IBM's global CEO report 2006: business model innovation matters

Purpose – To ascertain whether the choices CEOs were making about particular types of innovation and key enablers had any correlation with financial performance, IBM looked at a subset of our sample where publicly reported financial information was available. Design/methodology/approach – The findings in this report are based on in‐depth, consultative interviews on the topic of innovation with 765 CEOs, business executives and public sector leaders from around the world. Findings – For a subset, the authors compared their financial performance to that of an industry‐accepted list of their nearest competitors (up to ten companies with similar revenue and publicly available information). Some of their competitors were CEO study participants, but most were not. By taking a five‐year view, the researchers were able to identify which companies outperformed and under‐performed the average revenue growth, operating margin growth and historical operating margins of their closest competitors. Research limitations/implications – Throughout the analysis, IBM used these top‐half and bottom‐half groupings to look for notable financial correlations. In this report, the term outperformers refers to the study participants that are in the top 50 percent based on this competitive comparison, and under‐performers are those that fall in the bottom 50 percent. Practical implications – The authors report on how business leaders are seeking and finding new ways to adapt their business models to remain competitive in their current industry – or to seek growth by entering new industries. Originality/value – Companies focusing on business model innovation have enjoyed significant operating margin growth, while those using products/services/markets and operational innovation have sustained their margins over time.