Fortune magazine came out with its annual survey of Fortune 500 CEO’s last week. My favorite question is when they ask CEO’s to name their biggest challenges. I pay attention to the responses because what people are worried about has a way of changing their behavior (including what they spend money on).
So what’s the top worry on the minds of the CEOs of some of the world’s largest enterprises this year? Once again it was the “pace of technology change”. It was listed by an impressive 73% of respondents as either their top challenge or among the top three or four. Not regulation (40%) or skilled labor (36%) or geopolitical risk (26%). Nope. They’re concerned about technology disrupting their market position.
Whether it’s artificial intelligence in financial services or autonomy in automotive, their industries are being radically impacted by digitization and fast-moving innovation. And both Wall Street and Boards are proving to be harsh judges when companies are viewed as not moving fast enough.
We see the impact in our work every day as large enterprises seek new strategies to move faster and become more adaptable. Increasingly these strategies include engaging with external innovators to access the best emerging solutions across the wide array of strategic technologies. Boston Consulting Group, in their January 2017 report on The Most Innovative Companies – 2016 described the importance of accessing external innovation:
“The pace of technology-driven change is faster than ever before—we are seeing both more-rapid technology development and the quicker impact of new technologies in virtually all aspects of business (as well as daily life). To keep up, tech natives and non-tech companies alike must continually be on the lookout for promising new technologies and then incorporate them into their operations.”
The shift from centralized R&D to a hybrid of internally and externally-driven innovation has been underway for decades. But when it’s keeping 73% of CEOs up at night, it’s fair to say that the issue has taken on new significance. Navigating in this competitive environment requires a new set of best practices. The enterprises that adopt them first will win in the market … and those that lag behind will have sleep deprived CEOs.