Global CEOs speak: Creativity is key to managing complexity

MANILA, Philippines - Creativity is the most important leadership quality in an increasingly complex world.

This was the result of a recent IBM study that interviewed global chief executives from September 2009 to January 2010 regarding their insights on managing complexity.

“Creative leaders expect to make deeper business model changes to realize their strategies. To succeed, they take more calculated risks, find new ideas and keep innovating in how they lead and communicate,” the CEOs said.

“To capitalize on complexity, CEOs must lead with bold creativity, connect with customers in imaginative ways and design operations for speed and flexibility,” they added.

The study is the fourth edition of IBM’s Global CEO Study series led by the IBM Institute for Business Value and IBM Strategy and Change. Some 1,541 CEOs, general managers and senior leaders in 33 industries in 60 countries were interviewed for the study, the largest known sample of senior executives according to IBM.

In addition to CEO interviews, 3,619 students from more than 100 major universities around the world were also interviewed to provide insights on the views of future leaders.

In the past three global CEO studies, CEOs consistently said that coping with change was their most pressing challenge. In 2010, the CEOs identified complexity as the new primary challenge, with 79 percent of the respondents saying they are expecting even greater complexity ahead.

Multiple dimensions

“We occupy a world that is connected on multiple dimensions, and a deep level  a global system of systems,” Samuel Palmisano, IBM Corp. chairman and CEO, said in a note to his fellow CEOs in “Capitalizing on Complexity,” which was published after the study was completed.

“That means, among other things, that it is subject to systems-level failures, which require systems-level thinking about the effectiveness of its physical and digital infrastructures,” he added.

Technology is at the heart of this complexity, a world that is “massively interconnected with broad-based convergence of systems.” Thus, it is believed that it is no longer sufficient or even possible to view the world within the confines of an industry or discipline, or a process, or even a nation.

The study showed, among other things, that most CEOs doubt their ability to cope with rapidly escalating complexity in a drastically different world with increasingly interconnected economies.

Yet, there are standouts  organizations that have consistently performed well and have historically delivered solid business results even in the recent economic downturn. Most have registered higher year-on-year operating margins and revenue growth that is at least six times higher.

Creative leadership

The good news is that they come from every industry and every part of the world. What are they doing right? According to the CEOs, creative leadership is key.

“Creative leaders consider previously unheard of ways to drastically change the enterprise for better setting the stage for innovation. They are also comfortable with ambiguity and experimentation,” the study said.

At least 60 percent of CEOs said creativity is the most important leadership trait, followed by integrity (52 percent), and global thinking (35 percent).

Like CEOs, six out of 10 students also interviewed for the study rated creativity among the top three leadership qualities but students stressed global thinking more than CEOs, and included focus on sustainability.

CEOs recognize that leading creatively will require them to shed some long-held beliefs and share the view that leaders must be ready to upset the status quo and commit to ongoing experimentation.

“It is not that CEOs are just now becoming aware of the importance of creativity, but today creativity has been elevated to a leadership style,” the study said.

Of the CEOs who selected creativity as one of three top leadership qualities, 10 to 20 percent were more likely to pursue innovation through business model change.

“Continual business model innovation is similar to the way product designers keep improving their offerings based on ever-changing customer preferences,” the study said.

Now, it is no longer advisable to set apart “creative types” in siloed departments like product design; it is necessary to equip the entire organization to be a catalyst for creativity.”

CEOs advise: lead with bold creativity, connect with customers in imaginative ways, and design operations for speed and flexibility  “Creative leaders are comfortable with ambiguity and experimentation.”