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The Nation's CEOs Look to the Future
Study No. 818407 July 1998

A survey conducted for the: Foundation for the Malcolm Baldrige National Quality Award Data Collection: February-April, 1998

The results were tabulated and analyzed by: Louis Harris & Associates, Inc. 111 Fifth Avenue New York, New York 10003 212-539-9600


Executive Summary


Background/Methodology

This report presents the findings of a survey of CEOs commissioned by the Foundation for the Malcolm Baldrige National Quality Award. There were 308 respondents to the survey, conducted by mail between February and April, 1998, by Louis Harris & Associates, Inc.. The survey was sent to a nationwide cross section sample of 2500 CEOs of companies with revenues of $100 million or more. Larger companies had a higher probability of selection than smaller companies. Included in the sample were a small number of top managers of non-corporate organizations. The survey sample was provided by Dun & Bradstreet.

The purpose of the research was to find out what CEOs believe to be:
- major trends affecting U.S. companies;
- the competencies of US companies in relation to key trends;
- the needed improvements in CEO skills;
- the changing importance of different stakeholders;
- the types of companies likely to be major competitors in the next decade.

The survey concluded with two questions about the value of the Baldrige Criteria for Performance Excellence and the Baldrige award.

1. Major Trends
2. Rating the Competencies of Major US Companies
3. Improvement of CEO Skills
4. The Changing Importance of Different Stakeholders and Interests
5. Which Requires More Improvement: Developing Appropriate Strategies orr Executing them Effectively?
6. Which is More Important: Increasing Market Share or Expanding Market Size?
7. Who Will be the Most Serious Competitors In The Next Decade?
8. The Value of the Baldrige Criteria and Awards

1. MAJOR TRENDS (Table 1)
The leadership of corporate America sees a business environment subject to a large number of important trends.

Six trends affecting major US companies are judged to be "major" by more than 70% of the CEOs surveyed:
- globalization (94%);
- improving knowledge management (88%);
- cost and cycle time reduction (79%);
- improving supply chains globally (78%);
- manufacturing at multiple locations in many countries (76%);
- managing the use of more part-time, temporary and contract workers (71%).

Eight other trends were judged to be major by between 50% and 70% of the CEOs:
- developing new employee relationships based on performance (69%);
- improving human resources management (68%);
- improving the execution of strategic plans (68%);
- developing more appropriate strategic plans (64%);
- ongoing measurement and analysis of organizational processes (60%);
- developing a consistent global corporate culture (56%);
- outsourcing of manufacturing (55%);
- creating a learning organization (52%).

The very large number of those who believe all of the above are major trends is a reflection of the many substantial changes that are rapidly transforming American companies as we approach the end of the century. Keeping up with, let alone outperforming, the competition in this fast-changing world will surely require outstanding management skills.

2. RATING THE COMPETENCIES OF MAJOR US COMPANIES (Table 2)
The leadership of corporate America believes that most major corporations are not fully prepared to take advantage of the trends which they see as changing the business environment.

Only small minorities of the CEOs surveyed rate the competencies of major US companies as "excellent" on the list of nineteen items addressed in the previous question. The majority rate US companies as "fair" on fourteen of the trends. On five trends, majorities rate major US companies as either "fair" or "poor."

The most positive ratings for major US companies are for the following trends:
- cost and cycle time reduction (31% excellent, 52% fair);
- improving knowledge management and the use of new information technology (23% excellent, 55% fair);
- manufacturing at multiple locations in many countries (20% excellent, 59% fair);
- globalization (18% excellent, 70% fair); and
- developing more appropriate strategic plans (16% excellent, 66% fair). At the opposite end of the spectrum, CEOs give generally low ratings to major US companies on the following trends:
- giving more weight to long-term goals and relatively less to quarterly earnings (57% poor, 34% fair);
- hiring the best talent in developing countries such as Russia, India, China (31% poor, 26% fair);
- appointing CEOs and top managers who are not US citizens (30% poor, 28% fair);
- developing a consistent global corporate culture (43% poor, 44% fair);
- creating learning organizations (42% poor, 44% fair); and
- managing employee turnover (30% poor, 54% fair).

