Why CEOs Need to Change in Order to Remain Successful in 2020

With rapid changes in customer priorities towards getting the right experience from their service providers, the ability to drive innovation is most critical for CEOs; a study by Amdocs suggests that outsourcing strategies will help address what they believe to be their challenges in executing change five years from now, as industry moves to deliver "The New World of Customer Experience."

Amdocs, a provider of customer experience solutions, has unveiled a new global survey which found that senior service provider executives believe that industry CEOs will need to change their management style in order to remain successful five years from now.

According to the survey of current CEOs, C-suite and other senior management executives at the world's largest communications service providers, 83 percent said such change was necessary as rapid innovation by traditional and new players continued to revolutionize the way we communicate and consume information and entertainment.

Additional key findings of survey, conducted for Amdocs by strategy consultancy Telesperience, include:

•CEO of 2020, the Chief Innovator: The majority of the executives (73 percent) believe the 2020 CEO should be driven by a passion for innovation, and would provide the most value to the organization through driving ideas and strategy (1st) and innovation (2nd), ahead of good corporate management (3rd) and good operational management (6th). Risk-taking ranked very low (10th), implying CEOs are expected to focus on keeping the numbers right, further reinforced by the expectation of most respondents (70 percent) that the 2020 CEO will most likely come from a CFO background.

•Biggest barriers to success are lack of strategy and inability to execute change: Lack of clear strategy and an inability to support or execute change will be the top two barriers to CEO success in 2020 according to the survey, ahead of competition (3rd), and with lack of ideas a distant eighth. Helping to address this, CEO management styles will need to change according to respondents, shifting from the currently favored pacesetting (1st) and visionary (2nd) management styles in which the CEO is expected to know where the company is going and lead it there by example, to coaching (1st) and affiliative (tied 2nd place with pacesetting) styles, which value the contribution of teamwork to end goals. Reinforcing the need to overcome the challenge of executing on innovative ideas, executives believe that by 2020 the most important innovation skill the future CEO will have is the ability to create organizational structures that support innovation and change.

•C-suite is changing to support innovation: The study found that many service providers were adding new C-level roles in response to change in areas of focus and new lines of business. The most commonly added new C-level roles hold responsibility for customer experience (1st), commercial activities (2nd) and innovation (3rd). Executives predicted that by 2020, new C-level roles would also be added for the areas of big data (1st) and digital (2nd). Meanwhile those organizations without a C-level for customer experience are expected to add one by 2020, underlining the importance of this area for service providers.

•Professional services to help bridge 2020 innovation gaps: According to the study, the investment priorities of the CEO in 2020 are likely to be customer experience and cloud services (tied 1st place), with big data analytics the next most important priority. However, the way these investments will be made will vary. For customer experience, most (93 percent) plan to invest in in-house strategies while 23 percent plan to outsource, indicating some will deploy a hybrid approach. For cloud services, most (73 percent) plan to outsource, while 43 percent plan on in-house investment, with here too some taking a hybrid approach. In the areas of digital services, omni-channel operation and big data analytics, more than 40 percent plan to invest in outsourcing strategies, the same level as insourcing strategies in these areas.

"While innovation is regarded as critical to service providers' future success, and therefore to the reputation of its CEO, this study raises concerns as to how the industry will deliver the required innovation," said Teresa Cottam, chief strategist and founder at Telesperience, who led the research. "Senior service provider executives have recognized the need to source a diverse range of skills and place great value on the ability to take a collaborative approach and deliver structures that will facilitate ongoing innovation in what is one of the most demanding and fastest-changing industries in the world. This means adding new C-level roles, and adopting a flexible sourcing strategy that combines both in-house and outsourced expert resources and professional services in order to execute innovation rapidly, flexibly and effectively."

"The study shows customer experience is becoming increasingly critical, with CEOs of the largest service providers in the world viewing it as a top investment area in 2020," said Eric Updyke, group president of System Integration and Operations at Amdocs. "Delivering The New World of Customer ExperienceTM demands speeding time to market for the introduction of innovative and personalized services, and the next five years will see the challenges around this intensify. This is where professional services, including managed services, from experienced domain-focused vendors can help bridge gaps in skills and capabilities to allow service providers to move faster to excite consumers, while accelerating business value through operational efficiencies."

The study covered the world's 100 largest communications service providers in terms of revenue, with in-depth interviews conducted with CEOs, C-suite and senior management executives from 30 of the top 50, covering service providers operating in the Americas (33 percent), EMEA (37 percent), Asia Pacific (13 percent) and in multiple regions (17 percent).