In the wake of the COVID-19 pandemic, cloud computing, artificial intelligence and the Internet of Things have emerged as the top essential tools for businesses to not only survive, but to thrive. Companies that invested in these areas performed better than their peers during the disruptions of 2020, a major new study from the IBM Institute for Business Value finds.
For the study, IBM, in cooperation with Oxford Economics, interviewed 3,000 CEOs from nearly 50 countries and 26 industries.
“We discovered eye-opening surprises that reflect just how unprecedented the next era will be, with new priorities and new areas of focus,” the IBV report says. “From emerging expectations around remote work to accelerated technological adoption, the leading practices of yesterday and requirements of tomorrow are far from aligned.”
After the uncertainty of 2020, CEOs stress organizational agility—the capability of an organization to respond quickly and pivot without losing momentum—as a top priority for leaders.
IBV’s research showed that 56 percent of CEOs emphasize the need to “aggressively pursue” operational agility and flexibility over the next two to three years.
CEOs recognize that the new way of driving flexibility and delivering innovation can only be realized with an empowered remote workforce. IBV found that 61 percent of CEOs say empowering remote work is their top concern.
The 3,000 CEOs surveyed cite technological factors as the number one most important external force that will affect their enterprises over the next two to three years.
The IBV study found that during COVID-19, more tech-savvy organizations outperformed their less tech-savvy peers on revenue growth by an average of 6 percentage points, across 12 industries.1 In related research, 60 percent of executives surveyed said they are accelerating their companies’ digital transformations during the pandemic.
Technology not only enables agility—it is central to enabling a hybrid workforce, as well as both operational efficiency and customer engagement.
Which technologies are most important? The new CEO survey results rank IoT (79 percent), cloud computing (74 percent), and AI (52 percent) as the top three technologies expected to help deliver results.
IBV noted that the differences between out-performers and under-performers boiled down to five key areas:
Leadership. Across the study, out-performers demonstrate a far more focused set of priorities than under-performers. Out-performers are not passively gathering information or hedging their bets waiting for the dust to settle. Among the respondents, 85 percent of out-performers cite leadership as critical to business performance. Only 69 percent of under-performers report the same priority.
Technology. The CEOs of under-performing organizations tend to under-appreciate the impact of technology, focusing instead on traditional marketplace concerns. The CEOs of out-performers are focused on forward-looking risks and opportunities of emerging technologies. Emerging tech must be built on something, and outperforming CEOs identify tech infrastructure as a top challenge twice as often as under-performers. The specific figure, 62 percent of outperformer respondents, is significantly higher than that received by any of 17 other specific challenges IBV asked about. This also underscores the appreciation by out-performers of how quickly technology continues to move, as well as how laggards overlook that factor.
Employees. Outperformers also focus more on employee well-being, with 97 percent more of them than under-performers supporting workforce health and wellness even if it costs near-term profit.
Open innovation. Looking ahead, 47 percent more out-performers than under-performers expect to aggressively pursue establishing flexible partner networks. They stress customer relationships and experiences at 68 percent and 59 percent higher rates, respectively, than under-performers, indicating a more outward-looking perspective. In other words, organizations are forming fewer partnerships.
But out-performers stand out in their recognition that the partnerships they do engage in are more important—and more valuable—than ever.
Cybersecurity. In parallel with their deeper focus on ecosystems, remote activities, and technology overall, Outperformers distinguish themselves from under-performers in one more significant area: a heightened focus on cybersecurity. Some 26 percent more out-performers than under-performers identify cyber risk as among their greatest challenges over the next two to three years. The number two factor out-performers will aggressively pursue is securing data and systems. Furthermore, 31 percent more out-performers than under-performers cite security and risk as an area where they expect technology to have the greatest impact.