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For our first post of 2006, we’re starting way upstream of IT – by looking at what CEOs’ top business priorities are for the coming year. After all, it’s these priorities that will ultimately drive corporate IT investments in the months ahead.

With this goal in mind, in December we asked over 200 line-of-business (LOB) executives to indicate which among a long list of business improvement initiatives top their CEOs’ agendas for the year ahead. The top five responses are listed below, along with how each ranked in last year’s survey.

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As you can see, the most interesting shifts – compared with last year’s list – are the surge in focus on product innovation, as well as on improving the IT organization. The former supports what we’ve been seeing in the past year or more: a shift in many businesses from cost-cutting as the lead strategy, to more aggressive growth-oriented strategies – driving more executives’ attention toward improving product (and service) innovation flow and hit rates. The growing focus on improving product innovation makes sense, considering that it sits upstream of virtually all other business activities: shaping the business’ value proposition, defining much of the company’s differentiation, and directly impacting profitability as well as sales and marketing productivity.

The jump in priority for improving the IT organization is also a big deal. Indeed, for those who bought into the “IT Doesn’t Matter” theory, this finding may be surprising. What’s the reason behind the jump? The survey didn’t directly address that, but my suspicion – from many discussions with business executives – is that it’s yet another sign that LOB executives increasingly “get it”: that there are few process innovations (including both those that drive out costs and those that drive top line growth) that don’t depend on IT as a core part of operations.

In 2006, one of the most intriguing opportunites for CIOs and IT suppliers alike will lie in putting these two priority areas together, using management’s drive to improve innovation productivity as a catalyst to invest in IT that better supports high-volume, high-productivity innovation.

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3 Responses to “Product Innovation and Improving IT Are Rising As CEO Priorities in 2006”

The nanotechnology/biotechnology/information technology/cognitive science convergence (http://www.wtec.org/ConvergingTechnologies/) is heating up and there is an exponential growth curve in all of these areas.

Ten years ago, being innovative was a luxury or a nice diversion, but today it is a survival tactic. In many industries, they are a bit dazed and confused because we are experts at the things that are known and don’t quite know how to deal with this world of the unknown.

Here are a few keys to help:

1) Change and volatility are increasing exponentially (read the first chapter of the book “It’s Alive” by Christopher Meyer and Stan Davis.

2) Innovation today is often manifested as nano/bio/info/cognitive integration.

3) Innovation is a capability that is learned and can be enhanced, even mechanized, like any other capability (see Knowledge Machine at http://www.anti-knowledge.com/book/00_Title.htm). You can’t have innovative products without building, growing, rewarding this capability.

4) It’s what you don’t know that counts. Most businesses spend their precious resources managing knowledge that exists, instead of looking to and managing questions to find knowledge that does not exist. Questions and knowledge work in a cycle and ‘question management’ is more important to survival today than knowledge management.
(To better understand this knowledge/question cycle see http://www.anti-knowledge.com/convergence.htm)

5) Knowledge, innovation, questions, and performance are all ubiquitous in business. As such they work as a holistic system. You will suboptimize your business if you manage one without understanding all of the others together as a system.

6) If you think innovation is important now, just wait ten more years and see where it is when the exponential change curve explodes.

Bruce LaDuke
Managing Director
Instant Innovation, LLC
http://www.instantinnovation.com

[...] Very. Here are just two recent bits of evidence from IDC’s world. First, IDC’s latest Line-of-Business Executive Survey identifies innovation as the #2 (and rapidly rising) priority for respondents’ CEOs in 2006. [...]

[...] received quite a few requests for detail behind the CEO Agenda chart in Product Innovation and Improving IT Are Rising As CEO Priorities in 2006. Here is a revised version with the percentage responses for each of the major initiative [...]

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