more and more, CF05 at the most effective companies report fostering innovation as a growing part of their jobs. For that, it helps to be nimble and to hone the abil- ity to quickly develop measurements and metrics to accurately monitor activities, both native and novel. A company with a CFO thinking about initiatives early and accurately lowers the cost of experimen- tation and increases innovation opporttmities. That CFO can also give a company predictive insight into trends or product performance, and that trans- lates into a competitive edge. This kind of lesson is doubly true for businesses that have to measure not only money but also so- cial and environmental impact, and thenbalance all three to deliver an assessment of integrated value. Product monitoring often goes beyond the point of sale, all the way to the home, the trash, and then the landfill. The growing role of the CFO_ as strategist does not in any way imply that they aren’t still primar- ily focused on ensuring fiscal responsibility and delivering accurate, efficient, and traceable trans— actions all up and down the company. They have " to do the old work———and the new. “ PERCENTAGE OF tins was REPORT THESE- BUMPANY~WIUE icnvas AS cmmn; r Measuring and Providing input monitoring business into enterprise performance: strategy: ,. 85% 80% Driving enterprise Supporting, cost reduction: managing, and mitigating O enterprise risk: Driving integration 0 77 A’ of information across the enterprise: M he trash, ;ist does 1 primar- lity and )le trans- tey have NAME: methOd. FOUNDED: 2.001 SIZE: $100 MILLION AND GROWING 5000: What major change or risk do you see on the _ horizon that will change your business? AHQREA FHEEDMAN: Positive drivers are: Gen Y [con- - sumers] and baby boomers who shop their values; eco-friendly cleaning products are growing faster than traditional cleaners; and growth in online retail across all categories. The negatives are: The pace of emer- gence from the recession makes forecasting growth more challenging; and aggressive price promotion in our categories impacts not only consumer behavior but retail partner activity as well. 6: What metrics do you use for success at Method? And who gathers that data and sets the standards for that data? AF: Method's leadership team completed a three-year strategy in 2009, with five key areas of focus: 1. Ignite our unique people and culture; 2. Drive trial and aware- ness; 3. Deliver breakout innovation in everything we do; 4. Be the choice of the consumer in the store; 5. Expand margins. There are several specific tactics within each of these five areas. We developed key financial and perfor- mance metrics to measure our progress against spe- cific items we wanted to accomplish this year. We update them once a month on a one-page scorecard (this is not an automated process), and we share these metrics with the company at an ongoing employee “huddle.” G: How do you calculate the unit cost of a product when your metrics need to go beyond money? AF: Environmental sustainability is a winning approach if you embrace it as a creative constraint rather than as a trade-off in cost or efficacy. Our laundry detergent is an example: Our innovations in formula and packag- ing save water and plastic, while the detergent's small carbon footprint saves logistics costs for our suppliers ANDREA FREEDMAN is rechar- Method, 4 toxin-free cleaningfsupply company, and retail partners; that's What customers want. We have return-on-investment benchmarks that we expect every product to pass through to ensure that we are creating value with each dollarinvested in research and development, but we are not placing a specific . environmental cost or value on a product. It: Can you give an example of some meaningful business strategy insights or recommendations resulting from finance operations that added value to Method? AF: We measure profitability by category, by stock- keeping unit, and by customer. We also measure ROI on new product development initiatives, so we have good quarterly insights on key activities. Based on this work, we’ve recommended exiting entire categories, and even from time to time [dropping] a customer. As a result, we've seen material improvement in gross margin over the past few years. 6: How have external forces changed your role over time within Method and how you do your job? AP: The growth stage of our business has had more of an impact on my role with Method versus external forces. In the early years, I saw my role as an “enabler,” ensuring the company had adequate cash (the right balance between equity and debt) to test, learn, and achieve meaningful share in the marketplace as fast as we could. Over time, as the business has matured, it's as important (if not more) for me to provide and reinforce the right financial constraints into the mix, so that we can grow not only the top line but our profitability as well. I By ALEX GOLDMARK Design by OLIVER MUNDAY dgré’é It’sjt‘hfat they}_ .. n’tafi‘ord t0 dlsagree,’l Smarter business for a Smarter Planet: = Let the wisdom of 6,600 senior business leaders bring a single vision to your organization. As the business world becomes increasingly complex, so do the challenges facing today’s senior business leaders. And though CEOs, CiOs, CFOs and CHROs agree that complexity is at an all-time high, they have differing views on what’s driving it, and more importantly, how to address it. To better understand these views, iBM interviewed over 6,600 senior executives In 75 countries across 60 industries. The result is the iBM C—suite Studies Series, a comprehensive collection of thought leadership on managing complexity. Each study within the C-suite Studies Series has-the distinction of being the largest of its kind to date, delivering essential insight that can lead your organization to a common understanding of goals, and a shared vision to drive success. A smarter business needs smarter thinking. Let's build a smarter planet. Get the complete iBM C-suite Studies Series today at ibm.com/cserie35 \ I - -——-— - ——-— - _—_- — —--—- —_—'— ——_ v_® iBM. the IBM logo. ibnwotn Smarter Planet and the pianet icon are trademarks of international Business Machines Corn. rendered in many jurisdictions worldwide other product and service names might he trademarks oi iBM or other companiesA current list at IBM trademarks is available on the Web at wwwflmoomllagallmpyhadeshhnm International Business Machines Corporation 2011- ...
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This note was uploaded on 02/22/2012 for the course CSR 309 taught by Professor Staff during the Fall '08 term at Purdue.

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summary - ,3 xlzfivdflrfldfiflfil cor A QUESTION...

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