Our 2018 CEO imperative report revealed that institutional investors think disruption readiness will become more important to investment decisions.
Over recent decades, many CEOs have honed a primary focus on short-term earnings. While the resulting unprecedented growth has been received with praise from shareholders, investors and the press, today’s business leaders increasingly understand that this approach would no longer be sustainable in this transformative age, defined by disruption and innovation.
Companies must now become disruption ready — adept at both responding to disruption and initiating it. They must seize the upside of disruption, simultaneously optimizing one’s current business while laying the groundwork to disrupt it.
This shift in mindset was illustrated by the results shared in our 2018 report — The CEO imperative: seize the upside of disruption or be disrupted (pdf). The major highlights from the report included:
- Contrary to conventional wisdom, 67% of institutional investors wanted companies to undertake potentially disruptive innovation projects even if they were risky and might not deliver short-term returns.
- Seventy-three percent of institutional investors said that corporate disruption readiness would become more important to their investment decision-making over the next five years.
The new mindset was characterized by the notion of duality — the co-existence of imperatives that were in contrast or in conflict with each other, but together made up two essential parts of the total system or outcome. In the connected and accelerated digital economy, these contrasting imperatives must be addressed, not only simultaneously, but together.
As one of the CEOs in our disruption study remarked, “We look at this as a ‘here and now’ and a ‘tomorrow into the future.’ And the trade-offs for the short-term and the long-term have to live together. It’s not an ‘either-or option.’ It is necessary to be able to do both at the same time.”