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IBM says big business is readying for change

Latest CEO survey finds execs are looking to partners and customers for new ideas about business processes. Photo: CEOs on collaboration

NEW YORK--CEOs are preparing for big changes in their companies in the next two years, according to a new study released by IBM on Wednesday.

Based on face-to-face interviews with about 750 CEOs and business unit heads of large global companies, the survey showed that 65 percent of the world's corporate chief executives are planning for radical change in their companies in the next two years, due to pressures from competition and market forces.

IBM's Business Consulting Services performed the survey, called the Global CEO Study 2006, last year. Big Blue executives shared the results at a press event here on Wednesday.

The survey found that CEOs are concentrating more on making big changes in their business models and operations instead of looking for ways to introduce products and services. In fact, approximately two-thirds of CEOs' efforts are now targeted at business model and operational innovation, according to the survey.

And much of this innovation is coming from outside the company. The study found that 76 percent of CEOs ranked business partner and customer collaboration as top sources for new ideas. This greatly contrasts with internal research and development, which ranked eighth as a source for new ideas.

One of the attendees at the press conference, Ronald Williams, CEO of Aetna, said that the health care benefits provider has made several specific changes to its business based on conversations with customers. For example, Aetna realized that its members will increasingly be responsible for the cost of their health care as medical costs rise.

As a result, he explained how Aetna used IBM's data warehousing products to develop special tools that allowed its members to directly compare the cost of their medical care. Using the online tool, they can compare the price of a doctor's visit or a medical procedure with that of a comparable physician or hospital before they actually show up for their appointment.

"It sounds like a pretty simple idea," Williams said. "But it hadn't been done before. Listening to what our customers needed forced us to innovate and ultimately develop new products for them."

While a large portion of CEOs recognize that big changes are on the horizon, a significant portion indicated some trepidation about their company's ability to make the necessary changes. According to the study, only 20 percent of CEOs said they have been highly successful at navigating through similar changes in the past.