2014 STRATEGY AND BUSINESS DEVELOPMENT REVIEW INSIGHTS FROM THE MANAGEMENT EVENTS EXECUTIVE TREND SURVEY EXECUTIVE TEAM AND CEO PERSPECTIVES

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This report is based on Management Events’ 6th Executive Trend Survey The survey identifies the challenges and business development activities of 8,774 decision makers in Top500 companies and largest public sector organizations in 9 countries.

© Management Events 2014. All rights reserved.

Executive Trend Survey is a biannual survey conducted by Management Events Surveys since 2011. The respondents are carefully selected decision makers who are invited guests at Management Events’ invitation-only events. These directors and managers are surveyed in terms of their position, decision-making responsibilities, upcoming development projects and their outlook for the next 18 months. More than 8,700 decision makers participated in our latest survey: Austria 856 Denmark 1,129 Finland 1,472 Germany 914 The Netherlands 1,401 Norway 617 Poland 438 Sweden 1,683 Switzerland 551

This report is based upon responses from 3,373 decision makers who defined having an active role in business management, strategy process and business development in their organization: Top/business management 1,164 Finance management 520 IT management 454 HR management 350 Sales and marketing management 267 Procurement and supply chain management 239 Production and product development management 293 Other directors and managers 86

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66 % of the CEOs and 58 % of other C-level decision makers think that their organization needs to act more customer-focused in order to succeed in the next 18 months. 47 % of the C-suite members say that their current business processes need renewal – to increase efficiency, automation and flexibility. 32 % of the strategic level decision makers in banking, finance and insurance sector will focus on business model innovations. 56 % of the CEOs say that their critical development activities in 2014 and 2015 will focus on sales and marketing development. Top business management’s main concern in R&D is commercialization of new products and services. 28 % of the CEOs believe that their business would benefit significantly from shorter time-to-market of products. CEOs in researched 9 markets expect CIOs to focus primarily on supporting business growth. Business analytics, finance solutions and CRM are the top three IT investment priorities for CEOs. 43 % of the CEOs who are planning to invest in big data believe that utilization of advanced analytics will improve customer profitability.

Key figures

Finding talent

11 %

Forecasting in changing

environment

18 %

Talent develop-

ment

19 %

Strategy renewal

26 %

Business process renewal

47 %

Execution of transformation

projects

53 %

Corporate strategic outlook: critical success factors

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Cost reductions

56 %

Development of customer orientation

60 %

Critical success factors in the next 18 months The major focus is on customers, profitability and corporate transformation. Only one out of ten decision makers predict that they might face a challenge in securing needed talents.

Customer focus is recognized as a strategic goal regardless of industry or business function. Top decision makers in the largest companies aim to build strategic partnerships with their customers and let customers influence their organizations’ future direction.

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Critical success factors in the next 18 months While there is no major shift to be seen, decision makers indicate slightly less need for cost reductions than a year ago. Adjusting to change remains a high strategic priority for CxOs. More than half of the executives say that it is critical for their company that ongoing transformation programs are successfully completed. Digitalization and changing customer demands are forcing companies to put more effort into renewing their current business processes – to increase efficiency, automation and flexibility.

15%

18%

19%

26%

44%

53%

58%

60%

11%

18%

19%

26%

47%

53%

56%

60%

Finding talent

Forecasting in changing environment

Talent development

Strategy renewal

Business process renewal

Execution of transformation projects

Cost reductions

Development of customer orientation2013

2012

Customer driven transformation is led by the CEOs. Seven out of ten CEOs say that their organization needs to act more customer-focused in order to succeed in 2014-2015.

CEO

66 % Other C-suite

58 %

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2013

Critical success factors in the next 18 months Decision makers across different markets vary in their views about which factors will be the most significant for their organization’s success, although all think cost reductions are one of the top three.

NORDICS D/A/CH

Denmark Finland Norway Sweden Austria Germany Switzerland Netherlands Poland

Development of customer orientation 2 1 2 3 1 3 1 4 1

Cost reductions 3 3 3 2 2 2 3 3 2

Execution of transformation projects 5 2 5 1 3 1 2 2 3

Business process renewal 1 4 1 4 4 4 4 1 5

Strategy renewal 4 7 4 5 5 5 5 5 4

Talent development 7 5 7 8 6 6 6 6 7

Forecasting in changing environment 6 6 6 7 7 7 7 7 6

Finding talent 9 8 8 6 8 8 8 9 8

Strategic development initiatives

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Business strategies – top development initiatives in the next 18 months Majority of strategic level decision makers are going through a strategy implementation process. As foundations of many industries are shaking, four out of ten indicate that innovative and fresh business models are needed.

