Professional Documents
Culture Documents
Capitalizing on Complexity
Insights from the Global Chief Executive Officer Study
Paul Schumann
“This study is the fourth edition of our biennial Global CEO Study series, led by the
IBM Institute for Business Value and IBM Strategy & Change. To better understand
the challenges and goals of today’s CEOs, we met face-to-face with the largest-
known sample of these senior executives. Between September 2009 and January
2010, we interviewed 1,541 CEOs, general managers and senior public sector
leaders who represent different sizes of organizations in 60 countries and 33
industries.”
The beginning few paragraphs of the executive summary read, “In our past three
global CEO studies, CEOs consistently said that coping with change was their most
pressing challenge. In 2010, our conversations identified a new primary challenge:
complexity. CEOs told us they operate in a world that is substantially more volatile,
uncertain and complex.
Many shared the view that incremental changes are no longer sufficient in a world
that is operating in fundamentally different ways. Four primary findings arose from
our conversations:
Today’s complexity is only expected to rise, and more than half of CEOs doubt their
ability to manage it. Seventy-nine percent of CEOs anticipate even greater
complexity ahead. However, one set of organizations — we call them “Standouts” —
has turned increased complexity into financial advantage over the past five years.
The most successful organizations co-create products and services with customers,
and integrate customers into core processes. They are adopting new channels to
engage and stay in tune with customers. By drawing more insight from the available
data, successful CEOs make customer intimacy their number-one priority.
Now in line with “full disclosure” and “transparency”, I have to tell you that I worked
for IBM for 30 years. In the first ten years of my career with IBM I pursued
technology invention and development. I thought that IBM would be successful if we
were a leader in technology. In the second ten years I pursued innovation in
business practices and product development helping to create the first independent
business unit of IBM. Essentially we were doing what came to be called process
reengineering some years later. Having first found out that technology development
was stymied by the formal business practices of IBM, I then found out that changing
business practices did no good if the organizational culture remained the same. The
changes were only temporary and quickly snapped back to what they were before.
So, I spent the last ten years on organizational culture and how you change it. For
about the last seven years, I was a “grass roots” agitator for changing the values of
the culture to strengthen creativity, innovativeness, leadership (called situational
leadership at the time) and professionalism. After retiring from IBM I wrote a book
on my methodology titled Innovate!.
I’m sure that you have guessed by now that my message fell on rocky ground with
little soil in the 1980s.
Now, 30 years later and IBM is in the consulting business big time and touting, of all
things, creativity.
So, I read the report carefully, marking sections and quotes to call out in this
analysis I’m now writing. Unfortunately when I finished the report, I hit a brick wall.
The report repeatedly used key words like complexity, creativity, leadership and
innovation. These are words that I know well as I’ve lived them for 52 years. I also
know that they are some of the fuzziest concepts in the business lexicon. Just about
everyone has their own definitions of these words and very few of them agree with
each other. Furthermore, the report did not define the words making most of the
conclusions suspect. For example, when CEOs said that complexity was their
biggest challenge, what definition of complexity did each of them use.
Most of the time when the authors mention complexity, they are really talking about
complicatedness. If a system is complicated, cause and effect are related. If a
system has the characteristic of organized complexity, cause and effect are no
longer related. If the system is characterized by disorganized complexity, cause and
effect are again related, but statistically.
I’m guessing, but I think that this latter type of complexity is what the CEOs are
apprehending. Unfortunately the solutions being considered and the
Paul Schumann, PO Box 161475, Austin, TX 78716, 512.327.5449,
paschumann2009@gmail.com, http://insights-foresight.blogspot.com
3
recommendations made are not useful for this type of complexity, and may even be
harmful.
1, 2, a Few, Many
Capitalizing on Complexity