CEOs Looking to Extermal Sources for Innovation

According to IBM's "Global CEO Study 2006," 76% of the 750 of CEOs and business leaders interviewed for the study ranked business partner and customer collaboration as top sources for new ideas. This greatly contrasts with internal R&D, which ranked eighth as a source for new ideas -- cited by only 14% of CEOs. However, only 51% say their organizations currently collaborate extensively.

The study also suggests a link between collaboration and financial performance. Companies with higher revenue growth report using external sources significantly more than slower growers do. Outperformers used external sources 30% more than underperformers. Additionally, CEOs stated that the top benefits from collaboration with partners are: reduced costs, higher quality and customer satisfaction, access to skills and products, increased revenue, and access to new markets and customers.

On collaboration, one CEO said "We have at our disposal today a lot more capability and innovation in the marketplace of competitive dynamic suppliers than if we were to try to create on our own." Another commented that, "We need third parties as benchmarks and sparring partners. This also helps our staff to broaden their view." While another stated simply "If you think you have all of the answers internally, you are wrong."

In terms of driving innovation, CEOs stated that internal inhibitors were more significant than external hurdles. However, only 35% of CEOs were willing to take on these inhibitors by making innovation a CEO responsibility. The study reveals stark contrasts in varying geographies in terms of the responsibility for innovation. For example, in Japan, China, Korea and Eastern Europe, 47% of CEOs take strong ownership of the innovation agenda, versus 20% in India and the United States, where innovation management is widely distributed within the organization and externally via business partners and others.