These generally low ratings show that - in the view of corporate America's leaders - major US companies have a long way to go before they will be able to take full advantage of the trends which they see as greatly changing the business world.

Examples of the big gap between expectations and capabilities include:
- Globalization: 94% of CEOs see this a major trend, but only 18% rate major US companies as excellent.
- Improving knowledge management: 88% of CEOs see this a major trend, but only 23% rate major US companies as excellent.
- Cost and cycle time reduction: 79% of CEOs rate this a major trend, but only 31% rate US companies as excellent.

Similar gaps exist for most of the trends which are anticipated.

3. IMPROVEMENT OF CEO SKILLS (Table 3)

Corporate performance and corporate competence are, of course, closely linked to corporate leadership. It is no surprise, given their other replies, that many CEOs believe they and their peers need to improve their performance on a broad range of skills. As the business world changes rapidly, top management needs to develop a wide range of new skills, which were less important in the past.

More than half of the CEOs surveyed believe they and their peers need to improve the following skills "a great deal":
- the ability to think globally (72%);
- the ability to execute strategies successfully (66%);
- flexibility in a changing world (63%);
- the ability to develop appropriate strategies (60%);
- the ability to rapidly redefine their business (54%);
- the understanding of new technologies (52%).

Between 40% and 50% of CEOs also believe that they and their peers need to improve the following skills a great deal:
- the ability to work well with different stakeholders (50%);
- the ability to create a learning organization (49%);
- the ability to make the right bets about the future (43%);
- the ability to be a visible, articulate, charismatic leader (41%);
- being a strong enough leader to overcome opposition (40%).

A review of the list of these different talents indicates just how difficult it is to be a CEO of a major company today and how many new and different skills are needed. Here again there is perceived to be a big gap between the skills CEOs need and the skills they have.

4. THE CHANGING IMPORTANCE OF DIFFERENT STAKEHOLDERS AND INTERESTS (Table 4)

In today's business world, corporate leaders have to work with many different important stakeholders. Most corporate CEOs believe that many of these are becoming even more important, whereas only a few are becoming less important.

Three-quarters, or more, of CEOs believe that the following stakeholders are becoming more important:
- international customers (90%);
- consumers (76%);
- employees (75%).

Majorities of CEOs also believe the following are becoming more important:
- suppliers (67%);
- outside board directors (63%);
- institutional shareholders (61%).

At the other end of the spectrum 70% of CEOs believe labor unions are becoming less important. A 46% plurality also believe individual shareholders are becoming less important.

5. WHICH REQUIRES MORE IMPROVEMENT: DEVELOPING APPROPRIATE STRATEGIES OR EXECUTING THEM EFFECTIVELY? (Table 5)

By almost a three-to-one majority (72% to 26%), most CEOs believe that US companies' execution of their chosen strategies requires more improvement than the development of appropriate strategies.

6. WHICH IS MORE IMPORTANT: INCREASING MARKET SHARE OR EXPANDING MARKET SIZE? (Table 6)
Most CEOs believe it is more important for major US companies to expand their markets than to increase their market share.

By a larger than four-to-one majority (81% to 18%) they believe that expanding their markets (increasing the size of the pie) is a more important priority than increasing their share of these markets.

7. WHO WILL BE THE MOST SERIOUS COMPETITORS IN THE NEXT DECADE? (Table 7)

There is no consensus among corporate CEOs as to who will provide the most serious competitors for companies which are currently in the Fortune 500 list.

A third (33%) believe the most serious competition will come from US companies who are not yet in the top 500 list. Almost as many (30%) see foreign companies as being the most serious competitors. One-sixth (18%) see start-up entrepreneurial companies as posing the greatest competitive threat. Only a small minority (12%) believe the toughest competition will come from other Fortune 500 companies.

8. THE VALUE OF THE BALDRIGE CRITERIA AND AWARDS (Table 8)
Significant majorities of the CEOs believe that the Baldrige criteria and awards are extremely or very valuable in stimulating both improvements in quality in US companies (79%) and improvements in the competitiveness of US business (67%).

Relatively few believe they are "not very valuable" or "not valuable" in improving quality (11%) or competitiveness (23%).







Baldrige Website comments:
baldrige@nist.gov


Date created: 06/28/1998
Last updated: 11/29/2011