16%

17%

25%

26%

41%

58%

Expanding into new markets

Expanding into new business areas

Creating new business models

Defining business growth strategy

Development of business strategies

Strategy implementationBanking and Finance

Insurance

Energy

Telecom

Retail

Machinery

Media

Wholesale

114

72

69

68

67

48

39

33

Food and Beverage

Automotive

32

30

The number of respondents per industry who said that their main development initiatives focus on creating new business models.

10 industries that invest the most in new business models Digitalization, customer demands, regulation and competition drive finance, energy, telecom and retail companies to seek new business models.

45%

26%

30%

27%

22%

28%

39%

44%

19%

33%

25% 25%

31% 33%

20% 20%

25%

8%

56%

22%

52%

34% 36%

19%

40%

19%

24% 27%

22%

35%

Executive Team working Management reporting Talent management Management models Decision-making structures Operational models

CEO CFO CIO CHRO CMO

Key CxO actions in organizational development

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CxO perspective: key development activities in organizational development CxOs find it critical that the whole C-suite works well together as a team. Among the members of the C-suite, CEOs are the most united with CMOs in their key development actions. CFO and CIO share the responsibility to provide right information to support decision making. While the results reflect somewhat clearly divided responsibilities within the C-suite, it is still worth noting that talent management is perceived as so much higher priority by CHROs than other CxOs.

CEO priorities 2014-2015

1. Key development activities

2. Business development projects

3. ICT investments

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The sample includes 379 CEOs from Top500 companies in 9 countries

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Where will the CEOs focus their key investments Strategic goals of increasing customer engagement, adapting to change and renewing business processes are reflected in CEOs’ key development plans. CEOs say they are most willing to invest in development activities that • support customer acquisition and retention • enable innovations • improve operational efficiency

13%

15%

17%

18%

36%

37%

56%

Procurement and sourcing

HR and talent management

Mergers and acquisitions

Financial management and control

Supply chain and production

Innovation management

Sales and marketing

Key development activities for CEO

CEOs’ top development plans in the next 18 months

CEO’s DEVELOPMENT

PROJECT PRIORITIES 2014-2015

1. Executing change

2. New business models

3. Growth strategies: new business areas, new markets, M&A

1. Exploitation of customer data

2. Lead generation

3. Service and solution selling

1. Supply chain flexibility

2. Sales and operations planning

3. Lean development 1. Leadership development

2. Performance and productivity

management

3. Strategic workfoce planning

1. Profitability management

2. Business forecasting and

analytics

3. Managing strategic and operational

risks

1. Commercializing new products and

services

2. Time-to-market of R&D

3. Increasing innovation capabilities

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What the CEO wants from business development projects

1. Support to business growth and

profitability

2. New business opportunities

3. Improved value for customer

4. Increased process efficiency

5. Reduced enterprise costs or

resources

Strategy and leadership

Sales and marketing

Talent and performance management

Finance and risk management

Innovations and R&D

Operational excellence

CEO’s top 3 development activities per business function CEOs indicate six business development areas where they will be personally most involved.

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Top ICT investments for CEO

CEOs’ top ICT investment plans in the next 18 months Less than third of the researched CEOs say that they work closely with CIOs in a sense that they actively involve themselves in strategic level IT management questions such as IT strategies, processes, vendor management or portfolio management. However, CEO influence is strongly present in key ICT investments, namely in analytics, finance, CRM and mobility.

What the CEO expects from IT Top 5 goals and objectives IT

1. Supporting growth

2. Reducing enterprise costs

3. Executing transformation projects

4. Renewing business processes

5. Digitalizing services and processes

Top 5 needs for business analytics

1. Steering sales

2. Business forecasting

3. Cost and profitability management

4. Performance management

5. Directing marketing efforts

Top 5 expected benefits from big data

1. Improving customer profitability

2. Sales targeting

3. Increasing additional and after-sales

4. Customer segmentation

5. Forecasting customer behavior

of the surveyed CEOs say they are actively involved in strategic IT management.

10%

10%

10%

11%

11%

12%

14%

20%

21%

23%

e-Services

Supply chain management systems

HR systems

Content and document management

Product development systems

ERP systems

Mobility and communications solutions

Customer relationship management systems

Finance and controlling systems

Business Intelligence and Big Data

28 %

For further information

Management Events Surveys

surveys@managementevents.com www.managementevents.com

Management Events • Austria • Denmark • Finland • Germany • The Netherlands • Norway • Poland • Sweden • Switzerland • Turkey